$9,995,000 ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania General Obligation Bonds, Series of 2015

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1 THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO COMPLETION AND AMENDMENT. Under no circumstances shall this Preliminary Official Statement constitute an offer to 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. BOOK-ENTRY ONLY PRELIMINARY OFFICIAL STATEMENT NOVEMBER 16, 2015 Rating: Standard & Poor s AA (Stable Outlook) In the opinion of Bond Counsel, under existing statutes, regulations and judicial decisions, interest on the Bonds is excluded from gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although in the case of corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. Such opinion of Bond Counsel is given in reliance upon certain certifications made by or on behalf of the School District and is subject to continuing compliance by the School District with its covenants in the Resolution and other documents to comply with requirements of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder (the Code ). Bond Counsel is also of the opinion that under the laws of the Commonwealth of Pennsylvania (the Commonwealth ) as presently enacted and construed, the Bonds are exempt from personal property taxes in the Commonwealth and the interest on the Bonds is exempt from the Commonwealth s Personal Income Tax and the Commonwealth s Corporate Net Income Tax. The Bonds are designated as qualified tax-exempt obligations for purposes and effect contemplated by Section 265(b)(3)(B) of the Internal Revenue Code of 1986, as amended (relating to expenses and interest relating to tax-exempt income of certain financial institutions). For further information concerning federal and state matters relating to the Bonds, see Tax Exemption and Other Tax Matters herein. $9,995,000 ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania General Obligation Bonds, Series of 2015 Bonds Dated: Date of Delivery Interest Payable: February 1 and August 1 Principal Due: February 1, as shown on the inside cover First Interest Payment: February 1, 2016 Denominations: Integral multiples of $5,000 Legal Investment for Fiduciaries in Pennsylvania: The Bonds (hereinafter defined) are a legal investment for fiduciaries in the Commonwealth of Pennsylvania under the Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, P.L. 508 as amended and supplemented. Payable: The General Obligation Bonds, Series of 2015, in the aggregate principal amount of $9,995,000 (the Bonds ) will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee for the Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry only form, and purchasers will not receive certificates representing their interests in the Bonds. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal and interest on the Bonds will be made by the Paying Agent directly to Cede & Co. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursements of such payments to Beneficial Owners of the Bonds is the responsibility of the DTC Participants and the Indirect Participants. See BOOK-ENTRY ONLY SYSTEM herein. Optional Redemption: The Bonds are not subject to optional redemption prior to maturity Purpose: Proceeds of the Bonds will be used to provide funds to: (1) finance the current refunding of the outstanding General Obligation Bonds, Series A of 2010 of the School District; and (2) pay the costs of issuing the Bonds. Security: The Bonds are payable from tax and other general revenues of the School District. The School District has covenanted that it will provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will duly and punctually pay or cause to be paid from funds in the sinking fund established in the Resolution or from any Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and taxing power, which taxing power includes the power to levy ad valorem taxes on all taxable property within the School District, within limitations provided by law as to rate or amount for such purpose (see SECURITY FOR THE BONDS and APPENDIX A: TAXING POWERS OF THE SCHOOL DISTRICT herein). The Bonds are offered for delivery when, as and if issued by the School District and received by the Underwriter, subject to the approving legal opinion of Rhoads & Sinon LLP, Harrisburg, Pennsylvania, Bond Counsel to the School District, to be furnished upon delivery of the Bonds. Certain legal matters will be passed upon by Thomas L. Kelly, Esquire, of the law offices of Kelly Grimes Pietrangelo & Vakil, P.C., Media, Pennsylvania, Solicitor for the School District. It is expected that the Bonds in definitive form will be available for delivery, through the facilities of DTC, on or about. The date of this Official Statement is.

2 ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania General Obligation Bonds, Series of 2015 Bonds Dated: Date of Delivery Interest Payable: February 1 and August 1 Principal Due: February 1, as shown below First Interest Payment: February 1, 2016 Denominations: Integral multiples of $5,000 Form: Book-Entry Only Maturity Schedule Principal Principal Year Amount Coupon Price Year Amount Coupon Price

3 No dealer, broker, salesman or other person has been authorized by the School District or the Underwriter to give any information or to make any representation, other than that given or made in this Official Statement, and if given or made, any such other information or representation may not be relied upon as having been authorized by the School District or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement has been approved by the School District and, while the information set forth in this Official Statement has been furnished by the School District and other sources which are believed to be reliable, such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter or, as to information obtained from other sources, by the School District. The information and expressions of opinion set forth in this Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale made under this Official Statement shall, under any circumstances, create any implication that the affairs of the School District have remained unchanged since the date of this Official Statement. THE UNDERWRITER HAS PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. TABLE OF CONTENTS Board of School Directors & Administrative Staff... iii Summary Statement... iv Introduction... 1 Purpose of the Issue and Plan of Finance... 1 Sources and Uses of Funds... 1 Description of the Bonds... 2 Book-Entry Only System Security for the Bonds Tax Exemption and Other Tax Matters... 6 Continuing Disclosure Undertaking... 8 Miscellaneous... 9 Appendix A - Summaries of Financial Factors of the School District Appendix B - School District Audit Report Appendix C - Description of the School District Appendix D - Proposed Form of Bond Counsel Opinion Appendix E - Proposed Form of Continuing Disclosure Certificate Appendix F - Bond Amortization Schedule

4 ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania Board of School Directors John Hanna... Member William O Donnell... Vice President Grace A. Eves... Secretary (Non-Member) Heather Hogan... Treasurer (Non-Member) Harry Postles... Member Tracy Barusevicius... Member Nancy Fronduti... Member Susan Nolen... Member Nancy R. Mackrides... Member Bill Tyson... Member Elizabeth Schneider... Member Administrative Staff James M. Wigo, Sr.... Superintendent Grace A. Eves... Director of Management Services Bond Counsel Rhoads & Sinon, LLP Harrisburg, Pennsylvania Solicitor Thomas L. Kelly, Esquire Kelly Grimes Pietrangelo & Vakil, P.C., Media, Pennsylvania Underwriter RBC Capital Markets, LLC Lancaster, Pennsylvania Paying Agent and Sinking Fund Depository The Bank of New York Mellon Trust Company, N.A. Philadelphia, Pennsylvania Dallas, Texas

5 SUMMARY PAGE This Summary Statement is subject in all respects to more complete information in this Official Statement. No person is authorized to detach this Summary Statement from this Official Statement or otherwise use it without the entire Official Statement. A full review of the entire Official Statement should be made by potential bond purchasers. Issuer... Rose Tree Media School District, Delaware County, Pennsylvania. Bonds... $9,995,000 aggregate principal amount of General Obligation Bonds, Series of 2015, dated the date of delivery of the Bonds, maturing on February 1 of each of the years 2016 through 2022, with interest payable initially on February 1, 2016, and thereafter semiannually on February 1 and August 1 of each year. See DESCRIPTION OF THE BONDS herein Redemption Provisions... The Bonds are not subject to redemption prior to maturity. Form... Book-Entry Only. Application of Proceeds... Proceeds of the Bonds will be used to provide funds to: (1) currently refund the outstanding General Obligation Bonds, Series A of 2010 of the School District; and (2) pay the costs of issuing the Bonds. Security The Bonds are general obligations of the School District, for the payment of which the School District has pledged its full faith, credit and taxing power. See SECURITY FOR THE BONDS and APPENDIX A: TAXING POWERS OF THE SCHOOL DISTRICT herein. Rating See "MISCELLANEOUS -Rating" herein. iv

6 $9,995,000 ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania General Obligation Bonds, Series of 2015 INTRODUCTION This Official Statement is furnished by the Rose Tree Media School District, Delaware County, Pennsylvania (the "School District"), in connection with the offering of its General Obligation Bonds, Series of 2015, in the aggregate principal amount of $9,995,000 (the Bonds ). The Bonds are being issued pursuant to a resolution of the Board of School Directors of the School District, adopted October 22, 2015 (the "Resolution"), and in accordance with the Local Government Unit Debt Act, 53 Pa.C.S. Chs (the "Debt Act"), of the Commonwealth of Pennsylvania (the Commonwealth or State ). The Bonds will be issued as fully registered bonds and when issued, will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry only form, and purchasers will not receive certificates representing their interests in the Bonds. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal of and interest on the Bonds will be made by the Paying Agent directly to Cede & Co. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursement of such payments to Beneficial Owners of the Bonds is the responsibility of the DTC Participants and the Indirect Participants. See DESCRIPTION OF THE BONDS and BOOK-ENTRY ONLY SYSTEM herein. The information which follows contains summaries of the Resolution, relevant provisions of Commonwealth and Federal law, the School District's budget and the School District's financial statements. Such summaries do not purport to be complete and reference is made to the Resolution, the School District's budget and the School District's financial statements, copies of which are on file and available for examination at the offices of the School District. Reference is also made to the Bonds and to the actual cited laws and regulations. PURPOSE OF THE ISSUE Proceeds of the Bonds will be used to provide funds to: (1) currently refund the outstanding General Obligation Bonds, Series A of 2010, of the School District; and (2) pay the costs of issuing the Bonds. SOURCES AND USES OF FUNDS Total Sources of Funds Par Amount of the Bonds $ Less/Plus: Net Original Issue [Discount/Premium} Total Sources of Funds $ Uses of Funds Refunding Requirement Costs of Issuance (1) Total Uses of Funds $ (1) Includes underwriter s discount, legal, printing, paying agent, escrow agent, and miscellaneous fees. 1

7 DESCRIPTION OF THE BONDS The Bonds are being issued as fully registered bonds, without coupons, in the denominations of $5,000 principal amount or any integral multiple thereof. Principal and interest are payable as set forth below. When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company ( DTC ), New York, New York. Purchasers of the Bonds (the Beneficial Owners ) will not receive any physical delivery of bond certificates and beneficial ownership of the bonds will be evidenced only by electronic book entries. See Book-Entry Only System herein. Payment of Principal and Interest So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of and interest on the Bonds, when due, are to be made by the Paying Agent to DTC. All such payments shall be valid and effective to satisfy fully and to discharge the obligations of the School District on the Bonds to the extent of principal and interest so paid on the Bonds. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal and interest on the Bonds shall be made as described in the following paragraph. Principal of certificated Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered owners thereof or assigns, upon surrender of such Bonds to The Bank of New York Mellon Trust Company, N.A. (the Paying Agent ), acting as Paying Agent and sinking fund depository for the Bonds, at the designated corporate trust office of the Paying Agent in Philadelphia, Pennsylvania or Dallas, Texas, or at any other of its offices as the Paying Agent may designate (or to any successor Paying Agent at its designated office(s)). Interest on the Bonds is payable to the registered owner of a Bond from the interest payment date next preceding the date of registration and authentication of such Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding February 1, 2016, in which event such Bond shall bear interest from the date of delivery or, (d) as shown by the records of the Paying Agent, interest on such Bond shall be in default, in which event such Bond shall bear interest from the date on which interest was last paid on such Bond. Interest shall be paid semiannually on February 1 and August 1 of each year, beginning February 1, 2016, until the principal sum is paid. Interest on a Bond is payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15 th ) calendar day (whether or not a day on which the Paying Agent is open for business) next preceding each interest payment date, respectively (the "Record Date"), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bond subsequent to such Record Date and prior to such interest payment date, unless the School District shall be in default in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owners of Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names the Bonds are registered at the close of business on the fifth (5th) day preceding the date of mailing. If the date for the payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or on a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment. Transfer, Exchange and Registration of Bonds Subject to the provisions described below under Book-Entry Only System, each of the Bonds may be transferred or exchanged by the registered owners thereof upon surrender of such Bonds to the Paying Agent, at its designated corporate trust 2

8 office, accompanied by a written instrument or instruments in form, with instructions satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of such Bonds in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered bond or bonds of authorized denominations of the same series, maturity date and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered owner of such Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any notice to the contrary. Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same series, maturity date and interest rate. The School District and the Paying Agent shall not be required to: (i) issue or transfer any Bonds during the period beginning at the opening of business on any Record Date for interest payments and ending at the close of business on such interest payment date; or (ii) issue or transfer any Bonds during a period beginning at the opening of business on the 15th business day next preceding any date of selection of Bonds to be redeemed and ending at the close of business on the date the notice of redemption shall be mailed; or (iii) issue or transfer any Bonds during the period beginning at the opening of business on the first business day next succeeding the business day the Paying Agent determines the registered owners of Bonds to receive notice of any Special Record Date and the close of business on the Special Record Date; or (iv) issue or transfer any Bonds selected or called for redemption. BOOK-ENTRY ONLY SYSTEM The information in this section has been obtained from materials provided by DTC for such purpose. The School District (herein referred to as the Issuer ) and the Underwriter do not guaranty the accuracy or completeness of such information and such information is not to be construed as a representation of the School District or the Underwriter. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity and series of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. 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 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 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 3

9 entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. 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 DTC nominee do not affect 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. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notice of significant events with respect to the Bonds, such as redemptions, defaults, and proposed amendments to the Resolution. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, interest and redemption 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 Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to the 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, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, interest and redemption payments on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Issuer or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. NEITHER THE ISSUER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN 4

10 RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN THEREUNDER; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER. The Issuer and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Preliminary Official Statement. General Obligation Pledge SECURITY FOR THE BONDS The Bonds are general obligations of the School District and are payable from the general taxes and revenues of the School District. The taxing powers of the School District are described more fully in Appendix A herein. The School District has covenanted in the Resolution that it (i) shall include the amount of the debt service to be paid on the Bonds, for each fiscal year of the School District in which such sums are payable, in its budget for that fiscal year, (ii) shall appropriate such amounts from its general revenues for the payment of such debt service, and (iii) shall duly and punctually pay, or cause to be paid from its Sinking Fund (hereinafter defined) or any other of its revenues or funds, the principal of each of the Bonds and the interest thereon on the dates, at the place and in the manner stated in the Bonds, and for such budgeting, appropriation and payment, the School District has irrevocably pledged its full faith, credit and taxing power, within the limits provided by law. The Debt Act presently provides for enforcement of debt service payments as hereinafter described (see Actions in the Event of Default herein), and the Pennsylvania Public School Code presently provides for the withholding and application of subsidies in the event of default to pay debt service (see State Reimbursement Intercept Program under Section 633 of the Public School Code of 1949 below). Sinking Fund Sinking Funds for the payment of debt service on the Bonds, designated Sinking Fund - General Obligation Bonds, Series of 2015 (the Sinking Fund"), has been created under the Resolution and shall be established and maintained with the Paying Agent (the "Sinking Fund Depository") segregated from all other funds of the School District. The School District shall deposit in the Sinking Fund, not later than the date when principal or interest is to become due on the Bonds, an amount sufficient to provide for the payment of interest and principal becoming due on the Bonds. The Sinking Fund shall be held by the Paying Agent in its capacity as Sinking Fund Depository and invested by the Sinking Fund Depository in such securities or shall be deposited in such deposit accounts as are authorized by the Act, upon direction of the School District. Such deposits and securities shall be in the name of the School District but subject to withdrawal or collection only by the Sinking Fund Depository, and such deposits and securities, together with the interest thereon, shall be a part of the Sinking Fund. The Paying Agent, as sinking fund depository, is authorized and directed to pay from the Sinking Fund the principal of and interest on the Bonds when due and payable. State Reimbursement Intercept Program under Section 633 of the Public School Code of 1949 Section 633 of the Public School Code of 1949, as amended (the "Public School Code") presently provides that in all cases where the board of School Directors of any school district fails to pay or to provide for the payment of any indebtedness, at the date of maturity or mandatory redemption, or any sinking fund deposit date, or any interest due on such indebtedness on any interest payment date or any sinking fund deposit date, in accordance with the schedule under which the bonds or notes were issued, the Secretary of Education of the Commonwealth shall notify the board of school directors of its obligation and shall withhold from any Commonwealth appropriation due such school district, or sinking fund deposit due by such school district, 5

11 and shall pay over an amount equal to the sum of such principal or interest due and shall pay such amount directly to the bank acting as sinking fund depository for the bond issue. The withholding provisions of Section 633 are not part of any contract with the registered owners of the Bonds and may be amended or repealed by future legislation. The effectiveness of Section 633 may be limited by the application of other withholding provisions contained in the Public School Code, such as provisions for withholding and paying over of appropriations for payment of unpaid teachers' salaries. Enforcement may also be limited by bankruptcy, insolvency, or other laws or equitable principles affecting the enforcement of creditors' rights generally. As of the date hereof, the Commonwealth has not passed its budget for the fiscal year. Until the budget is passed, payments under the withholding provisions of Section 633 of the Public School Code will be affected. In addition, future budget impasses may affect payments under the withholding provisions of Section 633 of the Public School Code. Actions in the Event of Default Subject to the exclusive representation of bondholders by a trustee appointed under the Debt Act as described in the following paragraph, if the School District fails or neglects to pay principal or interest on any of the Bonds as it becomes due and payable, and such failure continues for 30 days, the holder of such bond may bring suit in a court of appropriate jurisdiction and venue and any judgment recovered shall have an appropriate priority upon the money next coming into the treasury of the School District, all as provided in the Debt Act. The Debt Act also provides other remedies to bondholders to enforce the School District's covenants in respect of payment of the Bonds. In the event the School District defaults in the payment of the principal of or the interest on any of the Bonds after same shall become due, whether at the stated maturity or upon call for prior redemption, and such default shall continue for thirty days, or if the School District fails to comply with any provision of the Bonds or the Resolution, the Debt Act provides that the holders of 25% in aggregate principal amount of the Bonds then outstanding may, upon appropriate action, appoint a trustee to represent the Bondholders. The trustee may, and upon request of the holders of 25% in principal amount of the Bonds then outstanding, and upon being provided with indemnity satisfactory to it, shall take such action on behalf of the Bondholders as is more specifically set forth in the Debt Act. Such representation by the trustee shall be exclusive. TAX EXEMPTION AND OTHER TAX MATTERS Federal Income Tax Matters On the date of delivery of the Bonds, Rhoads & Sinon LLP, Harrisburg, Pennsylvania, as Bond Counsel to the School District, will issue an opinion to the effect that under existing statutes, regulations and judicial decisions, interest on the Bonds is excluded from gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but that in the case of corporations (as defined for federal income tax purposes) such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. This opinion of Bond Counsel will assume the accuracy of certificates made by the School District and will be subject to the condition that the School District will comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excluded from gross income for federal income tax purposes. See the form of opinion of Bond Counsel appended to this Official Statement. The School District has covenanted to comply with all such requirements, which include, among others, restrictions upon the yield at which proceeds of the Bonds and other money held for the payment of the Bonds and deemed to be proceeds thereof may be invested and the requirement to calculate and rebate any arbitrage that may be generated with respect to investments allocable to the Bonds. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds. Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than the stated redemption price of such Bonds at maturity (that is, at less than par or the stated principal amount), the difference being original issue discount. Generally, original issue discount accruing on a tax-exempt obligation is treated as interest excludable from gross income for federal income tax purposes. In addition, original issue discount that has accrued on a taxexempt obligation is treated as an adjustment to the issue price of the obligation for the purpose of determining taxable gain 6

12 upon sale or other disposition of such obligation prior to maturity. The Internal Revenue Code of 1986, as amended, provides specific rules for the accrual of original issue discount on tax-exempt obligations for federal income tax purposes. Prospective purchasers of Bonds being sold with original issue discount should consult their tax advisors for further information. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain Subchapter S corporations with substantial passive income and Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. Bond Counsel will express no opinion as to such collateral tax consequences, and prospective purchasers of the Bonds should consult their tax advisors. No representation is made or can be made by the School District or any other party associated with the issuance of the Bonds as to whether or not any legislation now or hereafter introduced and enacted will be applied retroactively so as to subject interest on the Bonds to inclusion in gross income for federal income tax purposes or so as to otherwise affect the marketability or market value of the Bonds. Enactment of any legislation that subjects the interest on the Bonds to inclusion in gross income for federal income tax purposes or otherwise imposes taxation on the Bonds or the interest paid thereon may have an adverse effect on the market value or marketability of the Bonds. Pennsylvania Tax Matters On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect that under the laws of the Commonwealth of Pennsylvania (the Commonwealth ) as presently enacted and construed, the Bonds are exempt from personal property taxes within the Commonwealth and the interest on the Bonds is exempt from the Commonwealth s Personal Income Tax and the Commonwealth s Corporate Net Income Tax. See the form of opinion of Bond Counsel appended to this Official Statement. Profits, gains, or income derived from the sale, exchange or other disposition of the Bonds are subject to state and local taxation within the Commonwealth, in accordance with Pennsylvania Act No Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than their stated redemption price at maturity (that is, at an original issue discount ). For Pennsylvania Personal Income Tax purposes, original issue discount on publicly offered obligations is treated under current regulations of the Pennsylvania Department of Revenue as interest and, or purposes of determining taxable gain upon sale or other disposition of an obligation the interest on which is exempt from income taxation by the Commonwealth, as an adjustment to basis. For Pennsylvania Corporate Net Income Tax purposes, original issue discount is to be accorded similar treatment, according to a Private Letter Ruling issued by the Office of the Chief Counsel of the Pennsylvania Department of Revenue dated December 2, 1993, but such Private Letter Ruling may be relied upon only by the taxpayer to whom it was addressed. Prospective purchasers of Bonds issued with original issue discount should consult their tax advisors for further information and advise concerning the reporting of profits, gains or other income related to a sale, exchange or other disposition of such Bonds for Pennsylvania tax purposes. No representation is made or can be made by the School District, or any other party associated with the issuance of the Bonds, as to whether or not any legislation now or hereafter introduced and enacted in the Commonwealth will be applied, either prospectively or retroactively, so as to subject interest on such Bonds to taxation in the Commonwealth or so as to otherwise affect the marketability or market value of such Bonds. Enactment of any legislation that subjects the interest on such bonds to state or local taxes in the Commonwealth or otherwise imposes taxation on such Bonds may have an adverse effect on the market value or marketability of such Bonds. Federal Income Tax Interest Expense Deductions for Financial Institutions Under the Internal Revenue Code of 1986, as amended (the Code ) financial institution s are disallowed 100 percent of their interest expense deductions that are allocable, by a formula, to tax-exempt obligations acquired after August 7, An exception that reduces the amount of the interest expense disallowance under Section 265 of the Code is provided for certain tax-exempt obligations that are designated or "deemed designated" by the issuer as "qualified tax-exempt obligations" under Section 265 of the Code. 7

13 The Bonds have been designated, or deemed designated, as a qualified tax-exempt obligation for purposes and effect contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-exempt income of certain financial institutions). Financial institutions intending to purchase Bonds should consult with their professional tax advisors to determine the effect of the interest expense disallowance on their federal income tax liability. Changes in Law From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and no opinion is expressed as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. CONTINUING DISCLOSURE UNDERTAKING In accordance with the requirements of Rule 15c2-12 (the Rule ) promulgated by the Securities and Exchange Commission ( SEC ), and the Resolutions authorizing issuance of the Bonds, the School District will execute and deliver a written continuing disclosure obligation with respect to the Bonds. See the form of the Continuing Disclosure Agreement (the Agreement ) at Appendix E to this Official Statement. Under the terms of the Agreement, the School District will undertake to file with the MSRB financial and other information concerning the School District (including but not limited to, annual audited financial statements and annual budget (as and when available) and notice of certain events affecting the School District). The School District s obligations with respect to continuing disclosure shall terminate upon the prior redemption or payment in full of all of the Bonds. The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information filed by issuers of municipal securities since July 1, Information and notices filed by municipal issuers (and other obligated persons with respect to municipal securities issues) are made available through the MSRB s Electronic Municipal Market Access (EMMA) System, which may be accessed on the internet at The School District failed to file in a timely manner the required audited financial statement for the fiscal year ending June 30, Additionally, the School District failed to separately file operating information for fiscal year ending June 30, 2010 although certain updated operating information was publicly available in the official statement for bond transactions issued by the School District on October 29, The School District has filed a separate notice with EMMA (i) specifically crossreferencing this information, and (ii) setting forth the School District s failure to file or timely file certain operating information. 8

14 MISCELLANEOUS No Litigation As a condition of settlement for the Bonds, the School District and its Solicitor will deliver a certificate stating that there is no litigation of any nature, pending or threatened against the School District to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or if any such litigation is pending or threatened, an opinion of counsel satisfactory to the Underwriter that any such litigation is without merit. Legal Opinion The issuance and delivery of the Bonds is subject to delivery of the unqualified approving legal opinion of Rhoads & Sinon LLP, Harrisburg, Pennsylvania, Bond Counsel to the School District. Certain legal matters will be passed upon for the School District by Thomas L. Kelly, Esquire, of the law offices of Kelly Grimes Pietrangelo & Vakil, P.C., Media, Pennsylvania, Solicitor to the School District. Ratings Standard & Poor s Rating Services has assigned the School District an underlying rating of AA (Stable Outlook). The above ratings are not recommendations to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Bonds. Underwriting RBC Capital Markets, LLC (the Underwriter ) has agreed, subject to certain conditions, to purchase the Bonds from the School District at an aggregate price of $ (consisting of an aggregate principal amount of $ less an underwriter s discount of $ plus an original issue premium of $ ). The Underwriter s obligations to purchase the Bonds is subject to certain conditions precedent, however, the Underwriter is obligated to purchase all such Bonds if any such Bonds are purchased. The Bonds may be offered and sold to certain dealers (including dealers depositing such bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. The Underwriter has provided the following information for inclusion in this Official Statement: The Underwriter and their respective affiliates are full service financial institutions engaged in various activities, that may include securities trading, commercial and investment banking, municipal advisory, brokerage and asset management. In the ordinary course of business, the Underwriter and their respective affiliates may actively trade debt and if applicable equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its affiliates may engage in transactions for its own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Issuer. The Underwriter and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Issuer. The Underwriter does not make a market in credit default swaps with respect to municipal securities at this time but may do so in the future. 9

15 Other All references to the provisions of the Debt Act, the Bonds, the Resolution and legal opinions and all documents and certificates delivered at settlement for the Bonds described in this Official Statement are made subject to all the specific provisions thereof, to which reference is hereby made for further information, and this Official Statement does not purport to be a complete statement of any or all such provisions. All information, estimates and assumptions herein have been obtained from officials of the School District, other governmental bodies, trade and statistical services, and other sources which are believed to be reliable; but no representations whatsoever are made that such estimates or assumptions are correct or will be realized. So far as any statements herein involve matters of opinion, whether or not expressly so stated, they are intended as such and not representations of fact. Use of the words shall, will, must, or other words of similar import or meaning in summaries of documents or law in this Official Statement to describe future events of continuing obligations is not intended as a representation that such event will occur or such obligations will be fulfilled, but only that the document or law requires or contemplates such event to occur or such obligation to be fulfilled. The School District has authorized the distribution of this Official Statement. ROSE TREE MEDIA SCHOOL DISTRICT Delaware County, Pennsylvania By: President of the Board of School Directors 10

16 APPENDIX A Summaries of Finances of The School District A-1

17 FINANCIAL REVIEW Page A-4 is a summary only and is not intended to be a complete report. For more complete information, the individual financial statements and the Budget of the School District should be reviewed at the School District's Business Office in Media, Pennsylvania. Review of Recent General Fund Audited Financial Statements and Budgets The exhibit on page A-4 is a summary of the School District's through General Fund audited statements of revenues and expenditures, and estimated figures for and budget for The figures have been arranged in a form believed to be convenient for the purposes of this Official Statement. Accounting Method The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units. Its financial statements are audited annually by a firm of independent certified public accountants, as required by Commonwealth law. The firm of Barbacane Thornton & Company, Media, Pennsylvania serves as the School District auditor. The School District s auditor has not been engaged to perform, and has not performed since the date of its report included as an appendix to this Official Statement, any procedure on the financial statement addressed in the report. Such auditor also has not performed any procedure relating to this Official Statement. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class A, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. A-2

18 If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. A-3

19 ROSE TREE MEDIA SCHOOL DISTRICT Audited Financial Statements and Budgeted Revenues and Expenditures Audited Audited Audited Estimated Budgeted REVENUES: Local Sources $65,974,675 $68,130,858 $68,397,060 $70,521,055 $70,871,407 State Sources 10,715,018 11,283,177 12,054,529 12,837,447 14,177,639 Federal Sources 1,151,795 1,119,042 1,335, , ,500 OTHER FINANCING SOURCES Interfund Transfers Sale/Comp of Fixed Assets Refund of Prior Year Expenditures Operating Transfers from Other LEA s TOTAL REVENUES AND OTHER FINANCING SOURCES $77,841,488 $80,533,077 $81,786,670 $84,222,178 $85,676,546 EXPENDITURES: Instruction $43,117,943 $42,890,055 $43,845,597 $46,752,997 $50,086,860 Support Services 23,336,475 23,472,859 25,354,388 27,362,402 28,880,762 Non-Instructional Services 1,339,258 1,414,043 1,485,182 1,545,955 1,706,504 Facilities Debt Service 8,301,408 9,289,905 8,841,768 8,523,865 8,717,879 Capital Outlay Refund of Prior Year s Receipts ,155 0 Budgetary Reserve ,000 Interfund Transfers 2,855,227 3,663,844 4,346,285 2,654, TOTAL EXPENDITURES $78,950,311 $80,730,706 $83,873,220 $87,069,214 $90,242,005 REVENUES OVER (UNDER) EXPENDITURES (1,108,823) (197,629) (2,086,550) (2,848,036) (4,565,465) BEGINNING GENERAL FUND BALANCE AS OF JULY 1 $15,195,094 $14,086,271 $13,888,642 $11,802,092 $8,954,056 Residual Equity Transfer Prior Period Adjustment CLOSING GENERAL FUND BALANCE AS OF JUNE 30 $14,086,271 $13,888,642 $11,802,092 $ 8,954,056 $ 4,388,591 A-4

20 REVENUE FROM COMMONWEALTH SOURCES School districts in the Commonwealth receive, annually, financial assistance from the Pennsylvania Department of Education. The amount of such assistance is based upon (i) the market value of real estate per weighted average daily membership, (ii) income per weighted average daily membership and (iii) the school district's tax effort, all as compared with such figures on a state-wide basis. The basic instructional subsidy received by a School District is calculated by multiplying the number of students in weighted average daily membership by the District's Market Value/Personal Income Aid Ratio and by the factor for educational expense. Rental and sinking fund reimbursement from the Commonwealth for school projects is determined by the "Reimbursable Percentage" assigned to the school building project and by the school district's "Market Value Aid Ratio" or "Capital Account Reimbursement Factor" ("CARF") whichever is higher. The School District's CARF is currently higher at Most school building projects in Pennsylvania are eligible for Commonwealth reimbursement. Certain school building projects, such as school administration buildings and vehicle maintenance buildings, are ineligible for reimbursement. A reimbursable percentage, based upon the rated pupil capacity of the new or renovated structure and certain other costs, is assigned to the building project. This reimbursement percentage multiplied by the School District s appropriate Aid Ratio determines the Commonwealth's share of the annual lease rental or debt service for that school year. SCHOOL DISTRICT PENSION PROGRAM School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District s full-time employees, par-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, please note a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee s salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 was passed by the General Assembly on November 15 and signed by Governor Rendell on November 23, The benefit reductions contained in this legislation will only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier or 2.5%. The PSERS Board certified a new employer rate, to be paid by the School District, of 21.40% for the fiscal year. On December 9, 2014, the PSERS Board certified the employer rate, to be paid by the School District, of 25.84% for the fiscal year. According to Act 120 of 2010 the employer contribution rate is suppressed for future years by using rate caps to keep the rate from rising too high, too fast. Both the School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments, net of reimbursement, have been as follows: A-5

21 The School District is current in all payments. School District Fiscal Year Contribution $ 1,636, ,272, ,067, ,977, (Budgeted) 5,003,276 PSERS is primarily responsible for administering a defined benefit pension plan for public school employees in the Commonwealth of Pennsylvania. In the fall of 2014, the PSERS completed its process of publishing financial statements for the year ended June 30, 2014, in compliance with reporting standards established by the Government Accounting Standards Board s Statement No. 25 and Statement No. 26. PSERS rate of return for fiscal year ended June 30, 2014 was 14.91%, which added approximately $7.1 billion (net of fees) in investment income to the Fund. The Fund had plan net assets of $53.3 billion at June 30, PSERS investment outperformance well above its annual return assumption of 7.5% also helped decrease the unfunded accrued liability. The Fund s complete report is available on the PSERS website on the Internet: Source: PSERS Website. POST-EMPLOYMENT HEALTHCARE PLAN Plan Description OTHER POST-EMPLOYMENT BENEFITS Effective for the fiscal year, the District has implemented Governmental Accounting Standards Board Statement No. 45, "Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions," for certain post-employment healthcare benefits and life insurance benefits provided by the District. This Statement generally provides for prospective implementation - i.e., that employers set the beginning net OPEB obligation at zero as of the beginning of the initial year. Accordingly, for financial reporting purposes, no liability is reported for the post-employment benefits liability at the date of transition. The District's post-employment healthcare plan is a single-employer defined benefit healthcare plan. The plan provides medical insurance benefits to eligible retirees and their spouses. The Board of School Directors has the authority to establish and amend benefit provisions through the collective bargaining process with members of the professional and support staff, an agreement with administrative employees, and individual employment contracts with certain employees. The plan does not issue any financial report and is not included in the report of any public employee retirement system or any other entity. Funding Policy The contribution requirements of plan members are established and may be amended by the Board of School Directors. The required contribution is based on projected pay-as-you-go financing requirements, with any additional amount to prefund as determined annually by the Board of School Directors. For fiscal year 2015, plan members receiving benefits contributed $217,563, or approximately 100 percent of total premiums, through their required monthly contributions. Annual OPEB Cost and Net OPEB Obligation The District's annual other post-employment benefit cost (expense) is calculated based on the annual required contribution of the employer ("ARC"), an amount actuarially determined in accordance with the parameters of A-6

22 GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the District's 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 473,079 Interest on net OPEB obligation 50,363 Adjustment to annual required contribution (68,708)) Annual OPEB cost (expense) 454,734 Contributions made (217,563)) Increase in net OPEB obligation 237,171 Net OPEB obligation - beginning of year 1,119,176 Net OPEB obligation - end of year 1,356,347 This amount represents the cost of medical expenses for retirees. Funded Status and Funding Progress The schedule of funding progress of OBEB is as follows: Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL) AAL Funded Covered Of covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) ( c) [(b-a)/c] 7/1/ $2,793,367 $2,793, % 34,298, % 7/1/ $3,358,260 $3,358, % $35,094, % Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation 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 liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. A-7

23 LABOR RELATIONS The School District employs a total of 657 employees, 364 of which are professional staff and 293 are support staff. The professional employees are represented by the Rose Tree Media Education Association. A four-year contract went into effect for the 2014/15 through the 2017/18 school years. Non-teaching employees belong to the following unions with accompanying contract expiration dates: Rose Tree Media Bus Drivers/Custodial Maintenance Personnel Association, June 30, 2016 and Rose Tree Media Secretaries and Support Staff Association, June 30, SCHOOL DISTRICT FINANCIAL HISTORY The School District and its predecessors have never defaulted on the payment of lease rentals or debt service. The status of the School District's present indebtedness is shown in the table entitled "Previous School Financing", in Appendix A. FUTURE FINANCING The School District does not anticipate the need for issuance of additional long-term debt for the next few years. A-8

24 SCHOOL DISTRICT BORROWING CAPACITY (Under Local Government Unit Debt Act) The borrowing capacity of the School District is calculated in accordance with provisions of the Act, which describes the applicable debt limits for local government units, including school districts and municipalities. Under the Act, the School District may incur electoral debt, which is debt that is approved by a majority of the School District's voters at either a general or special election, in an unlimited amount. Net nonelectoral debt, or debt not approved by the School District's electorate, net of state aid, may not exceed 225% of the School District's "Borrowing Base". The Bonds constitute nonelectoral debt under the Act. The Borrowing Base is calculated as the annual arithmetic average of Total Revenues (as defined in the Act), for the three full fiscal years next preceding the date of incurring debt. Combined net nonelectoral debt and net lease rental debt (debt represented by capital leases and other forms of agreement), net of state aid, incurred on behalf of the School District may not exceed 225% of the School District's Borrowing Base. The Borrowing Base and borrowing capacity of the School District are as follows: Calculation of Borrowing Base * Total Revenues (All Governmental Funds)... $ 80,533,078 $ 81,786,670 $ 84,102,606 Less: Required Deductions (a) Rental and Sinking Fund Reimbursement , , ,799 (b) Revenues for Self-Liquidating Debt (c) Interest Earned on Sinking Funds (d) Grant and Gifts for Capital Projects (e) Sale of Equipment and Non-Recurring Items Total Deductions , , ,799 Total Revenues... $ 80,292,69 $ 81,552,256 $ 84,000,807 Total Net Revenues for Three Years... $ 245,845,753 Borrowing Base Average Net Revenues for Three-Year $ 81,948,584 Period * Estimated A-9

25 DEBT STATEMENT AND BORROWING CAPACITY (Under Local Government Unit Debt Act) A. ELECTORAL DEBT... 0 B. NON-ELECTORAL DEBT Computation of Net Non-Electoral Debt a. Outstanding Principal (including the Bonds)... $ 72,585,000 b. Less: Deductions (described in the Act) *... 0 c. Net Non-Electoral Debt... $ 72,585,000 C. LEASE RENTAL DEBT Computation of Net Lease Rental Debt a. Outstanding Principal under Lease Agreements... $ 0 b. Less: Deductions (described in the Act)*... 0 c. Net Lease Rental Debt... $ 0 Computation of Combined Borrowing Capacity a. Debt Limit - 225% of Borrowing Base... $184,384,314 b. Less: Combined Net Lease Rental Debt and Net Non-Electoral Debt... 72,585,000 c. Current Combined Borrowing Capacity - Before Reimbursement... $111,799,314 * The School District may, at any time, claim a credit against the gross principal of debt outstanding equal to the amount estimated to be reimbursed by Commonwealth sources. TAXING POWERS OF THE SCHOOL DISTRICT Subject to certain limitations imposed by Act 1 (see below), the School District, being a school district of the Third Class, is empowered by the School Code and other statutes to levy the following taxes: 1. A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, to be used for general school purposes 2. An unlimited ad valorem tax on the property taxable for school purposes to provide funds: (a) to pay minimum salaries and increments of the teaching and supervisory staff; (b) to pay rentals due any municipal authority, or non-profit corporation or due the State Public School Building Authority; (c) to pay interest and principal on any indebtedness under the Debt Act or any prior or subsequent act governing the incurrence of indebtedness of the School District; and (d) to pay amortization of bonds to finance construction of school facilities, if issued prior to the first Monday of July, An annual per capita tax, not to exceed $5.00, on each resident over 18 years of age. 4. Additional taxes subject to division with other political subdivisions authorized to levy similar taxes on the same person, subject, business, transaction or privilege, under Act No. 511, enacted December 31, 1965, as amended ( The Local Tax Enabling Act ). These taxes, which may include, among others, an additional per capita tax, a wage and other earned income tax, a real estate transfer tax, a gross receipts tax, a local services tax and an occupation tax, shall not exceed, in the aggregate, an amount equal to the product of the market valuation of real estate in the School District (as certified by the State Tax Equalization Board of the Commonwealth STEB ) multiplied by twelve mills. All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also A-10

26 authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year. PENNSYLVANIA ACTS AFFECTING CERTAIN LOCAL TAXING POWERS OF SCHOOL DISTRICTS The Taxpayer Relief Act (Act 1) Under Pennsylvania Act No. 1 of the Special Session of 2006, as amended by Act 25 of 2011 (the Taxpayer Relief Act or Act 1 ), a school district may not, in fiscal year or in any subsequent fiscal year, levy any tax for the support of the public schools which was not levied in the previous fiscal year, raise the rate of any earned income and net profits tax if already imposed under the authority of the Local Tax Enabling Act (Act 511), or increase the rate of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such exception is approved by the PDE: 1. to pay interest and principal on indebtedness incurred (i) prior to September 4, 2004, in the case of a school district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves; 2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and 3. to make payments into the State Public School Employees Retirement System when the increase in the estimated payments between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1. Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by the court or PDE, as the case may be. If a school district s petition or request to increase taxes by more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a referendum. The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio. The Index applicable to the School District for the current and previous fiscal years is as follows: % % % % % % In accordance with Act 1, the Board of School Directors of the School District placed a referendum on the ballot for the May 15, 2007 primary election seeking voter approval to levy (or increase the rate of) an earned income tax or personal A-11

27 income tax and use the proceeds to reduce local real estate taxes by a homestead and farmstead exclusion. The referendum was not approved by a majority of the voters at the primary election. During the 2007 primary election the voters in the School District disapproved a referendum question which would have increased the earned income and net profits tax ( EIT ) payable by School District taxpayers from 1.8% to 2.3%, and use the additional revenues to fund an increase in the homestead and farmstead exclusions from applicable real property taxes (and thereby reduce property taxes payable by the eligible property owners). The board of school directors may submit, but is not required to submit, a similar referendum question to the voters at future municipal election seeking approval to levy or increase the rate of an EIT or a personal income tax, which would include investment income in taxable income, for the purpose of further funding homestead and farmstead exclusions, up to the maximum homestead and farmstead exclusions allowable under law. Act 1 also provides for gaming revenues received by the Commonwealth to be accumulated in the Property Tax Relief Reserve Fund ( Fund ). When the Fund has sufficient money according to a formula, the Secretary of the Commonwealth announces that funds are available for distribution to school districts. The money received by school districts from the Fund may only be used to provide a reduction in real estate taxes to qualified homestead/farmstead properties. To qualify for a homestead and/or farmstead tax reduction, the property must be owner-occupied and used for residential purposes. The money received by the local school district from the Fund are offset on a dollar for dollar basis by reductions in the local real estate tax payments from owners of qualified homestead and farmstead properties. This summary is not intended to be an exhaustive discussion of the provisions of Act 1 nor a legal interpretation of any provision of Act 1, and a prospective purchaser of the Bonds should review the full text of Act 1 as a part of any decision to purchase the Bonds. Status of the Bonds Under Act 1 Bonds The Bonds represent indebtedness of the School District that refunds prior indebtedness that was incurred as defined by the Debt Act and Act 1, prior to June 27, 2006, the effective date of Act 1. (The School District did not elect to become subject to the provisions of the earlier Act 72 of 2004, that was repealed by Act 1). Under Act 1, the School District is entitled to apply to the Pennsylvania Department of Education (PDE) for an approval to utilize a referendum exception described in paragraph 1 above, if and to the extent a tax increase greater than the Index is needed to pay principal and interest on the Bonds in any particular fiscal year (see "Act 1 of Special Session 2006 and "Budgeting Process for School Districts under Act 1 of 2006" herein). Act 1 provides that PDE shall approve a school district's request if a review of the data demonstrates that the school district qualifies for the exception sought and the sum of the dollar amounts of all exceptions for which the school district qualifies is not more than what is necessary to balance the budget after giving effect to the revenue to be raised by the allowable increase under the Index. There can be no assurance, however, that approval will be given by PDE to utilize a referendum exception in any future fiscal year or years. The School District has levied and has in place sufficient tax millage to provide for payment of the annual debt service on the 2010 Bonds. The maximum annual debt service on the Bonds will not be more than the maximum annual debt service on the 2010 Bonds and therefore, it will not be necessary for the School District to levy any new tax or to increase the rate of any existing tax in order to provide for payment of the interest and principal of the Bonds. A-12

28 Act 130 of 2008 Act 130 of 2008 of the Commonwealth amended the Local Tax Enabling Act so as to authorize school districts levying an occupation tax to replace that occupation tax with an increased earned income tax or, if the school district has implemented a personal income tax in accordance with the Taxpayer Relief Act, an increased personal income tax, in a revenue neutral manner. To so replace an occupation tax, the board of school directors must first hold at least one public hearing on the matter and then place a binding referendum question on the ballot at a general or municipal election for approval by the voters The School District has not scheduled a public hearing or taken other action to conduct a referendum under Act 130 of SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 130. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 130 NOR A LEGAL INTERPRETATION OF ANY PROVISION OF ACT 130. A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 130 AS A PART OF ANY DECISION TO PURCHASE THE BONDS Act 48 of 2003 Limitation on Fund Balances Pennsylvania Act No (enacted December 23, 2003) prohibits a school district from increasing real property taxes for the school year or any subsequent school year, unless the school district has adopted a budget for such school year that includes an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set forth below: Total Budgeted Expenditures: Estimated Ending Unassigned Fund Balance as a Percentage of Total Budgeted Expenditures: Less than or equal to $11,999, % Between $12,000,000 and $12,999, % Between 13,000,000 and $13,999, % Between $14,000,000 and $14,999, % Between $15,000,000 and $15,999, % Between $15,715,000 and $16,999, % Between $17,000,000 and $17,999, % Between $18,000,000 and $18,999, % Greater than or equal to $19,000, % Estimated ending unreserved fund balance is defined in Act as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district s budget was adopted and held in the general fund accounts of the school district. The total budgeted expenditures in the School District s budget for the fiscal year including fund transfers and budgeted reserves are $90,242,005, and the School District s estimated ending unassigned fund balance as a percentage of total budgeted expenditures for the fiscal year is 5%. SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 48. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 48 NOR A LEGAL INTERPRETATION OF ANY PROVISIONS OF ACT 48. A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 48 AS A PART OF ANY DECISION TO PURCHASE THE BONDS. A-13

29 Ten Largest Taxpayers in School District TAX REVENUES IN THE SCHOOL DISTRICT The ten largest real estate taxpayers in the School District and their assessed valuation of their real estate are as follows: Taxpayer Type of Business Assessed Value White Horse Village, Inc. Retirement Center $49,058,970 Riddle Healthcare Foundation Retirement Center $29,700,060 Adult Communities Nursing Home $28,035,340 BT Granite Run LP Shopping Mall $21,696,000 Open Door Estates, Inc. Retirement Center $16,000,000 Rose Tree KPG III LLC Office Building $14,124,000 WV-PP Towne Center, LP Misc. Buildings $13,800,000 US REIF Watermark Retirement Center $10,360,000 Media Station Apartments Apartments Buildings $ 9,306,430 Rose Tree KPG III LLC Office Building $8,988,000 Total* $201,068,800 *Represents 7.1% of total Assessed Valuation Source: School District Valuation of Real Property Market values of real property in the School District, as reported by the Pennsylvania State Tax Equalization Board. Current Year Assessed Valuation Market Value Common Level Ratio 2007 $2,844,014,651 $4,878,241, % ,879,055,075 4,696,664, ,888,203,395 4,498,759, ,854,030,791 4,228,193, ,870,340,851 3,986,584, ,881,556,599 3,893,995, ,891,410,029 4,264,616, ,905,288,687 4,285,086, Source: Pennsylvania State Tax Equalization Board A-14

30 Tax Collection Record Collected in School Assessed Amount Year of Levy Total Collections (1) Year Valuation Millage of Levy Amount % Amount % $2,798,638, $52,549,475 $50,973, $52,165, ,835,819, ,211,993 53,779, ,230, ,856,052, ,496,331 55,488, ,038, ,807,544, ,232,731 57,010, ,431, ,826,078, ,114,228 58,173, ,235, ,802,930, ,371,370 59,512, ,104, ,790,001, ,083,660 59,621, ,884, ,822,700, ,833,407 63,439, ,439, ,826,485, ,852,296 62,610, ,394, ,835,227, ,252,754 64,266, ,886, ,820,925, ,160,587 N/A N/A (1) Includes interims, penalties, discounts, delinquencies and exoneration returned to Commissioners. Note: Beginning in the amount of the Adjusted Levy is reduced by the amount of the Homestead/Farmstead Exemptions. The Adjusted levy shown excludes the amount payable from the Property Tax and Rent Rebate Program funded pursuant to Act 1 of the Commonwealth. Source: School District. A-15

31 Tax Rates (2015) Real Estate (mills) School District ( ) Media Borough Edgmont Township Middletown Township Upper Providence Township Delaware County Per Capita School District... $5.00 Media Borough... $0.00 Edgmont Township... $5.00 Middletown Township... $0.00 Upper Providence Township... $5.00 Real Estate Transfer School District....5% Edgmont, Middletown Townships and Media Borough....5% Upper Providence Township % Local Services School District (Edgmont & Upper Providence Townships)... $5.00 School District (Media Borough & Middletown Township)... $10.00 Media Borough... $42.00 Edgmont Township... $47.00 Middletown Township... $42.00 Upper Providence Township... $47.00 Earned Income: Media Borough Resident Worker % Non-Resident Worker % Source: Pennsylvania Department of Community and Economic Development A-16

32 SUMMARY OF LONG-TERM DEBT, FINANCIAL FACTORS AND PERTINENT RATIOS Current Long-Term Financing (As of December 2, 2015) Long-Term Percent Effective Date of Debt Reimburs- Reimburse- Commonwealth Local Issue Outstanding able % ment (1) Share Share G.O. Bonds 2015 $ 9,995, % 0.00% 0 $ 9,995,000 G.O. Bonds 2013B 14,350, ,350,000 G.O. Bonds 2013A 5,705, ,705,000 G.O. Bonds ,235, ,235,000 G.O. Bonds ,280, ,280,000 G.O. Bonds 2010AA 280, ,000 G.O. Bonds 2010A 4,785, ,785,000 G.O. Bonds 2009A 3,185, ,770 3,051,230 G.O. Bonds 2009AA 2,270, ,688 2,237,312 G.O. Bonds ,500, ,500,000 TOTALS $72,585,000 $ 166,458 $72,418,542 (1) Preceding column multiplied by CARF of 27.47%. Property Values and Population Data STEB Market Valuation of Real Estate (2014)... $4,285,086,559 STEB Assessed Valuation of Real Estate (2014)... $2,905,288,687 Common Level Ratio % Population: ,263 Market Valuation of Real Estate Per Capita... $121,518 Assessed Valuation of Real Estate Per Capita... $82,389 Bonded Indebtedness Obligations of the Residents of the School District School District General Obligation and Lease Rental... $ 72,585,000 Delaware County (1)... 29,974,862 Municipalities (2)... 16,011,000 Total Obligations... $118,570,862 Ratio of Total Obligations to: Market Valuation of Real Estate % Assessed Valuation of Real Estate % Population.... $3,368 (1) According to the most recent data available from the Department of Community and Economic Development (October 2015), the Net Direct, General Obligation Debt of Delaware County totaled $314,862,000. The School District s proportionate share, 9.52%, is determined by dividing the School District s assessed value by the total assessed value of all the municipalities within the County. (2) The general obligation debt outstanding of the municipalities within the School District as reported by DCED as of October, A-17

33 APPENDIX B School District Audit Report for

34 RT01~ ROSE TREE MEDIA SCHOOL DISTRICT MEDIA, PENNSYLVANIA AUDIT REPORT JUNE 30, 2014

35 ROSE TREE MEDIA SCHOOL DISTRICT TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS Entity-wide Financial Statements: - Statement of Net Position - Statement of Activities Fund Financial Statements: - Balance Sheet - Governmental Funds - Reconciliation of Balance Sheet - Governmental Funds to Statement of Net Position - Statement of Revenues. Expenditures. and Changes in Fund Balances - Governmental Funds - Reconciliation of Statement of Revenues. Expenditures, and Changes in Fund Balances - Governmental Funds to Statement of Activities - Budgetary Comparison Statement - General Fund - Statements of Net Position - Proprietary Fund - Statements of Revenues, Expenses. and Changes in Fund Net Position- Proprietary Fund - Statements of Cash Flows - Proprietary Fund - Statement of Net Position - Fiduciary Funds - Statements of Changes in Net Position - Fiduciary Fund NOTES TO FINANCIAL STATEMENTS

36 INDEPENDENT AUDITOR'S REPORT Barbacane, Thornton & Company LLP 200 Springer Building Silversidc Road Wilmington, Delaware November T F Board of School Directors Rose Tree Media School District Media, Pennsylvania Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Rose Tree Media School District ("the District"), Media, Pennsylvania, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the School 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. 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. - l - BARBAO\NE TI-IORNIDN &CDMPANY CERTIFi t D PUBLIC ACCOUNTANTS

37 Board of School Directors Rose Tree Media School District Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Rose Tree Media School District, Media, Pennsylvania, as of June 30, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof, and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the District's 2013 financial statements, and we expressed unmodified opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information in our report dated November 22, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2013 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 14 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 Rose Tree Media School District's basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as requited by U.S. Office of Management and Budget Circular A- 133, "Audits of States, Local Governments, and Non-Profit Organizations," and is not a required part of the basic financial statements. The schedule of expenditures of federal awards 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 - 2 -

38 Board of School Directors Rose Tree Media School District 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 schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 11, 2014, on our consideration of the Rose Tree Media 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 the District's internal control over financial reporting and compliance. /j~~~a-r BARBACANE, THO~NTON & COMPANY Ll~ LLP - 3-

39 ROSE TREE MEDIA SCHOOl DISTRICT MANAGEMENT'S DISCUSSION AND ANAlYSIS (MD&A) - UNAUDITED JUNE 30, 2014 Management's Discussion and Analysis ("MD&A") of Rose Tree Media School District's financial performance provides an overall review of the District's financial activities for the fiscal year ended June 30, The intent of the MD&A is to look at the District's financial performance as a whole; readers should also review the transmittal letter, notes to the basic financial statements, and financial statements to enhance their understanding of the District's financial performance. FINANCIAL HIGHLIGHTS The District's total net position increased in the amount of $3.1 million on an entity-wide basis. The increase is partially the result of the completion of various capital projects. The largest project was the Energy saving Company, ESCO, project. The project resulted in energy efficiencies and savings throughout the District. Revenue for the current year increased at the entity-wide level. This was due to an increase of 1.5 percent in the millage rate, an increase in delinquent taxes, and an increase in state revenue for the 50 percent subsidy reimbursement of retirement costs. The retirement rate increased from percent in 2013 to percent in The District also received unanticipated revenue through rebates and reimbursements. Program revenues for the governmental activities accounted for $11.1 million, or 13.6 percent, of total revenues of $81.7 million, and general revenues accounted for $70.6 million, or 86.4 percent. Pennsylvania's Special Session Act 1 of 2006 provides property tax relief tor homestead and farmstead owners through gaming revenue. Approved homestead/farmstead property owners received approximately $211 in property tax relief per property for the fiscal year. The District received approximately $1.6 million dollars from state sources to distribute tax relief to approved property owners. The General Fund completed the fiscal year with a positive assigned fund balance of $7.8 million for future benefits funding and future expenditures and $4.0 million in unassigned fund balance. Both totals combined equate to 13.5 percent of the $87.3 million operating budget. A portion of fund balance was used to balance the budget against revenues which resulted in a decrease in fund balance of approximately $2.1 million. The Instructional programs (including special education, vocational education, summer school, homebound instruction, adjudicated programs, and Delaware County Community College) cost $43.8 million for salaries, benefits, technical services, tuition for private and approved private schools, supplies, and equipment. The cost of the instructional programs was supported by 53.6 percent of total revenue. The support services programs (including pupil services, guidance, psychological services, home and school visitor, child accounting, curriculum and assessment, school and central office administration, school board of director services, tax collection, legal services, community relations, student health services, operation and maintenance of plant services, and student transportation) cost $25.4 million for salaries, benefits, supplies, utilities, diesel fuel and gasoline, the insurance program, and equipment. The cost of the support programs was supported by 31.0 percent of total revenue. -4-

40 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENTS DISCUSSION AND ANALYSIS - UNAUDITED (CONTD) JUNE 30, 2014 The operation of noninstructional services programs (including student activities, athletics, and support for public libraries) cost $1.5 million for salaries, supplemental contracts, dues, fees for officials, supplies, and equipment. The cost of the noninstructional services programs was supported by 1.8 percent of total revenue. The other expenditures and financing uses (including debt service, refund of prior years' revenue, and capital funds transfer) cost $13.2 million for interest and principal payments and for a transfer to the capital account. The cost of the other financing uses was supported by 16.1 percent of total revenue. REPORTING THE DISTRICT AS A WHOLE Statement of Net Position and Statement of Activities The statement of net position and the statement of activities report information about the District as a whole and about its overall activities. These statements include all the assets and deferred outflows and liabilities and deferred inflows of the District (except for fiduciary funds held in trust for student purposes), using the accrual basis of accounting similar to the accounting used by private sector corporations. All of the current year's revenues and expenses are taken into consideration regardless of when cash is received or paid. These two statements report the District's net position and changes in the net position during the fiscal year. The change in net position provides the reader a tool to assist in determining whether the District's financial health is improving or deteriorating. The reader will need to consider other nonfinancial factors such as the District's property tax base, current property tax laws. student enrollment, and facility conditions in arriving at a conclusion regarding the overall health of the District. Entity-wide Financial Analysis Net position may serve over time as a useful indicator of a government's financial position. In the case of the District, assets and deferred outflows of resources exceeded liabilities by $54.4 million at the close of the most recent fiscal year. In the prior year, assets and deferred outflows of resources exceeded liabilities by $51.3 million. A portion of the District's total net position (67.9 percent) reflects its net investment in capital assets. The District uses capital assets to provide services; consequently, these assets are not available for future spending. Although the District's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. A comparative analysis of fiscal year 2014 to 2013 follows: Governmental Activities Business-tlee Activities Totals ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets: Current and other assets $ 33,344,758 $ 32,599,096 $ 756,650 $ 802,970 $ 34,101,408 $ 33,402,066 Capital assets 111,489, ,058, , , ,658, ,245,907 Total Assets 144,834, ,657, , , ,759, ,647;973-5-

41 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONrD) JUNE 30, 2014 Governmental Activities Business-!xpe Activities Totals Deferred outflows of resources: Deferred amounts on bond Refunding 112, , , ,175 Total Deferred Outflows of Resources 112, , , ,175 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $144,946,853 $141,786,048 $ 925,568 $ 990,100 $145,872,421 $142,776,148 LIABILITIES AND NET POSITION Liabilities: Current liabilities $ 13,723,230 $ 14,436,534 $ 197,937 $ 220,872 $ 13,921,167 $ 14,657,406 Long-term liabilities 77,504,259 76,779,581 77,504,259 76,779,581 Total Liabilities 91,227,489 91,216, , ,872 91,425,426 91,436,987 Net Position: Net investment in capital assets 36,816,682 34,606, , ,130 36,985,600 34,793,951 Unrestricted 16,902,682 15,963, , ,098 17,461,395 16,545,210 Total Net Position 53,719,364 50,569, , ,228 54,446,995 51,339,161 TOTAL LIABILITIES AND NET POSITION $144,946,853 $141,786,048 $ 925,568 $ 990,100 $145,872,421 $142,776,148 The District's net position, net investment in capital assets increased $2.2 million due to the substantial completion of the District Wide Energy Savings Projects. The statement of activities shows the cost of program services, the charges for services, and grants offsetting those services. The table below reflects the cost of program services and the net cost of those services after taking into account the program revenues for the governmental and businesstype activities Total Cost Net Cost Total Cost Net Cost of Services of Services of Services of Services PROGRAM EXPENSES Governmental Activities: Instruction $ 48,388,463 $ (41,406,772) $ 45,412,747 $ (37,746,515) Support services: Instructional student support 6,981,731 (6,002,325) 7,251,215 (6,707,637) Administration 6,512,536 (6,166,887) 6,419,317 (6,145,142) Maintenance 7,105,781 (6,717,703) 6,125,391 (5,813,239) Pupil transportation 5,011,447 (3,663,933) 4,390,347 (3,034,609) Student activities 1,518,065 (1,323,546) 1,531,629 (1,355,019) Community services 115,897 (17,925) 88,924 (720) Interest and fiscal charges 2,880,084 (2,152,944} 3,797,162 (3,118,291} Total Governmental Activities $ 78,514,004 $ ~67,452,0 35} $ 75,016,732 $ (63,921 '172} Business-type Activities: Food service $ 1,716,616 $ (41,667} $ 1,640,601 $ (32,531} Total Business-type Activities $ 1,716,616 $ ~41,667} $ 1,640,601 $ (32,531} - 6-

42 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONT'D) JUNE 30, 2014 In total. Governmental Activities total cost of services increased by $3.5 million over the prior year. Revenue also increased due to an increase in transfer taxes for several large real estate property transfers. This resulted in a decrease in net cost of services. statement of Changes In Net Position Fiscal Years Ended June 30, 2014 and 2013 REVENUES Program Revenues: Charges for services Operating grants Total Program Revenues Governmental Activities Business-type Activities Totals $ 2,020,577 $ 2,978,982 $1,283,321 $1,245,166 $ 3,303,898 $ 4,224,148 9,041,392 8,116, , ,904 9,433,020 8,479,482 11,061,969 11,095,560 1,674,949 1,608,070 12,736,918 12,703,630 General Revenues: Property taxes Other taxes Grants and entitlements Investment earnings Miscellaneous Total General Revenues TOTAL REVENUES 64,256,469 1,780,135 4,348,218 64, ,968 70,601,466 81,663,435 63,422,960 1,367,037 4,287,600 90, ,733 69,617,306 80,712, ,675, ,608,154 64,256,469 1,780,135 4,348,218 64, ,968 70,601,536 83,338,454 63,422,960 1,367,037 4,287,600 91, ,733 69,617,390 82,321,020 EXPENSES Program Expenses: Instruction Support services: Instructional staff support Administration Maintenance Pupil transportation Student activities Community services Interest and fiscal charges Food service TOTAL EXPENSES 48,388,463 6,981,731 6,512,536 7,105,781 5,011,447 1,518, ,897 2,880,084 78,514,004 45,412,747 7,251,216 6,419,317 6,125,391 4,390,347 1,531,628 88,924 3,797,162 75,016,732 1,716,616 1,716,616 1,640,601 1,640,601 48,388,463 6,981,731 6,512,536 7,105,781 5,011,447 1,518, ,897 2,880,084 1,716,616 80,230,620 45,412,747 7,251,216 6,419,317 6,125,391 4,390,347 1,531,628 88,924 3,797,162 1,640,601 76,657,333 CHANGE IN NET POSITION $ 3,149,431 $ 5,696,134 $ (41,597) $ (32,477) $ 3,107,834 $ 5,663,687 Property tax revenue is up $800 thousand due to a 1.5 percent increase in the millage rate. The increase in other taxes is due to an increase in transfer taxes for several large real estate property transfers. Interest earnings decreased from the previous year based on the current economic environment's decline in investment interest rates. Miscellaneous revenue decreased due to fewer refunds. Instructional program, maintenance, and pupil transportation expenses increased due to increased benefit costs. Interest and fiscal charges decreased due to the refunding of the Series A of 2004 bond. - 7-

43 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANAL VSIS - UNAUDITED (CONTD) JUNE 30, 2014 Reporting the District's Most Significant Funds Governmental Funds - Most of the District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year end available for spending in future periods. These funds include Fund 1 0 (General Fund), Funds 32 through 39 (Capital Projects funded with General Obligation Bond funds and General Fund transfers) and Fund 40 (Debt Service Fund). These funds are reported using the modified accrual accounting method, which measures cash and 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 provided. Governmental fund information helps the reader determine whether there are more or fewer financial resources available to spend in the near future to finance the District's programs. The relationship (or differences) between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds is reconciled in the basic financial statements. Proprietary Funds- Proprietary funds use the accrual basis of accounting, the same as on the entitywide statements; therefore, the statements will essentially match the business-type activities portion of the entity-wide statements. The only proprietary fund is the food service fund. Fiduciary Funds - The District is the trustee, or fiduciary, for its scholarship program and other items listed as private-purpose trust. In addition, the District is the agent for funds held on behalf of students of the District. All of the District's fiduciary activities are reported in separate statements of fiduciary net position and changes in fiduciary net position. Fiduciary funds include a scholarship fund, student activity funds, and escheat funds. These assets are excluded from the District's other financial statements because the assets cannot be utilized by the District to finance its operations. Fund Financial Statements The fund financial statements of the District's major funds provide detailed information about the most significant funds - not the District as a whole. Some funds are required to be established by state statute, while many other funds are established by the District to help manage money for particular purposes and compliance with various grant provisions. The District's three types of funds, governmental, proprietary, and fiduciary, use different accounting approaches as further described in the notes to the financial statements. The District's governmental funds reported a combined fund balance of $25.7 million, which is an increase over last year's total of $23.8 million. The decrease in the General Fund was expected due to the use of fund balance to balance the budget. The Capital Projects and Capital Reserve Fund balances increased due to the issuance of debt for various capital projects throughout the District and a transfer to the Capital Reserve Fund for capital projects. The schedule below indicates the fund balance and the total change in fund balances as of June 30, 2014 and Fund Balance Fund Balance Increase June 30, 2014 June 30, 2013 (Decrease) General Fund $ 11,802,092 $ 13,888,642 $ (2,086,550) Capital Projects Funds 6,646,639 5,455,960 1 '190,679 Capital Reserve Fund 6,559,408 3,741,040 2,818,368 Other Funds 692, , Total $ 25,700,271 $ 23,777,705 $ 1,922,566-8-

44 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONT'D) JUNE 30, 2014 General Fund The District's reliance upon tax revenues is demonstrated by the graph below that indicates 77 percent of total revenues for government activities come from local taxes. Other revenue 7% Investment earnings 0% The table that follows helps illustrate the financial activities and balance of the General Fund. Dollar Percent Change Change General Fund Revenue: Taxes $ 62,772,278 $ 61,635,462 $ 1,136, % Investment earnings 50,413 62,924 (12,511) % Intergovernmental 13,389,610 11,814,899 1,574, % Other revenue 5,594,369 7,019,792 (1,425,423) % Total $ 81,786,670 $ 80,533,077 $ 1,253, % Real estate tax revenue increased $1.1 million due to a 1.5 percent increase in the millage rate and collection of interim taxes. Investment earnings decreased due to market conditions. Intergovernmental revenue increased due to the increase in retirement reimbursement. The retirement rate increased from percent to percent. The District is reimbursed 50 percent of retirement expense from the state, which resulted in increased revenue. Other revenue decreased due to reductions in the collection of delinquent taxes, refunds of prior years, and tuitions. - 9-

45 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENTS DISCUSSION AND ANALYSIS - UNAUDITED (CONT'D) JUNE 30, 2014 Other Funds The Capital Project Funds (33 through 39) had an increase in fund balance due to the issuance of debt for the ESCO project throughout the District. The capital projects funds are used to keep the District's facilities in optimal operational condition to avoid more costly repairs in the future. The District has substantial completion of the ESCO project which resulted in energy efficiencies and cost savings. The Capital Reserve Fund increased due to the need for future capital projects. The District continues to transfers funds from the General Fund to the Capital Reserve Fund in accordance with Board Policy #603. Other governmental funds consist of the Debt Service Fund (40). This fund was established for the purpose of paying down debt. Business-type Activities The only business-type activity in the District is the Food Service program. This program had a decrease in net position of $42 thousand for the fiscal year. The District purchased equipment that was necessary for the Food Service program. General Fund Budget Information The District keeps its books and prepares its financial reports on a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units. The District's financial statements are audited annually by a firm of independent certified public accountants, as required by Commonwealth law. The District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Director of Management Services and submitted to the Board of School Directors for approval prior to the beginning of the fiscal year on July 1 each year. The most significant budgeted fund is the General Fund. Spending Review The final budget for expenditures reflects required Board-approved budgetary transfers in function categories due to spending patterns. Function Original Final Dollar Percentage Code Budget Budget Difference Difference Instructional Services: Regular programs 1100 $ 30,817,780 $ 30,385,551 $ (432,229) -1.40% Special programs ,701,129 11,138, , % Vocational programs , ,461 (2,000) -0.32% Other instructional programs ,552,161 1,547,661 (4,500) -0.29% Community college , , % Total Instructional Services 44,625,442 44,624,575 {867} 0.00% - 10-

46 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS- UNAUDITED (CONT'D) JUNE 30, 2014 (continued) Function Original Final Dollar Code Budget Budget Difference Support Services: Pupil services ,730,543 2,705,641 (24,902) Instructional staff services ,600,305 4,542,895 (57,410) Administrative services ,132,382 4,121,002 (11,380) Pupil health , ,042 20,000 Business services ,105,497 1,104,289 (1,208) Operation and maintenance ,236,745 7,247,433 10,688 Student transportation services ,030,487 5,030,488 1 Central support services , ,514 (26,320) Other support services , ,897 30,000 Total Support Services 26,653,732 26,593,201 (60,531) Noninstructional Services: Student activities ,418,421 1,409,819 (8,602) Community services , ,400 {10,000} Total Noninstructional Services 1,588,821 1,570,219 (18,602) Debt Service and Transfers: Debt service/refund of prior year receipts ,763,727 8,843,727 80,000 lnterfund transfers , ,000 Budgetary reserve , ,000 Total Debt Service and Transfers 9,61 3,727 9,693,727 80,000 TOTAL EXPENDITURES $ 82,481,722 $ 82,481,722 $ Percentage Difference -0.91% -1.25% -0.28% 3.08% -0.11% 0.15% 0.00% -2.64% 17.35% -0.23% -0.61% -5.87% -1.17% 0.91 % 0.00% 0.00% 0.83% 0.00% Using spending variances in excess of $10,000 and using five percent as a spending tolerance, the most significant changes in the District's original vs. final budgeted expenditures were: Function Code Original Budget Final Budget Dollar Difference Percentage Difference Other Support Services Community Services , , ,897 30, ,400 (10,000) 17.35% -5.87% The variance for the other support services is due to an increase in Delaware County Intermediate Unit costs. The variance for community services is due to a reduction in community service programs. As the graph on the next page illustrates, the largest portions of General Fund expenditures are for salaries and benefits. The District is an educational, service entity and as such is labor-intensive

47 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONT'D) JUNE 30, 2014 Miscellaneous General Fund: Salaries $ 37,193,773 $ 37,624,111 Benefits 17,674,502 15,378,723 Purchased services 6,458,990 6,136,756 Supplies 8,481,836 7,810,598 Equipment 621, ,393 Miscellaneous 254, ,376 Debt/transfers/prior 13,188,052 12,953,749 Increase {Decrease} $ (430,338) 2,295, , ,238 47,398 1, ,303 TOTAL EXPENDITURES BY OBJECT $ 83,873,220 $ 80,730,706 $ 3,142,514 Expenditures increased $3.1 million or 3.89 percent over the prior year. The increase was partially due to an increase in benefits and the transfer to the Capital Reserve Fund per board policy #603. The retirement rate increased from percent in 2013 to percent in The District is mandated to fund the retirement program for its employees. Debt increased due to the issuance of the Series of 2013 B Bond for the ESCO Project

48 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENfS DISCUSSION AND ANALYSIS - UNAUDITED (CONrD) JUNE 30, 2014 CAPITAL ASSETS At June 30, 2014, the District's governmental activities had $111,489,301, net of depreciation, invested in a broad range of capital assets, including land, buildings, and furniture and equipment. Business-type activities owned $168,918 worth of net capital assets. These assets consist of movable equipment that will be depreciated in future years. Land Construction-in-progress Land improvements Buildings Furniture and equipment 2014 $ 6,253,838 1,656,532 2,101,973 92,848,270 8,797,606 $ 111,658, $ 6,253,838 11,678,603 2,048,242 81,675,992 7,589,232 $ 109,245,907 More detailed information about the District's capital assets is presented in Notes 1 and 5 to the financial statements. DEBT ADMINISTRATION As of July 1, 2013, the District had total outstanding debt of $78,765,000. Total debt outstanding as of June 30, 2014 was $78,240,000. Outstanding Debt General Obligation Notes/Bonds Bond Series B of 2013 $ 5,710,000 $ - Bond Series A of ,395,000 - Bond Series ,240,000 $9,245,000 - Bonds Series ,285,000 8,290,000 - Bond Series AA of ,775,000 3,780,000 - Bonds Series A of ,505,000 14,595,000 - Bonds, Series AA of ,125,000 3,955,000 - Bonds, Series A of ,685,000 9,585,000 - Bonds, Series B of ,455,000 14,455,000 - Bonds, Series A of , ,000 - Bonds, Series A of ,715,000 TOTAL $ 78,240,000 $ 78,765,

49 ROSE TREE MEDIA SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS - UNAUDITED (CONTD) JUNE 30, 2014 ECONOMIC FACTORS EXPECTED TO HAVE A SIGNIFICANT EFFECT ON FUTURE OPERATIONS The District's general obligation bond rating is a Standard & Poor's AA/Stable. Standards cited that the AA/Stoble rating reflected the District's stable financial performance, limited tax base, and manageable debt position. The District's fiscal performance and position have historically been sound. The District's remaining borrowing capacity is $84.4 million. The District's bonds payable total as of June 30, 2014 is $78.2 million. Rose Tree Media School District is listed as a beneficiary in the amount of $240 thousand on a life insurance policy that was provided to a former Superintendent. The real estate market is a major factor in the economic environment. While the District's assessment value has shown increases for the past two years, the economy continues to be a concern for the School District. The Granite Run Mall, which is the District's largest taxpayer has filed a tax appeal, which resulted in a reduction in tax revenue. The new property owner has proposed major renovations that will take place over the next several years. Those renovations should increase the assessment value in the future. The District has maintained a stable tax base and has maintained an AA/Stable Standard and Poor's bond rating. The District continues to perform well academically as well as being attractive to homeowners. Investment earnings are down as a result of the current economic environment. The District took steps to plan for the significant increase in the Pennsylvania School Employees' Retirement System by assigning a portion of fund balance for a portion of future increases. The District has completed an energy savings project on facilities throughout the District, which will improve energy efficiency and provide cost savings. In 201 4, the District will replace one third of its buses with CNG buses. This will provide savings for the District as well as provide a healthier and cleaner environment for students, staff members, and members of the community. The District has been awarded grants to help offset the costs of the CNG vehicles. The District continues to improve efficiencies and reduce expenditures to maintain current programs. CONTACnNG THE DISTRICT'S FINANCIAL MANAGEMENT The District's financial report is designed to provide citizens, taxpayers, parents, students, investors, and creditors with a general overview of the District's finances and to show the Board's accountability for the monies it oversees. If you have questions about this report or wish to request additional financial information, please contact Grace Eves, Director of Management Services and Board Secretary, Rose Tree Media School District, 308 North Olive Street, Media, Pennsylvania , (610)

50 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2014 (With Summarized Comparative Data for June 30, 2013) Governmental Business-type Activities Activities 2014 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS: Cash and cash equivalents $ 2,507,875 $ 726,629 $ 3,234,504 Investments 26,427,027 26,427,027 Taxes receivable 1,717,803 1,717,803 Due from other governments 2,113,263 15,852 2,129,115 Prepaid expenses 9,600 9,600 Internal balance 34,950 (34,950) Other receivables 534,240 19, ,849 Inventories 29,510 29,510 Land and improvements 9,701,113 9,701,113 Construction-in-progress 1,656,532 1,656,532 Buildings and improvements 146,006, ,006,469 Furniture and equipment 31,556, ,366 31,939,841 Accumulated depreciation (77,431,289) (214,448) (77,645, 736) TOTAL ASSETS 144,834, , ,759,627 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on bond refunding 112, ,794 TOTAL DEFERRED OUTFLOWS OF RESOURCES 112, ,794 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ~ 144,946,853 $ 925,568 ~ 145,872,421 LIABILITIES AND NET POSITION: LIABILITIES Accounts payable $ 1,584,853 $ 170,963 $ 1,755,816 Accrued salaries and benefits 2,927,531 2,927,531 Retainage payable 545, ,172 Other liabilities 628, ,119 Accrued interest 499, ,172 Unearned revenue 308,812 26, ,786 Long-term liabilities Portion due or payable within one year: Bonds payable in future years, net 6,275,463 6,275,463 Capital lease payable 779, ,183 Accumulated compensated absences/ early retirement incentives 174, ,925 Portion due or payable after one year: Bonds payable in future years, net 73,550,542 73,550,542 Capital lease payable 826, ,864 Accumulated compensated absences/ early retirement incentives 2,221,578 2,221,578 Other post-employment benefits 905, ,275 TOTAL LIABILITIES 91,227, ,937 91,425,426 NET POSITION Net investment in capital assets 36,816, ,918 36,985,600 Unrestricted 16,902, ,461,395 TOTAL NET POSITION 53,719, ,631 54,446,995 TOTAL LIABILITIES AND NET POSITION $144,946,853 $ 925,568 $145,872,421 Totals 2013 $ 7,746,772 21,033,144 1,972,963 1,722,327 3, ,467 21,610 9,529,414 11,678, ,472,644 30,385,040 (72,819, 794) 142,647, , ~ 142,776,148 $ 2,933,816 2,383, , , , ,786 6,083, , ,988 73,370, ,668 2,231, ,436,987 34,793,951 16,545,210 51,339,161 $142,776,148 The accompanying notes are an integral part of these financial statements

51 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 (With Summarized Comparative Data for the Year Ended June 30, 2013) GOVERNMENTAL ACTIVITIES: Instruction Instructional student support Administrative and financial support services Operation and maintenance of plant services Pupil transportation Student activities Community services Interest on long-term debt TOTAL GOVERNMENTAL ACTIVITIES Expenses $ 48,388,463 6,981,731 6,512,536 7,105,781 5,011,447 1,518, ,897 2,880,084 78,514, Program Revenues Net (ExEense) Revenue and Changes in Net Position Operating Capital Business- Charges for Grants and Grants and Governmental type Totals Services Contributions Contributions Activities Activities $1,810,850 $5,170,841 $ - 979, , ,078-1,347, ,213 76,306 91,514 6, ,020,577 9,041,392 - $(41,406,772) $ $(41,406,772) $(37,746,515) (6,002,325) - (6,002,325) (6,707,637) (6,166,887) (6,166,887) (6,145,142) (6,717,703) (6,717,703) (5,813,239) (3,663,933) - (3,663,933) (3,034,609) (1,323,546) (1,323,546) (1,355,01 9) (17,925) - (17,925) (720) {2,152,944) - {2,152,944) (3,118,291 ) {67,452,035) {67,452,035) (63,921,1 72) BUSINESS-TYPE ACTIVITIES: Food service TOTAL BUSINESS-TYPE ACTIVITIES 1,716,616 1,716,616 1,283, ,628-1,283, ,628 - {41,667) {41,667) (32,531) - {41,667) {41,667) (32,531) TOTAL PRIMARY GOVERNMENT $ $ $ $ ~452,035) (41,667) (67,493,702) (63, 953, 703) GENERAL REVENUES Property taxes, levied for general purposes Taxes levied for specific purposes Grants and entitlements not restricted to specific programs Investment earnings Miscellaneous TOTAL GENERAL REVENUES 64,256,469-64,256,469 63,422,960 1,780,135-1,780,135 1,367,037 4,348,218-4,348,218 4,287,600 64, ,746 91, , , ,601, ,601,536 69,617,390 CHANGE IN NET POSITION 3,149,431 (41,597) 3,107,834 5,663,687 NET POSITION, BEGINNING OF YEAR 50, 569, ,228 51,339,161 45,675,474 NET POSITION, END OF YEAR _$_9~,719,364 $ 727,631 $ 54,446,995 $ 51, The accompanying notes are an integral part of these financial statements.

52 2014 $ 2,507,875 26,427,027 1,717,803 34,950 2,113,263 9, ,240 $ 33,344,758 $ 1,584, ,172 2,927, , , ,925 6,169,412 1,475,075 1,475,075 9,600 13,206, ,132 3,502,652 1,200,000 3,018,902 19,212 19,058 6,874 14,300 6,330 4,005,164 25,700,271 $ 33,344,758 Totals 2013 $ 6,956,063 21,033,144 1,972,963 31,744 1,709,917 3, ,086 $ 32,599,700 $ 2,742, , ,383, , , ,988 7,208,622 1,613,373 1,613,373 3,783 9,197, ,063 1,673,879 2,500,000 3,362,658 19,212 16,498 10,223 1,740 1, ,298,781 23,777,705 $ 32,599,700 ROSE TREE MEDIA SCHOOL DISTRICT BALANCE SHEET-GOVERNMENTAL FUNDS JUNE 30, 2014 (With Summarized Comparative Data for June 30, 2013) ASSETS Cash and cash equivalents Investments Taxes receivable Due from other funds Due from other governments Prepaid expenditures Other receivables General Fund $ 1,081,658 12,927,027 1,717,803 34,950 2,113,263 9, ,240 Capital Projects Fund $ 406,956 7,200,000 Capital Reserve Fund $ 327,129 6,300,000 Debt Service Fund $ 692,132 TOTAL ASSETS $ ,541 $ 7,606,956 $ 6,627,129 $ 692,132 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES: Accounts payable Retainage payable Due to other funds Accrued salaries and benefits Other current liabilities Unearned revenues Accumulated compensated absences TOTAL LIABILITIES $ 1,101,987 2,927, , , ,925 5,141,374 $ 415, , ,317 $ 67,721 67,721 $ DEFERRED INFLOWS OF RESOURCES Unavailable revenues- delinquent taxes TOTAL DEFERRED INFLOWS OF RESOURCES 1.475,075 1,475,075 FUND BALANCES Nonspendable Restricted for capital projects Assigned for debt service Assigned for future expenditures Assigned for capital projects Assigned for future benefits funding Assigned for SYA Assigned for SLMS Assigned for Scoreboard Assigned for PCHS Science Assigned - Summer School Assigned - GW helping GW Assigned for Save Our Steinway Unassigned TOTAL FUND BALANCES 9,600 3,502,652 1,200,000 3,018,902 19,212 19,058 6,874 14,300 6,330 4,005,164 11,802,092 6,646,639 6,646,639 6,559,408 6,559, , ,132 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 18,418,541 $ 7,606,956 $ 6,627,129 $ 692,132 The accompanying notes are an integral part of these financial statements

53 ROSE TREE MEDIA SCHOOL DISTRICT RECONCILIATION OF BALANCE SHEET- GOVERNMENTAL FUNDS TO STATEMENT OF NET POSITION JUNE 30,2014 TOTAL GOVERNMENTAL FUND BALANCES $ 25,700,271 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 in the funds. These assets consist of: Land and improvements Buildings and improvements Furniture and equipment Construction-in-progress Accumulated depreciation $ 9,701, ,006,469 31,556,476 1,656,532 (77,431,289) 111,489,301 Some liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Those liabilities consist of: Bonds payable in future years, net Capital lease payable in future years Accumulated compensated absences/early retirement incentives Accrued interest Other post-employment benefits Refunded debt resulted in deferred outflows of resources which will be amortized over the life of new debt but do not represent current rights. Some of the District's revenues will be collected after year end but are not available soon enough to pay for the current period's expenditures and, therefore, are unavailable in the funds. (79,826,005) (1,606,047) (2,221,578) (499,172) (905,275) (85,058,077) 112,794 1,475,075 NET POSITION OF GOVERNMENTAL ACTIVITIES $53.719,364 The accompanying notes are an integral part of these financial statements

54 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2014 (With Summarized Comparative Data for the Year Ended June 30, 2013) Capital Capital Debt General Projects Reserve Service Fund Fund Fund Fund REVENUES Local sources $68,397,060 $ 10,344 $ 4,650 $ 69 $68,412,123 State sources 12,054, ,054,529 Federal sources 1,335, ,335,081 TOTAL REVENUES 81,786,670 10,344 4, ,801,733 EXPENDITURES Current: Instruction 43,845, ,845,597 Support services 25,354,388 64, ,819 25,741,739 Operation of non instructional services 1,485, ,485,182 Capital outlays - 6,690,179 1,095,288 7,785,467 Debt service 8,841, ,460-8,956,228 TOTAL EXPENDITURES 79,526,935 6,754,711 1,532,567-87,814,213 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,259,735 (6,744,367) (1,527,917) 69 (6,012,480) OTHER FINANCING SOURCES (USES) Proceeds of bond - 20,285, ,285,000 Proceeds of extended term financing - 1,868,229-1,868,229 Premium on bond issuance 1,222, ,222,949 Bond refunding payment - (15,441,132) - (15,441,132) Bond discount lnterfund transfers {4,346,285} - 4,346,285 TOTAL OTHER FINANCING SOURCES (USES) (4,346,285) 7,935,046 4,346,285-7,935,046 NET CHANGES IN FUND BALANCES (2,086,550) 1,190,679 2,818, ,922,566 FUND BALANCES, BEGINNING OF YEAR 13,888,642 5,455,960 3,741, ,063 23,777,705 FUND BALANCES, END OF YEAR _j_1j,8j)l.c092 $ 6,646,639 $ $ $25,700,271 Totals 2013 $68,325,310 11,285,136 1,119,042 80,729,488 42,890,055 25,076,893 1,414,043 15,649,763 9,404,365 94,435,119 (13, 705,631) 9,250, ,625 (238,593) 9,341,032 (4,364,599) 28,142,304 $ The accompanying notes are an integral part of these financial statements

55 ROSE TREE MEDIA SCHOOL DISTRICT RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 NET CHANGE IN FUND BALANCES- GOVERNMENTAL FUNDS $ 1,922,566 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays ($8,356,036) exceeded depreciation expense ($5,925,512) in the period. Because some revenues will not be collected for several months after the District's fiscal year ends, they are not considered as "available" revenues in the governmental funds and are recorded as deferred inflows of resources. Unavailable revenues decreased by this amount this year. The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences. Governmental funds report bond discounts as other financing uses and bond premiums as other financing sources. However, these amounts are reported on the statement of net position as deferred charges and credits and are amortized over the life of the debt. Governmental funds report deferred bond refunding option proceeds as other financing sources. However, these amounts are reported on the statement of net position as deferred outflows of resources and amortized over the life of the refunding debt. The incurrence of a capital lease agreement provides current financial resources to governmental funds, while the repayment of the principal of capital lease consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences. In the statement of activities, certain operating expenses -compensated absences (vacations and sick leave) and special termination benefits (early retirement) - are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). Other post-employment benefits include post-employment healthcare benefits and all postemployment benefits provided separately from a pension plan, excluding benefits defined as termination offers and benefits. The annual cost represents the employer's contribution to the plan which includes the implicit rate subsidy. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amount actually paid). Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized 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. CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 2.430,524 (138,298) 525,000 (897,486) (15,381) (1,023,475) 9,924 (61,137) 397,194 $ 3,149,431 The accompanying notes are an integral part of these financial statements

56 ROSE TREE MEDIA SCHOOL DISTRICT BUDGETARY COMPARISON STATEMENT -GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Original Final {GMP Basis) REVENUES Local sources $ 67,268,429 $ 67,268,429 $ 68,397,060 State sources 12,342,814 12,342,814 12,054,529 Federal sources 1, ,196,600 1,335,081 TOTAL REVENUES 80,807,843 80,807,843 81,786,670 EXPENDITURES Instruction: Regular programs 30,817,780 30,385,551 29,707,403 Special programs 10,701 '129 11,138, '103,529 Vocational programs 616, , ,647 Other instructional programs 1,552,161 1,547,661 1,504,107 Community college 937, , ,911 Total Instruction 44,625,442 44,624,575 43,845,597 Support services: Pupil personnel services 2,730,543 2,705,641 2,441,533 Instructional staff services 4,600,305 4,542,895 4,323,593 Administrative services 4,132,382 4,121,002 3,966,812 Pupil health 649, ,Q42 665,663 Business services 1,105,497 1,104,289 1,101,393 Operation and maintenance of plant services 7,236,745 7,247,433 6,963,916 Student transportation services 5,030,487 5,030,488 4,757,139 Data processing services 995, , ,351 Other Support Services 172, , ,988 Total Support Services 26,653,732 26,593,201 25,354,388 Operation of Noninstructional Activities: Student activities 1,418,421 1,409,819 1,369,285 Community services 170, , ,897 Total Operation of Noninstructional Services 1,588,821 1p0,219 1,485,182 Debt service 8,763,727 8,843,727 8,841,768 TOTAL EXPENDITURES 81,631,722 81,631,722 79,526,935 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES {823,879) {823,879) 2,259,735 OTHER FINANCING USES Budgetary reserve (250,000) (250,000) Transfers out {600,000} {600,000) {4,346,285} TOTAL OTHER FINANCING USES {850,000) {850,000) {4,346,285) NET CHANGE IN FUND BALANCE (1,673,879) (1,673,879) (2,086,550) Variance with Final Budget Positive {Negative) $ 1,128,631 (288,285) ,148 35,462 21,814 43, , , , ,190 3,379 2, , ,349 34,163 3,909 1,238,813 40,534 44,503 85,037 1,959 2,104,787 3,083, ,000 {3,746,285) {3,496,285) (412,671) FUND BALANCE, BEGINNING OF YEAR 13,888,642 13,888,642 13,888,642 FUND BALANCE, END OF YEAR ~ 12,214,763 ~ 12,214,763 ~ 11,802,092 ~ {412,671} The accompanying notes are an integral part of these financial statements

57 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENTS OF NET POSITION- PROPRIETARY FUND JUNE 30, 2014 (With Comparative Data for June 30, 2013) 2014 Major Enterprise Fund Food Service Fund ASSETS CURRENT ASSETS: Cash and cash equivalents $ 726,629 $ Due from other governments 15,852 Accounts receivable 19,609 Inventories 29,510 Total Current Assets 791, ,709 12,410 9,381 21, ,110 PROPERTY AND EQUIPMENT: Net furniture and equipment 168,918 TOTAL ASSETS $ 960,518 $ 187,130 1,021,240 LIABILITIES AND NET POSITION CURRENT LIABILITIES: Accounts payable $ 170,963 $ Due to other funds 34,950 Unearned revenue 26,974 Total Current Liabilities 232, , '140 29, ,012 NET POSITION: Net investment in capital assets 168,918 Unrestricted 558,713 Total Net Position 727,631 TOTAL LIABILITIES AND NET POSITION $ 960,518 $ 187, , , The accompanying notes are an integral part of these financial statements. -22-

58 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2014 (With Comparative Data for the Year Ended June 30, 2013) OPERATING REVENUES Food service revenues TOTAL OPERATING REVENUES 2014 $ 1,283,321 1,283,321 Major Enterprise Fund Food Service Fund 2013 $ 1,245,166 1,245,166 OPERATING EXPENSES Salaries Employee benefits Purchased professional and technical services Purchased property services Supplies Depreciation TOTAL OPERATING EXPENSES 384, , ,647 74, ,449 38,523 1,716, , , ,423 70, ,005 32,423 1,640,601 OPERATING LOSS (433,295) (395,435) NONOPERATING REVENUES Earnings on investments State sources Federal sources TOTAL NONOPERATING REVENUES 70 72, , , , , ,988 CHANGE IN NET POSITION (41,597) (32,447) NET POSITION, BEGINNING OF YEAR 769, ,675 NET POSITION, END OF YEAR $ $ The accompanying notes are an integral part of these financial statements. -23-

59 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENTS OF CASH FLOWS- PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2014 (With Comparative Data for the Year Ended June 30, 2013) CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Payments to suppliers Payments to employees NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: State sources Federal sources NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Equipment acquisition NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Earnings on investments NET CASH PROVIDED BY INVESTING ACTIVITIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR Major Enterprise Fund Food Service Fund $1,270,530 $1,236,429 (1,030,937) (972,689) (580,623} ( } (341,030} (299,099} 72,337 69, , , ,035 (20,311} (361612) (20,311} (36,612} (64,080) (22,592) ,301 ~ 726,629 $ 790,709 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM OPERATING ACTIVITIES: Operating loss Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation Donated commodities (Increase) Decrease in: Accounts receivable Inventories Increase (Decrease) in: Accounts payable Due to other funds Unearned revenue NET CASH USED BY OPERATING ACTIVITIES SUPPLEMENTAL DISCLOSURE NONCASH NONCAPITAL FINANCING ACTIVITY: USDA donated commodities $ (433,295) $ (395,435) 38,523 32,423 90,995 79,838 (10,228) (2,531) (7,900) (1,938) (20,372) (1,743) 3,810 (3,507) (2,563} (6,206) $ {341 p30} $ { } $ 90,995 $ 79,838 The accompanying notes are an integral part of these financial statements. -24-

60 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENT OF NET POSITION- FIDUCIARY FUNDS JUNE 30, 2014 ASSETS Private- Agency Funds Purpose Student Escheat Trust Activities Funds Total Agency Funds Cash $ 22,103 $ 152,500 $ Due from private-purpose trust fund 355 TOTAL ASSETS $ 22,103 $ 152,500 $ 355 $ 152, $ 152,855 LIABILITIES AND NET POSITION LIABILITIES: Due to escheat funds $ 355 $ $ Other current liabilties 152, , NET POSITION: Reserved for trust 21,748 TOTAL LIABILITIES AND NET POSITION $ $ $ 355 $ 152, ,855 $ The accompanying notes are an integral part of these financial statements

61 ROSE TREE MEDIA SCHOOL DISTRICT STATEMENTS OF CHANGES IN NET POSITION- FIDUCIARY FUND FOR THE YEAR ENDED JUNE 30, 2014 (With Comparative Data for the Year Ended June 30, 2013) ADDITIONS 2014 Private-Purpose Trust 2013 Local contributions $ 17,427 $ TOTAL ADDITIONS 17,427 13,456 13,456 DEDUCTIONS Fees paid and scholarships awarded 12,450 TOTAL DEDUCTIONS 12,450 CHANGE IN NET POSITION 4,977 NET POSITION, BEGINNING OF YEAR 16,771 NET POSITION, END OF YEAR $ 21l48 $ 12,450 12,450 1,006 15, The accompanying notes are an integral part of these financial statements. -26-

62 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Rose Tree Media School District (the "District") operates four elementary schools, one middle school, and one senior high school to provide education and related services to the residents of Edgmont, Middletown, and Upper Providence Townships and the Borough of Media. The District operates under current standards prescribed by the Pennsylvania Department of Education in accordance with the provisions of the School Laws of Pennsylvania as a school district of the second class. The District operates under a locally elected nine-member Board form of government. The financial statements of Rose Tree Media School District have been prepared in accordance with generally accepted accounting principles ("GAAP") as applied to governmental units. The Governmental Accounting Standards Board ("GASB") is the authoritative standard-setting body for the establishment of governmental accounting and financial reporting principles. The more significant of these accounting policies are as follows: Reporting Entity GASB Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39 and GASB Statement No. 61, established the criteria for determining the activities, organization and functions of government to be included in the financial statements of the reporting entity. In evaluating the District as a reporting entity, management has addressed all potential component units which may or may not fall within the District's financial accountability. The criteria used to evaluate component units for possible Inclusion as part of the District's reporting entity are financial accountability and the nature and significance of the relationship. Rose Tree Media School District is considered to be an independent reporting entity and has no component units. Basis of Presentation Entity-wide Financial statements The statement of net position and the statement of activities display Information about the District as a whole. These statements distinguish between activities that are governmental and those that are considered business-type. These statements include the financial activities of the primary government, except for fiduciary funds. The entity-wide financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting as further defined under proprietary funds below. This is the same approach used in the preparation of the proprietary fund financial statements but differs from the manner in which governmental fund financial statements are prepared. Therefore, governmental fund financial statements include reconciliations with brief explanations to better identify the relationship between the entity-wide statements and the statements of governmental funds. The entity-wide statement of activities presents a comparison between expenses and program revenues for each function of the business-type activities of the District and for each governmental function. Expenses are those that are specifically associated with a service or program and are, therefore, clearly identifiable to a particular function. Program revenues

63 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) 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 function. Revenues which are not c lassified as program revenues are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each function is self-financing or draws from the general revenues of the District. Except for interfund activity and balances between the funds that underlie governmental activities and the funds that underlie business-type activities, which are reported as transfers and internal balances, the effect of interfund activity has been removed from these statements. The entity-wide financial statements report net position in one of three components. Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of borrowing attributable to acquiring, constructing, or improving those assets. Net position is reported as restricted when constraints placed on net position use 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. Those restrictions affect net position arising from special revenue and capital projects funds. Unrestricted net position consists of net position that does not meet the definition of "net investment in capital assets" or "restricted." Fund Financial Statements During the school year, the District segregates transactions related to certain District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements report detailed information about the District. The focus of governmental and proprietary fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Fiduciary fund financial statements are presented by fund type. Governmental Funds All governmental funds are accounted for using the 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. The District reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Projects Fund is used to account for the acquisition, construction, and renovation of major capital facilities and their related capital assets. The Capital Reserve Fund is used to accumulate resources for future capital needs of the District. The Debt Service Fund is used to account for funds segregated to pay for future debt service payments

64 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Revenue Recognition In applying the "susceptible to accrual concept" under the modified accrual basis, revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers tax revenue to be available if collected within 60 days of the end of the fiscal period. Revenue from federal, state, and other grants designated for payment of specific District expenditures is recognized when the related expenditures are incurred; accordingly, when such funds are received, they are reported as unearned revenues until earned. Other revenues, including certain other charges for services and miscellaneous revenues, are recorded as revenue when received in cash because they generally are not measurable until actually received. Expenditure Recognition The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Most expenditures are measurable and are recorded when the related fund liability is incurred. However. principal and interest on general long-term debt which has not matured are recognized when paid. Liabilities for compensated absences and special termination benefits are recognized as fund liabilities to the extent they mature each period. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds. Proprietary Funds The proprietary fund is accounted for using the accrual basis of accounting. This fund accounts for operations that are financed primarily by user charges. The economic resource focus concerns determining costs as a means of maintaining the capital investment and management control. Revenues are recognized when they are earned and expenses are recognized when they are incurred. Allocations of certain costs, such as depreciation, are recorded in the proprietary fund. The District does not attempt to allocate all "building-wide costs" to the proprietary fund. However, the food service department does partially refund these costs to the general fund. Similarly, the proprietary fund does not recognize a cost for the building space it occupies. This fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund's principal ongoing operations. The principal operating revenues of the District's proprietary fund are food service charges. Operating expenses for the District's proprietary fund include salaries and benefits, food production costs, supplies, and administrative costs. All revenues or expenses not meeting this definition are reported as nonoperating revenues and expenses. -29-

65 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE l SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Fiduciary Funds Fiduciary funds account for the assets held by the District as a trustee or agent for individuals, private organizations and/or governmental units and are, therefore, not available to support the District's own programs. The District accounts for these assets in a private-purpose trust and agency fund. The private-purpose trust fund accounts for activities in various scholarship accounts, whose sole purpose is to provide annual scholarships to particular students as described by donor stipulations. The agency fund accounts for funds held on behalf of students of the District, and escheat funds. The measurement focus and basis of accounting for the private-purpose trust is the same as for proprietary funds, while the agency fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. Cash and Cash Equivalents The District's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the c urrent portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the entity-wide financia l statements as "internal balances." The District does not record an allowance for uncollectible taxes because it is considered to be immaterial. Property Taxes Property taxes attach as an enforceable lien on property as of July l. Taxes are levied on July 1 and are payable in the following periods: July l - August 31 September l - October 31 November l to collection February 28 - Discount period, 2% of gross levy - Face Period - Penalty Period, l 0% of gross levy - Lien Date Real estate taxes for the District are collected from the Townships of Edgmont, Middletown, and Upper Providence and the Borough of Media. The tax on real estate in those municipalities for public school purposes for fiscal was mills ($ per $1,000 of assessed valuation) as levied by the Board of School Directors. Assessed valuations of property are determined by the Delaware County Board of Assessment

66 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Prepaid Items and Inventories Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both entity-wide and fund financial statements. All inventories are valued at the lower of cost (first-in, first-out method) or market. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the applicable governmental or business-type activities columns in the entity-wide and proprietary fund financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $1,500 or $1 0,000 in the aggregate and an estimated useful life in excess of one year. Such assets are recorded at historical cost if purchased or constructed. Purchased equipment at less than $1,500 yet deemed critical to inventory control will be recorded at its original cost. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed, inclusive of ancillary costs. Property, plant, and equipment of the District are depreciated using the straight-line method over the following estimated useful lives: School buildings Site improvements Furniture and equipment Vehicles 40 years 20 years 3-20 years 8 years Compensated Absences District policies permit employees to accumulate earned but unused vacation, personal, and sick days as stipulated in each bargaining unit's contract. The liability for these compensated absences is recorded as long-term debt in the entity-wide financial statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements, governmental funds report only the compensated absence liability payable from expendable available financial resources. Long-term Obligations In the entity-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities

67 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Bond premiums and bond discounts are reported as netting items against the outstanding bond liability and amortized over the term of the related debt. All amounts are amortized using the straight-line method. Bond issuance costs are expensed at the time of issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received and discounts paid on debt issuances are reported as other financing sources and uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures, except for refundings paid from proceeds which are reported as other financing uses. Deferred Inflows and Deferred Outflows of Resources In addition to assets and liabilities, the financial statements will sometimes report separate sections for deferred inflows and deferred outflows of resources. These separate financial statement elements represent acquisition or use of net position that applies to a future period(s) and so will not be recognized as an inflow or outflow of resources (revenue or expense/expenditure) until that time. The District currently has two types of items that qualify for reporting in this category. Deferred amounts on the refunding of bonds are reflected as deferred outflows of resources on the entity-wide statement of net position. Delinquent taxes not collected within 60 days of year end and, therefore, not available under modified accrual reporting, are reflected as deferred inflows of resources on the general fund balance sheet. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. The proprietary funds report the same three components of net position as do the entity-wide financial statements. 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 Board has provided otherwise in its commitment or assignment actions. As of June 30, 2014, fund balances of the governmental funds are classified, if applicable, 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

68 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Committed- amounts that can be used only for specific purposes determined by formal action of the Board of Directors. The Board is the highest level of decision-making authority for the District. Commitments may be established, modified, or rescinded only through resolutions approved by the Board of Directors. 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. The Finance Committee or Director of Management Services may assign amounts for specific purposes. Unassigned - all other spendable amounts. In the general fund, the District strives to maintain an unassigned fund balance of not less than two percent and not more than eight percent of budgeted expenditures. Comparative Data Comparative totals for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the District's financial position and operations. However, presentation of prior year totals by fund and activity type have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Summarized comparative information should be read in conjunction with the District's financial statements for the year ended June 30, 2013, from which the summarized information was derived. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information An annual budget is adopted prior to the beginning of each year for the general fund on the modified accrual basis of accounting. The general fund is the only fund for which a budget is legally required, although project-length financial plans are adopted for all capital projects funds. The District is required to publish notice by advertisement at least once in two newspapers of general circulation in the municipalities in which it is located, and within 1 0 days of final action, that the proposed budget has been prepared and is available for public inspection at the administrative offices of the District. Notice that public hearings will be held on the proposed operating budget must be included in the advertisement; such hearings are required to be scheduled at least 10 days prior to the date final action on adoption is taken by the Board

69 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 2 STEWARDSHIP, COMPLIANCE. AND ACCOUNTABILITY (cont'd) Legal budgetary control is maintained at the sub-function/major object level. The Board of School Directors may make transfers of funds appropriated to any particular item of expenditure by legislative action in accordance with the Pennsylvania School Code. Management may amend the budget at the sub-function/sub-object level without Board approval. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the financial statements is presented at or below the level of budgetary control and includes the effect of approved budget amendments. NOTE 3 DEPOSITS AND INVESTMENTS Deposits Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned. At June 30, 2014, the carrying amount of the District's deposits was $3.409,107 and the bank balance was $4.426,41 7. The cash deposits of the District are in the Pennsylvania School District Liquid Asset Fund ("PSDLAF"). Although not registered with the Securities and Exchange Commission and not subject to regulatory oversight. PSDLAF acts like a money market mutual fund in that its objective is to maintain a stable net asset value of $1 per share, is rated by a nationally recognized statistical rating organization, and is subject to an independent annual audit. Investments Statutes authorize the District to invest in U.S. Treasury bills, time or share accounts of institutions insured by the Federal Deposit Insurance Corporation, or in certificates of deposit when they are secured by proper bond or collateral, repurchase agreements, State Treasurer's investment pools or mutual funds. As of June 30, 2014, the District had the following investments: Certificates of deposit due within one year - collateral held by pledging bank's agent in the District's name Certificates of deposit due between one and two years - collateral held by pledging bank's agent in the District's name Total Certificates of Deposit $ 25,937, ,000 $ 26,427,027 Interest Rate Risk The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates

70 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 3 DEPOSITS AND INVESTMENTS (cont'd) Credit Risk The District has no investment policy that would limit its investment choices to those with certain credit ratings. As of June 30, 2014, PSDLAF was rated as AAAm by a nationally recognized statistical rating organization. Concentration Risk The District places no limit on the amount it may invest in any one Issuer. NOTE 4 UNEARNED REVENUES The District records unearned revenue for resources that have been received but not yet earned. At the end of the current fiscal year, unearned revenue reported In the governmental funds resulted from federal grants received that have not satisfied eligibility requirements and revenue received but not yet earned. Unearned revenue in the proprietary funds and the entity-wide financial statements represents resources that have been received but not yet earned. NOTE 5 CAPITAL ASSETS Capital asset activity for the year ended June 30, 2014 was as follows: Beginning Ending Balance Increases Decreases Balance GOVERNMENTAl ACTIVITIES: Capital assets not being depreciated: land $ 6,253,838 $ $ - $ 6,253,838 Construction-in-progress 11,678,603 1,387,505 11,409,576 1,656,532 Total Capital Assets Not Being Depreciated 17,932,441 1,387,505 11,409,576 7,910,370 Capital assets being depreciated: land improvements 3,275, , ,447,275 Buildings and improvements 130,472,644 15,534,950 1, ,006,469 Furniture and equipment 30,000,028 2,671,058 1 '114,610 31,556,476 Total Capital Assets Being Depreciated 163,748,248 18,378,107 1,116, ,010,220 less accumulated depreciation for: land improvements 1,227, , ,345,302 Buildings and improvements 48,796,652 4,362,672 1 '125 53,158,199 Furniture and equipment 22,597,926 1,444,472 1,114,610 22,927,788 Total accumulated depreciation 72,621,912 5,925,512 1,116,135 77,431,289 Total Capital Assets Being Depreciated, Net 91,126,336 12,452, ,578,931 GOVERNMENTAl ACTIVITIES ASSETS, NET $109,058,777 $13,840,1 00 $11,409,576 $111,489,

71 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 5 CAPITAL ASSETS (cont'd) Beginning Ending Balance Increases Decreases Balance BUSINESS-TYPE ACTIVITIES: Capital assets being depreciated: Machinery and equipment $ 385,012 $ 20,311 $ (21,957) $ 383,366 Less accumulated depreciation (197,882) (38,523) 21,957 (214,448) BUSINESS-TYPE ACTIVITIES, NET $ 187,130 $ (18,2121 $ - $ 168,918 Depreciation expense was charged to functions/programs of the District as follows: Governmental Activities: Instruction Instructional student support Administrative and financial support services Operation and maintenance of plant services Pupil transportation Student activities Total Governmental Activities Business-type Activities - food service $ 4,566, ,988 27, , , ,358 $ 5,925,512 $ 38,523 NOTE 6 INTERNAL RECEIVABLES. PAYABLES, AND TRANSFERS The composition of interfund balances as of June 30, 2014 is as follows: Due To Amount Due From General Fund $ 34,950 Food Service Amount $ 34,950 lnterfund balances between funds represent temporary loans recorded at year end subsequent to a final allocation of expenses. The balances generally are paid shortly after year end. lnterfund Transfers: Transfer Out: Transfers In: General Fund $ 4,346,285 Capital Reserve Fund $ 4,346,285 Transfers represent funds set aside for the anticipation of future capital needs

72 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 7 GENERAL LONG-TERM DEBT The following summarizes the changes in the long-term liabilities of governmental activities for the year ended June 30, 2014: Balance July 1, 2013 Additions Reductions Balance June 30, 2014 Bonds payable, net $ 79,453,519 $ 21,507,949 Capital lease payable 582,572 1,868,229 Accumulated compensated absences/early retirement incentive 2,520,490 97,500 Other post-employment benefits 844,138 61,137 TOTALS $ 83,400,719 $ 23,534,815 $ (21,135,463) (844,754) (221,487) $ (22,201,704) $ 79,826,005 1,606,047 2,396, ,275 $ 84,733,830 Bonds payable, net consists of the following: Bonds payable, at face Bond premiums Bond discounts Bonds payable, net $ 78,240,000 2,100,120 (514,115) $ 79,826,005 Payments of long-term debt are expected to be funded by the general fund. General Obligation Bonds Series of 2007A, maturing through January 25, 2017, bearing interest at a fixed rate of 2.04%, payable monthly. Series of 2007B, maturing through January 25, 2022, bearing interest at a fixed rate of 2.04%, payable monthly. Series of 2009A, maturing through February 15, 2017, bearing interest ranging from 2. 75% to 4%, interest payable semiannually on February 15 and August 15. Series of 2009AA, maturing through February 15, 2018, bearing interest ranging from 2.25% to 5%, interest payable semiannually on February 15 and August 15. Series of 201 OA, maturing through February 1, 2022, bearing interest ranging from 0.45% to 3%, interest payable semiannually on February 1 and August 1. $ 65,000 14,455,000 4,685,000 3,125,000 14,505,

73 ROSE TREE MEDIA SCHOOl DISTRICT NOTES TO FINANCIAl STATEMENTS NOTE 7 GENERAl long-term DEBT (cont'd) Series of 201 OAA, maturing through May 1, 2016, bearing interest ranging from 0.8% to 3%, interest payable semiannually on May 1 and November 1. Series of 2011, maturing through February 1, 2023, bearing interest ranging from 1% to 4%, interest payable semi-annually on February 1 and August 1. Series of 2012, maturing through April 1, 2025, bearing interest ranging from 0.5% to 2. 7%, interest payable semi-annually on April 1 and October 1. Series of 2013A, maturing through February 1, 2019, bearing Interest ranging from 0.55% to 4.0%, interest payable semiannually on February 1 and August 1. Series of 20138, maturing through February 1, 2025, bearing Interest ranging from 0.3% to 5.0%, Interest payable semiannually on February 1 and August 1. TOTAl 3,775,000 8,285,000 9,240,000 14,395, $ 78,240,000 Advance Refunding The District issued $20,285,000 of general obligation bonds. A new bond of $5,715,000 is to finance various capital projects and to pay for issuance costs, and $14,570,000 was to refund the outstanding general obligation Series 2004A bond and to pay the costs of issuing the bond. This advance refunding was undertaken to reduce total debt service payments over the next five years by $1,211,824 and resulted in an economic gain of $1,123,491. The District defeased $14,705,000 of the 2004A bonds by placing new bond proceeds in an irrevocable trust to provide for future debt service payments on the defeased bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District's financial statements. At June 30, 2014, $14,700,000 of defeased bonds are still outstanding. Presented below is a summary of debt service to maturity by years: Principal Interest Total Year Ending June 30, Maturities Maturities Maturities 2015 $ 5,950,000 $ 2,404,784 $ 8,354, ,220,000 2,224,752 8,444, ,400,000 2,045,601 8,445, ,590,000 1,801,672 8,391, ,805,000 1,539,170 8,344, ,205,000 4,869,002 44,074, ,070, ,015 7,327,015 $ 78,240,000 $ 15,141,996 $ 93,381,

74 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 8 CAPITAL LEASES- LESSEE The District has entered into lease agreements as a lessee tor financing the acquisition of equipment used for the network throughout the District. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of future minimum lease payments as of the inception date. The assets acquired through the capital leases are as follows: ASSET Equipment - Corporate Networking Inc. Equipment - Apple Inc. Less: Accumulated depreciation Total $ 572,299 2,422,634 (1,343, 725) $ 1,651,208 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2014 were as follows: Year Ending June 30, 2015 $ 806, , ,017 Amount representing interest (47,163) Total $ 1,606,047 NOTE 9 OPERATING LEASES The District currently is obligated under operating lease agreements for various office equipment. The following is a summary of the minimum rental costs for the remaining terms: Year Ending June 30, Total $ 157,235 54,711 32,924 $ 244,870 Rental expense for the year ended June 30, 2014 was $157,

75 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 1 0 PENSION PLAN Plan Description The District contributes to the Public School Employees' Retirement System ("PSERS"), a governmental cost-sharing multiple-employer defined benefit pension plan administered by the Commonwealth of Pennsylvania Public School Employees' Retirement System. The PSERS provides retirement and disability, legislatively mandated ad hoc cost-of-living adjustments and certain healthcare insurance premium assistance to plan members and beneficiaries. The Public School Employees' Retirement Code (Act No. 96, of October 2, 1975, as amended) provides the authority to establish and amend benefit provisions. The PSERS issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Public School Employees' Retirement System, P.O. Box 125, Harrisburg, PA ; or by accessing its website at us/publications/cafr/index.htm. Funding Policy The contribution policy is established in the Public School Employees' Retirement Code and requires contributions by active members, employers, and the Commonwealth. Individual employees contribute between 5.25 and 7.5 percent of salary depending on their membership status. Contributions required of employers are based upon an actuarial valuation. For fiscal year ended June 30, 2014, the rate of employer contribution was percent of covered payroll. The District's contributions to PSERS for the years ended June 30, 2012, 2013, and 2014 were $3,273,546, $4,594,716, and $6,199,268, respectively, equal to the required contribution for each year. The Commonwealth contributes to PSERS by reimbursing the District 50 percent of its contribution each year. NOTE 11 JOINT VENTURES The District participates in a joint venture with other school districts of Delaware County, Pennsylvania to support the Delaware County Community College. The financial statements of the Delaware County Community College Authority ("DCCCA") are available from the DCCCA located at 901 South Media Line Road, Media, Pennsylvania The District has entered into lease agreements with the Delaware County Community College Authority to provide rental payments to retire the Authority's outstanding debt obligations. The lease agreements generally provide that in the event the Authority either retires all of its outstanding obligations which were issued to finance school facilities construction or acquisition, or accumulate sufficient reserves to cover such obligations prior to the expiration of the applicable schedules, there will be no subsequently scheduled rental payments made. Inasmuch as the annual rentals include reserve funds which either are invested by Authorities or used for advance retirement of obligations, it is anticipated that less than scheduled rentals will eventually be paid

76 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 11 JOINT VENTURES (cont'd) Future Authority rental payments are: Year Ending June 30, 2015 $ 169, , , , , ,979,124 Total 2,821,027 Less: Interest requirements (798,091) Outstanding rental payments $ 2,022,936 NOTE 12 SPECIAL TERMINATION BENEFITS The District from time to time offers additional retirement incentives, known as early retirement incentive plans ("ERIPs") to senior professional staff and administrators contemplating retirement. These special termination benefits are formally approved by School Board action in the year an ERIP plan is implemented. In order for an employee to retire and participate in a District-sponsored ERIP. the District must first decide whether or not to offer a special termination plan in the year the employee is retiring; the retiring employee must meet certain age and District service year requirements; a specified minimum number of employees must opt into the ERIP; and the retiring employee must be eligible to receive other pension benefits provided through the PSERS, described in Note 1 0. The District's various ERIP plans can provide for the payment of specific annuity amounts to the participating retiree or the payment of specified dollar amounts to be applied toward participating retiree healthcare premiums for a limited number of years. As of June 30, 2014, the District had four ERIP plans in effect. The number of participants and the present value of those benefits as of June 30, 2014 are summarized below: ERIP Healthcare Began Participants Total Premium July 1, $ 11,386 $ 11,386 July 1, ,221 52,221 July 1, , ,000 July 1, , ,500 $ 579,107 $ 579,107 During the year ended June 30, 2014, the cost of these benefits was $241,

77 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 13 COMMITMENTS AND CONTINGENCIES Government Grants and Awards The District participates in both state and federally assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The District is potentially liable for any expenditures which may be disallowed pursuant to the terms of these grant programs. Management is not aware of any material items of noncompliance which would result in the disallowance of program expenditures. Litigation Certain litigation claims are pending against the District. In the opinion of District management and legal counsel, the potential losses, if any, on such claims are not yet determinable. Capital Improvement Commitments As of June 30, 2014, the District was in the process of several capital projects. Construction commitments completed to date are as follows: Contract Completed Project Amount 6/30/2014 Commitment Penncrest High School Partial HVAC Replacement $ 136,500 $ 132,236 $ 4,264 Springton Lake Middle School Project Asbestos Abatement 571, ,468 8,740 General Contractor 14,441,676 14,171, ,172 Electrical Contractor 5,207,492 5,184,332 23,160 Mechanical Contractor 6,509,361 6,385, ,449 Plumbing Contractor 2,083,000 2,058,000 25,000 Architect 2,534,799 1,853, ,765 HVAC Testing 77,900 75,424 2,476 ESCO Johnson Controls 9,840,967 9,704, ,968 Natural Gas Bus Project 4,820,492 1,571,486 3,249,006 46,223,395 41,699,395 4,524,000 Less: Items placed in service (40,384, 723) (40,384, 723) Total commitments related to construction-in-progress $ 5,838,672 $ 1,314,672 $ 4,524,000 In addition, the District has incurred costs in the amount of $341,860 for other projects that were not under a formal construction commitment as of June 30,

78 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 14 RISK MANAGEMENT The District is exposed to various risks of loss related to torts: theft of, damage, to and destruction of assets: errors and omissions: injuries to employees: and natural disasters. Significant losses are covered by commercial insurance for all major programs except for workers' compensation, for which the District retains risk of loss. For insured programs. there were no significant reductions in insurance coverages during the year. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. NOTE 15 POST-EMPLOYMENT HEALTHCARE PLAN Plan Description Effective for the fiscal year, the District adheres to Governmental Accounting Standards Board Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions," for certain post -employment healthcare benefits and life insurance benefits provided by the District. This statement generally provides for prospective implementation - i.e., that employers set the beginning net OPEB obligation at zero as of the beginning of the initial year. Accordingly, for financial reporting purposes, no liability is reported for the post-employment benefits liability at the date of transition. The District's post-employment healthcare plan is a single-employer defined benefit healthcare plan. The plan provides medical insurance benefits to eligible retirees and their spouses. The Board of School Directors has the authority to establish and amend benefit provisions through the collective bargaining process with members of the professional and support staff, an agreement with administrative employees, and individual employment contracts with certain employees. The plan does not issue any financial report and is not included in the report of any public employee retirement system or any other entity. Funding Policy The contribution requirements of plan members are established and may be amended by the Board of School Directors. The required contribution is based on projected pay-as-you-go financing requirements, with any additional amount to prefund as determined annually by the Board of School Directors. For fiscal year 2014, plan members receiving benefits contributed $299,371, or approximately 100 percent of total premiums, through their required monthly contributions. Annual OPEB Cost and Net OPEB Obligation The District's annual other post-employment benefit 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 costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the District's OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation to the plan. -43-

79 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 15 POST-EMPLOYMENT HEALTHCARE PLAN (cont'd) Annual required contribution $ 374,345 Interest on net OPEB obligation 37,986 Adjustment to annual required contribution (51,823) Annual OPEB cost (expense) 360,508 Contributions made (299,371) Increase in net OPEB obligation 61,137 Net OPEB obligation - beginning of year 844,138 Net OPEB obligation - end of year $ 905,275 This amount represents the cost of medical expenses for retirees. Funded Status and Funding Progress The schedule of funding progress of OPEB is as follows: Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL)- AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) [(b-a)/c] 7/1/2012 $ $2,793,367 $2,793, % $34,298, % 7!1/2010 $ $3,522,969 $3,522, % $34,522, % 111/2008 $ $4,066,104 $4,066, % $30,779, % Actuarial valuations of an ongoing plan Involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation 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 liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. -44-

80 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS NOTE 15 POST-EMPLOYMENT HEALTHCARE PLAN (cont'd) In the July 1, 2012 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.50 percent investment rate of return and an annual healthcare cost trend rate of 7.5 percent in 2012, reduced by decrements to an ultimate rate of 5.5 percent in 2016 or later. The UAAL is being amortized based on the level dollar, 30-year open period. The remaining amortization period at June 30, 2014 was 24 years. NOTE 16 FUND BALANCES As of June 30, 2014, fund balances are composed of the following: Capital Capital Debt Total General Projects Reserve Service Governmental Fund Fund Fund Fund Funds Nonspendable $ 9,600 $ $ - $ - $ 9,600 Restricted: Capital projects 6,646,639 6,559,408 13,206,047 Assigned: Capital projects 1,200,000 1,200,000 Debt service 692, ,132 Future expenditures 3,502,652 3,502,652 Future benefits funding 3,018,902 3,018,902 SYA 19,212 19,212 SLMS 19,058 19,058 PCHS Science 6,874 6,874 Summer School 14,300 14,300 Save our Steinway 6,330 6,330 Unassigned 4,005,164 4,005,164 Total Fund Balances $11,802,092 $ 6,646,639 $ 6,559,408 $ 692,132 $ 25,700,271 NOTE 17 SUBSEQUENT EVENTS The District has evaluated all subsequent events through November 11, 2014, the date the financial statements were available to be issued. -45-

81 SINGLE AUDIT

82 Barbacane, Thornton & Company LLP 200 Springer Building INDEPENDENT AUDITOR'S 3411 Silverside Road REPORT ON INTERNAL CONTROL Wilmington, Delaware OVER FINANCIAL REPORTING AND ON T COMPLIANCE AND OTHER MATIERS BASED F ON AN AUDIT OF FINANCIAL STATEMENTS wwv>.btcpa.com PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS November 11, 2014 Board of School Directors Rose Tree Media School District Media, Pennsylvania 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, the business-type activities, each major fund, and the aggregate remaining fund information of the Rose Tree Media School District as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Rose Tree Media School District's basic financial statements, and have issued our report thereon dated November 11, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Rose Tree Media 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 the Rose Tree Media School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the Rose Tree Media 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. 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. 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 BARRAO\NE lhornton &COMPANY I ~1\11~1~11 rlti\ut At't'Ol NtANn

83 Board of School Directors Rose Tree Media School District Compliance and Other Matters As part of obtaining reasonable assurance about whether Rose Tree Media School District's financial statements are free of 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. 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 results 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. /j~~~a-r BARBACANE, TH~RNTON & COMPANY LL~ LLP -47 -

84 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-1 33 Barbacane, Thornton & Company LLP 200 Springer Building 34 1 I Silverside Road Wilmington, Delaware T F November 11, 2014 Board of School Directors Rose Tree Media School District Media, Pennsylvania Report on Compliance for the Major Federal Program We have audited the Rose Tree Media 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 the Rose Tree Media School District's major federal program for the year ended June 30, The Rose Tree Media School District's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and recommendations. 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 the Rose Tree Media School District's major federal program 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 the Rose Tree Media 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 the major federal program. However, our audit does not provide a legal determination of the Rose Tree Media School District's compliance BARBAO\NE 1HORNTON &COMPANY l'&rtifieo l'ljnuc ACCOUNTANTS

85 Board of School Directors Rose Tree Media School District Opinion on the Maior Federal Program In our opinion, the Rose Tree Media 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 its major federal program for the year ended June 30, Report on Internal Control Over Compliance Management of the Rose Tree Media 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 the Rose Tree Media School District's internal control over compliance with the types of requirements that could have a direct and material effect on its major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for its 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 the Rose Tree Media 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. ;j~~il'n-f BARBACANE, THO~NTON & COMPANY LL~ LLP

86 ROSE TREE MEDIA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2014 FEDERAL GRANTOR/PASS-THROUGH GRANTOR SOURCE PROJECT TITLE CODE U.S. Deeartment of Education Passed throuah Penns~vania Department of Education Title I - Improving Basic Programs I Title I - Improving Basic Programs I Title I - Improving Basic Programs I Total CFDA # Title II - Improving Teacher Quality I Title II- Improving Teacher Quality I Total CFOA # Total Passed through Pennsylvania Department of Education PASS- FEDERAL THROUGH GRANT PERIOD TOTAL CFDA GRANTOR'S BEGINNING/ GRANT RECEIVED NUMBER --- NUMBER ENDING OATES AMOUNT FOR YEAR /01/11-09/30/12 $307,102 $ 19, /01/12.Qg/30/13 261,035 58, /01 /13..09/30/ ,879 29, , / /30/13 104,265 7, /01/13-09/30/14 100,057 13,352 21, ,1 41 ACCRUED ACCRUED REVENUE REVENUE REVENUE 07/01/2013 RECOGNIZED EXPENDITURES 06/30/2014 $ 1g, , , ,539 $ $ $ 36,go2 21,209 21,209 56, , , ,539 7, , ,057 86,705 7, , ,057 86,705 63, , , ,244 Su~rant from U.S. Deeartment of Education Passed throuah Delaware Coun~ Intermediate Unit I.O.E.A. I I.D.E.A.- Section 619 I Totaii.D.E.A. Program Cluster Race to the Top- Phase 3 I Total Passed through Delaware County Intermediate Unit Total U.S. Department of Education /01/13..06/30/14 531, , /01 /13..06/30/14 2,539 2, , A FC /01/12-09/30/15 21,428 17, , , , ,667 2,539 2, , ,415 2,127 2,127 2,127 17, , ,333 2,127 81, , , ,371 Continued on next page. -50-

87 ROSE TREE MEDIA SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2014 FEDERAL GRANTOR/PASS-THROUGH GRANTOR SOURCE PROJECT TITLE CODE (cont'd) U.S. Department of Agriculture Passed throullh Penns~vania Department of Allriculture Value of U.S.D.A. Donated Commodities I PASS- FEDERAL THROUGH GRANT PERIOD TOTAL CFDA GRANTOR'S BEGINNING/ GRANT RECEIVED NUMBER NUMBER ENDING DATES AMOUNT FOR YEAR N/A 07/01 /13-06/30/14 N/A 90,995 ACCRUED ACCRUED REVENUE REVENUE REVENUE 07/01/2013 RECOGNIZED EXPENDITURES 06/30/ ,995 90,995 Passed throuah Penns}:lvania Department of Education National School Lunch Program I National School Lunch Program I Total CFDA# Breakfast Program I Breakfast Program I Total CFDA# Total Child Nutrition Cluster N/A 07/01/12-06/30/13 N/A 10, N/A 07/01/13-06/30/14 N/A 200, , NJA 07/01/12-06/30/13 N/A N/A 07/01/13-06/30/14 N/A 12,899 13, ,849 10, , ,067 13,241 10, , ,062 13, ,824 13, ,824 13, , , ,886 14,166 Total U.S. Department of Agriculture 315,849 11, , ,886 14,166 TOTAL FEDERAL AWARDS $ 995,611 $ 92,540 $ 1,178,608 $ 1,178,608 $ 275,537 Source Codes: I = Indirect Funding -51 -

88 ROSE TREE MEDIA SCHOOL DISTRICT NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTE A SCOPE OF SCHEDULE The schedule of expenditures of federal awards reflects federal expenditures for all individual grants which were active during the fiscal year. NOTE B BASIS OF ACCOUNTING The District uses the modified accrual method of recording transactions except as noted for the accounting of donated commodities in Note C. Revenues are recorded when measurable and available. Expenditures are recorded when incurred. NOTEC NONMONETARY FEDERAL AWARDS - DONATED FOOD The Commonwealth of Pennsylvania distributes federal surplus food to institutions (schools, hospitals, and prisons) and to the needy. Expenditures reported in the schedule of expenditures of federal awards under CFDA # , Value of USDA Donated Commodities, represent surplus food consumed by the District during the fiscal year. NOTED ACCESS PROGRAM The ACCESS Program is a medical assistance program that reimburses local educational agencies for direct eligible health-related services provided to enrolled special needs students. Reimbursements are federal source revenues but are classified as fee-for-service and are not considered federal financial assistance. The amount of ACCESS funding recognized for the year ended June 30, 2014 was $475,

89 SCHEDULE OF FINDINGS AND RECOMMENDATIONS