OFFICIAL STATEMENT XENIA COMMUNITY CITY SCHOOL DISTRICT GREENE AND WARREN COUNTIES, OHIO

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1 Rating: Standard & Poor's OSDCE: AA SPUR: A+ See "RATING" and "OHIO SCHOOL DISTRICT NEW ISSUE BOOK-ENTRY FORM ONLY CREDIT ENHANCEMENT PROGRAM" herein. In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law, (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2010 Notes and the Series 2010B Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code of 1986, as amended (the "Code"); (ii) interest on the Series 2010C Bonds is not excluded from gross income for federal income tax purposes; and (iii) interest on and any profit made on the sale, exchange or other disposition of the Securities is exempt from taxes levied by the State of Ohio and its political subdivisions. The School District has designated the Series 2010 Notes and the Series 2010B Bonds as "qualified taxexempt obligations" within the meaning of Section 265(b)(3) of the Code. For a more complete discussion of the tax aspects, see "TAX MATTERS" herein. $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (General Obligation-Limited Tax) OFFICIAL STATEMENT XENIA COMMUNITY CITY SCHOOL DISTRICT GREENE AND WARREN COUNTIES, OHIO $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt) (General Obligation-Unlimited Tax) Voted November 3, 2009 $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment) (General Obligation-Unlimited Tax) Voted November 3, 2009 Dated: Date of Delivery Due: As shown on the inside cover The Series 2010 Notes are unvoted general obligation debt of the Xenia Community City School District, Greene and Warren Counties, Ohio (the "School District"), and the Series 2010B Bonds and the Series 2010C Bonds are voted general obligation debt of the School District. The full faith, credit and revenue of the School District are irrevocably pledged for the prompt payment of the principal of and interest on the Securities. (See "SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT" herein.) Terms used herein with initial capitalization where the rules of grammar would not otherwise so require and not defined have the meanings given to them under "DEFINITIONS" herein. Interest on the Current Interest Securities will be payable at the respective rates shown on the inside cover herein on June 1 and December 1 of each year beginning December 1, 2010, to the holders of record as of the record dates described in the Bond Resolution. The Capital Appreciation Bonds will bear interest, compounded semiannually, from the date of their issuance, but such interest will be payable only at maturity. Principal of the Securities will be payable at the designated corporate trust office of The Huntington National Bank, Columbus, Ohio, as registrar, paying agent and transfer agent for the Securities. The Securities will be issuable as fully registered securities without coupons in the denominations set forth herein. The Securities will be issuable under a book-entry only method and registered in the name of The Depository Trust Company ("DTC") or its nominee. There will be no physical delivery of the Securities to the ultimate purchasers. The Underwriter has satisfied the requirements of DTC for the Securities to be eligible for its book-entry services. (See "BOOK-ENTRY ONLY SYSTEM" herein.) The Series 2010 Notes and the Series 2010B Bonds are not subject to redemption prior to stated maturity. The Series 2010C Bonds will be subject to optional redemption, extraordinary optional redemption, and mandatory sinking fund redemption prior to stated maturity as set forth herein. (See "THE SECURITIES Redemption Provisions" herein.) The School District has elected to treat the Series 2010C Bonds as Build America Bonds under Section 54AA(d) of the Code and elected under Section 54AA(g) to receive the Series 2010C Direct Payments from the Treasury. A portion of the Series 2010C Bonds will be designated as Recovery Zone Economic Development Bonds under Section 1400U-2(b) of the Code. (See "THE SECURITIES Designation of Bonds as Build America Bonds" herein.) Holders of the Series 2010B Bonds and the Series 2010C Bonds will not be entitled to receive any tax credits with respect thereto. The Securities are offered when, as and if issued and received by the Underwriter, subject to prior sale and to withdrawal or modification of the offer without notice. Certain legal matters relating to the issuance of the Securities are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel, Columbus, Ohio. (See "LEGAL MATTERS" and "TAX MATTERS" herein.) Certain other legal matters will be passed upon for the Underwriter by Benesch, Friedlander, Coplan & Aronoff LLP, Columbus, Ohio. This cover page contains certain information for general reference only. It is not a summary of the provisions of the Securities. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. This Official Statement has been prepared by the School District in connection with the original offering for sale by it of the Securities. It is expected that delivery of the Securities in definitive form will be made through DTC on or about July 28, The date of this Official Statement is July 15, 2010, and the information herein speaks only as of that date. BAIRD

2 XENIA COMMUNITY CITY SCHOOL DISTRICT Greene and Warren Counties, Ohio $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (General Obligation-Limited Tax) $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt) (General Obligation-Unlimited Tax) $670,000 SERIES 2010 NOTES $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment) (General Obligation-Unlimited Tax) Year (June 1) Principal Maturing Interest Year Rate Yield CUSIP (June 1) Principal Maturing Interest Rate Yield CUSIP 2011 $165, % 0.80% AC $170, % 1.22% AE , AD , AF7 $10,000 SERIES 2010B CURRENT INTEREST SERIAL BONDS Year (December 1) Principal Maturing Interest Year Rate Yield CUSIP (December 1) Principal Maturing Interest Rate Yield CUSIP 2011 $5, % 1.00% AG $5, % 1.25% AH3 $189, SERIES 2010B CAPITAL APPRECIATION BONDS Year (December 1) Original Principal Amount Maturity Amount (1) Stated Interest Rate Original Principal Per $5,000 Maturity Amount Initial Offering Price to Public per $5,000 Maturity Amount Approx. Initial Offering Yield at Maturity CUSIP 2013 $96, $ 925, % $ $4, % AJ , , , AK , ,030, , AL , ,050, , AM , , , AN0 (1) The maturity amount for a Capital Appreciation Bond equals the original principal amount of the Capital Appreciation Bond plus interest, compounded semiannually at the stated interest rate, to maturity. $3,375, % SERIES 2010C CURRENT INTEREST TERM BONDS MATURING DECEMBER 1, 2030, PRICE %, CUSIP AQ3 $9,130, % SERIES 2010C CURRENT INTEREST TERM BONDS MATURING DECEMBER 1, 2036, PRICE %, CUSIP AR1 $7,800, % SERIES 2010C CURRENT INTEREST TERM BONDS MATURING DECEMBER 1, 2040, PRICE %, CUSIP AS9 The School District is not responsible for the use of the CUSIP numbers referenced herein nor is any representation made by the School District as to their correctness; such CUSIP numbers are included solely for the convenience of the readers of the Official Statement.

3 XENIA COMMUNITY CITY SCHOOL DISTRICT Greene and Warren Counties, Ohio $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (General Obligation-Limited Tax) $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt) (General Obligation-Unlimited Tax) $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment) (General Obligation-Unlimited Tax) Ronald L. Roth Vice President William Spahr Member BOARD OF EDUCATION Robert P. Dillaplain, M.D. President Robert Porter Member Barbara Stafford Member DISTRICT ADMINISTRATION Dr. Jeffrey K. Lewis Superintendent Rosalie A. Townsend Treasurer/CFO PROFESSIONAL SERVICES Robert W. Baird & Co. Incorporated Underwriter Bricker & Eckler LLP Bond Counsel Benesch, Friedlander, Coplan & Aronoff LLP Underwriter's Counsel The Huntington National Bank Paying Agent/Bond Registrar i

4 REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (the "Series 2010 Notes"), the $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt) (the "Series 2010B Bonds"), and the $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment ) (the "Series 2010C Bonds", and together with the Series 2010 Notes and Series 2010B Bonds, the "Securities") of the Xenia Community City School District, Greene and Warren Counties, Ohio (the "School District") identified on the Cover hereof. No person has been authorized by the School District to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by the School District. Statements contained in this Official Statement that involve estimates, forecasts, or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the School District and other sources that are believed to be reliable for purposes of this Official Statement. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions or that they will be realized. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the School District since the date hereof. Certain information in this official statement is attributed to the Ohio Municipal Advisory Council ("OMAC"). OMAC compiles information from official and other sources. OMAC believes the information it compiles is accurate and reliable, but OMAC does not independently confirm or verify the information and does not guarantee its accuracy. OMAC has not reviewed this Official Statement to confirm that the information attributed to it is information provided by OMAC or for any other purpose. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under 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. UPON ISSUANCE, THE SECURITIES WILL NOT BE REGISTERED BY THE SCHOOL DISTRICT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS ANY OTHER FEDERAL, STATE, MUNICIPAL OR OTHER GOVERNMENTAL ENTITY OR AGENCY, EXCEPT THE BOARD OF EDUCATION OF THE SCHOOL DISTRICT, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE SECURITIES FOR SALE. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, AND THERE SHALL NOT BE ANY SALE OF, THE SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SECURITIES TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. ii

5 INVESTMENT CONSIDERATIONS General The Securities, like all obligations of state and local governments, are subject to changes in value due to changes in the condition of the market for taxable and tax-exempt obligations or changes in the financial position of the School District. It is possible under certain market conditions, or if the financial condition of the School District should change, that the market price of the Securities could be adversely affected. With regard to the risk involved in a downward revision or withdrawal of the rating for the Securities shown on the Cover hereof, see "RATING" herein. With regard to the risk involved in a loss of the exclusion from gross income for purposes of federal income taxation of interest payable on the Series 2010 Notes and the Series 2010B Bonds, see "TAX MATTERS" herein. Prospective purchasers of the Securities should consult their own tax advisors prior to any purchase of the Securities as to the impact of the Internal Revenue Code of 1986, as amended (the "Code"), upon their acquisition, holding or disposition of the Securities. Investment Suitability and Market Volatility of Capital Appreciation Bonds A primary test of the suitability of a tax-exempt obligation for an individual investor is a comparison of the yield the investor would have to earn on a taxable obligation to equal a tax-exempt yield in his or her income tax bracket. Individuals should consult with brokers or qualified financial or tax advisors to determine the taxable equivalent yield they could expect given their particular tax circumstances. The Capital Appreciation Bonds may not be suitable for all investors. Investors should realize that capital appreciation bonds such as the School District's Capital Appreciation Bonds (as shown on the Cover) are subject to greater market volatility than traditional tax-exempt obligations that have semiannual interest payments. An investor who purchases a Capital Appreciation Bond and holds it until maturity receives an amount equal to the original principal amount plus the interest that has accrued over the life of the bond at the stated interest rate for such Capital Appreciation Bond. An investor who sells such a bond prior to maturity at a time when interest rates, generally, are higher than at the time that the bond was purchased, may realize a loss on the investment. Prospective purchasers of the Capital Appreciation Bonds who believe they may have to sell such bonds prior to maturity should consider the market risk associated with capital appreciation bonds. It is particularly important for the first-time buyer of capital appreciation tax-exempt bonds to review the suitability of the School District's Capital Appreciation Bonds with a broker or qualified financial or tax advisor. Prepayments of Principal The Series 2010C Bonds allow the School District to prepay the principal of the Series 2010C Bonds without penalty. (See "THE SECURITIES Redemption Provisions" herein.) If such Series 2010C Bonds were to be prepaid before scheduled maturity, the investor would not receive the anticipated yield through the scheduled maturity date. In such a prepayment situation there is no guarantee that the investor could reinvest the proceeds and receive a comparable yield for the period remaining until the scheduled maturity of the Series 2010C Bonds. The investor, therefore, may receive a lower total return for the period beginning on the date of purchase through the scheduled date of maturity than anticipated. iii

6 DEBT ISSUE SUMMARY The information contained in this Debt Issue Summary is qualified in its entirety by the entire Official Statement, which should be reviewed in its entirety by potential investors. Issuer: Xenia Community City School District, Greene and Warren Counties, Ohio Issues: $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (the "Series 2010 Notes"); $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax- Exempt) (the "Series 2010B Bonds"); and $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment) (the "Series 2010C Bonds," and together with the Series 2010 Notes and the Series 2010B Bonds, the "Securities"). Dated Date: Interest Payment Dates: Principal Payment Dates: Redemption: Purpose: Date of Delivery Interest on Current Interest Securities will be paid each June 1 and December 1, beginning December 1, Interest on Capital Appreciation Bonds will accrue and be compounded on each June 1 and December 1 and be payable at maturity. Series 2010 Notes: Current Interest Serial Notes: June 1, 2011 through June 1, 2014, inclusive. Series 2010B Bonds: Current Interest Serial Bonds: December 1, 2011 and December 1, 2012; Capital Appreciation Bonds: December 1, 2013 through December 1, 2017, inclusive. Series 2010C Bonds: Current Interest Term Bonds: December 1, 2030, December 1, 2036, and December 1, The Series 2010 Notes and the Series 2010B Bonds are not subject to redemption prior to stated maturity. The Series 2010C Bonds are subject to redemption at the option of the School District, either in whole, or in part, in such order of maturity as the School District shall determine, on any date on or after June 1, 2020, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. (See "THE SECURITIES Redemption Provisions Optional Redemption" herein.) The Series 2010C Bonds are subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. (See "THE SECURITIES Redemption Provisions Mandatory Sinking Fund Redemption" herein.) The Series 2010C Bonds are subject to extraordinary optional redemption prior to stated maturity upon the occurrence of an Extraordinary Event (as defined herein). (See "THE SECURITIES Redemption Provisions Extraordinary Optional Redemption" herein.) The Series 2010 Notes are issued for the purpose of currently refunding the Refunded Notes (as defined herein). The Series 2010B Bonds and the Series 2010C Bonds are issued for the purpose of constructing school facilities under the State of Ohio Classroom Facilities Assistance Program and related facilities, including science and technology labs and community meeting space; renovating, improving and constructing additions to existing facilities; furnishing and equipping the same, including enhanced safety and security devices; improving the sites thereof; and acquiring land and interests in land (collectively, the "Project"), and retiring the Outstanding Notes (as defined herein) of the School District previously issued for the purpose of funding the Project. (See "THE SECURITIES Authorization and Purpose" herein.) iv

7 Security: Credit Rating: Tax Matters: Build America Bonds: Bank Qualification Legal Opinion: Underwriter: Underwriter's Counsel: Bond Registrar and Paying Agent: Book-Entry Only System: Delivery and Payment: School District Official: The Series 2010 Notes will be unvoted general obligations of the School District, and the Series 2010B Bonds and Series 2010C Bonds will be voted general obligations of the School District. The Securities will a pledge of the full faith and credit of the School District for the payment of the principal of and interest on the Securities when due. The School District has applied for a rating of the Securities from Standard & Poor's Ratings Services ("Standard & Poor's"), which has rated the Securities AA, based on the School District's participation in the Credit Enhancement Program (as defined herein). The Securities also have an underlying rating of A+ from Standard & Poor's. (See "RATING" and "OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM" herein.) In the opinion of Bond Counsel, under existing law and assuming compliance with certain covenants, interest on the Series 2010 Notes and the Series 2010B Bonds is excluded from gross income for federal income tax purposes, is not treated as an item of tax preference for purposes of the alternative minimum income tax imposed on individuals and corporations under the Internal Revenue Code of 1986, as amended (the "Code"), and is exempt from taxes imposed by the State of Ohio and its political subdivisions. Interest on the Series 2010C Bonds is not excluded from gross income for federal income tax purposes, but such interest is exempt from taxes imposed by the State of Ohio and its political subdivisions. (See "TAX MATTERS" herein.) The School District has elected to treat the Series 2010C Bonds as Build America Bonds under Section 54AA(d) of the Code and has elected under Section 54AA(g) to receive the Series 2010C Direct Payments from the Treasury. A portion of the Series 2010C Bonds will be designated as Recovery Zone Economic Development Bonds under Section 1400U- 2(b) of the Code. (See "THE SECURITIES Designation of Bonds as Build America Bonds" herein.) The School District has designated the Series 2010 Notes and the Series 2010B Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code. Bricker & Eckler LLP, Columbus, Ohio Robert W. Baird & Co. Incorporated, Columbus, Ohio Benesch, Friedlander, Coplan & Aronoff LLP, Columbus, Ohio The Huntington National Bank, Columbus, Ohio The Securities are being issued as fully registered Securities in book-entry form only and book-entry interests therein will be available for purchase in amounts of $5,000 and integral multiples thereof with respect to the Current Interest Securities and maturity amounts of $5,000 and integral multiples thereof with respect to the Capital Appreciation Bonds. Owners of book-entry interests will not receive physical delivery of securities certificates. DTC or its nominee will receive all payments with respect to the Securities from the Bond Registrar. DTC is required by its rules and procedures to remit such payments to its participants for subsequent disbursement to owners of the book-entry interests. It is expected that delivery of the Securities in definitive form will be made through DTC on or about July 28, The Securities will be released to the Underwriter against payment in federal funds. Questions concerning the Official Statement should be directed to Rosalie A. Townsend, Treasurer, Xenia Community City School District, 578 E. Market Street, Xenia, Ohio Telephone: (937) v

8 TABLE OF CONTENTS REGARDING THIS OFFICIAL STATEMENT...ii INVESTMENT CONSIDERATIONS...iii General...iii Investment Suitability and Market Volatility of Capital Appreciation Bonds...iii Prepayments of Principal...iii DEBT ISSUE SUMMARY... iv TABLE OF CONTENTS... vi INTRODUCTORY STATEMENT... 1 DEFINITIONS... 2 THE SECURITIES... 4 Authorization and Purpose... 4 Plan of Finance... 4 Form and Terms... 4 Designation of Bonds as Build America Bonds... 6 Redemption Provisions... 6 ESTIMATED SOURCES AND USES OF FUNDS... 8 SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT... 8 Security for the Series 2010 Notes... 8 Security for the Series 2010B Bonds and Series 2010C Bonds... 8 General Security for All of the Securities... 9 School District Bankruptcy... 9 OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM UNDERWRITING RATINGS LITIGATION Litigation Generally School Funding Litigation LEGAL MATTERS TAX MATTERS General Original Issue Discount Amortizable Premium Backup Withholding BOOK-ENTRY ONLY SYSTEM Revision of Book-Entry Only System - Replacement Securities TRANSCRIPT AND CLOSING DOCUMENTS CONTINUING DISCLOSURE CONCLUDING STATEMENT APPENDIX A THE XENIA COMMUNITY CITY SCHOOL DISTRICT...A-1 GENERAL INFORMATION...A-1 Introduction...A-1 Map of Geographic Area...A-2 School District Officials...A-3 School District Employees...A-3 Pension Obligations...A-4 School District Facilities...A-4 Enrollment...A-6 Open Enrollment...A-7 vi

9 Dual Enrollment Programs and Credit Flexibility...A-7 Educational Program...A-7 State Performance Standards...A-8 National Standardized Test Scores...A-11 Comparative Position of the School District...A-12 ECONOMY AND EMPLOYMENT...A-13 Economic Development...A-13 Labor Force Statistics...A-14 Largest Employers...A-15 SCHOOL DISTRICT PROPERTY TAX BASE...A-16 Ad Valorem Taxes and Assessed Valuation...A-16 Tax Abatements and Economic Development Incentives...A-17 Assessed Valuation...A-19 Growth in School District Assessed Valuation...A-19 Largest Taxpayers...A-20 Real Estate Taxpayers...A-20 Public Utility Taxpayers...A-20 History of Voted Taxes...A-21 Property Tax Rates and Collections...A-22 Property Tax Rate Calculations...A-23 Ad Valorem Tax Levies...A-24 Repeal of Property Tax Levies...A-24 Total Property Tax Burden...A-25 State Reimbursement of Property Tax Revenues...A-25 OTHER SOURCES OF SCHOOL DISTRICT FUNDING...A-27 School Foundation Program...A-27 State Classroom Facilities Assistance...A-27 School District Income Tax...A-28 SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS...A-29 Statutory Debt Limitations Generally...A-29 Bond Anticipation Notes...A-31 School District Debt Currently Outstanding...A-32 Debt Service Requirements...A-33 Overlapping Subdivision Indebtedness...A-34 Debt Capacity Analysis...A-35 Lease Obligations...A-36 Future Financings...A-36 FINANCES OF THE SCHOOL DISTRICT...A-37 Budgeting, Tax Levy and Appropriations Procedures...A-37 Financial Reports and Audits...A-37 Five-Year Projection...A-38 Fiscal Oversight System...A-38 General Fund Operations...A-39 Other Funds...A-39 Investment of Funds...A-40 School District Insurance...A-40 APPENDIX B Basic Financial Statements for the Fiscal Year Ended June 30, B-1 APPENDIX C Five-Year Projection of Operational Revenues and Expenditures... C-1 APPENDIX D Form of Approving Legal Opinion of Bricker & Eckler LLP...D-1 APPENDIX E Sample Closing Certificate... E-1 APPENDIX F Sample Continuing Disclosure Certificate...F-1 vii

10 XENIA COMMUNITY CITY SCHOOL DISTRICT Greene and Warren Counties, Ohio $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt) (General Obligation-Limited Tax) $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt) (General Obligation-Unlimited Tax) $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment) (General Obligation-Unlimited Tax) INTRODUCTORY STATEMENT This Official Statement has been prepared by the Board of Education (the "Board") of the School District in connection with the original issuance and sale by the School District of the Securities identified on the Cover hereof. All financial and other information presented herein has been provided by the School District from its records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the School District. No representation is made that past experience, as might be shown by such financial and other information, will necessarily continue or be repeated in the future. Certain statements contained in this Official Statement, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the School District to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, general economic conditions, demographic changes, and existing government regulations and changes in, or the failure to comply with, government regulations. Certain of these factors are discussed in more detail elsewhere in this Official Statement. Given these uncertainties, readers of this Official Statement and investors are cautioned not to place undue reliance on such forward-looking statements. This Official Statement should be considered in its entirety and no subject discussed should be considered less important than any other subject by reason of its location in the text. Reference should be made to laws, reports or documents referred to for more complete information regarding their contents. References herein to provisions of Ohio law, whether codified in the Ohio Revised Code or uncodified, the Ohio Constitution, or federal law, are references to such provisions as they presently exist. Provisions of the Ohio law and the Ohio Constitution and federal law may in the future, and from time to time, be amended, repealed or supplemented. Additional information relating to the financial condition of the School District may be obtained by contacting the Treasurer, Rosalie A. Townsend, Treasurer, Xenia Community City School District, 578 E. Market Street, Xenia, Ohio 45385, telephone: (937) , and from the Ohio Department of Education's website: The School District makes no representation as to the accuracy of the information appearing at such website.

11 DEFINITIONS The following capitalized terms, as used in this Official Statement and the Appendices attached hereto, have the following meanings unless otherwise indicated: "Annual Report" means any annual report provided by the School District referred to in this Official Statement and any appendix hereto. "Bankruptcy Code" means Title 11 of the United States Code. "Board" means the Board of Education of the School District. "Bond Counsel" means Bricker & Eckler LLP, Columbus, Ohio. "Bond Registrar" means The Huntington National Bank, Columbus, Ohio. "Build America Bonds" means Securities elected to be treated as "build America bonds" under Section 54AA(d) of the Code. "Capital Appreciation Bonds" means Series 2010B Bonds on which interest will compound semiannually on June 1 and December 1 but will be payable only at maturity. "City" means the City of Xenia, Ohio. "Code" means the Internal Revenue Code of 1986, as amended. "County" means Greene County, the dominant county of the School District, as defined by the Revised Code. "County Auditor" means the Auditor of the County. "County Treasurer" means the Treasurer of the County. "Cover" means the cover page and the inside cover of this Official Statement. "Current Interest Securities" means Securities on which interest is payable each June 1 and December 1. "Department" means the State Department of Education. "MSA" means the Dayton Metropolitan Statistical Area, as defined by the United States Office of Management and Budget, including Greene, Miami, Montgomery and Preble Counties. "OMAC" means the Ohio Municipal Advisory Council. "Outstanding Notes" means the School District's $19,670,000 School Facilities Construction and Improvement Notes, Series 2009, dated December 30, 2009, and maturing July 29, 2010; and the School District's $15,000,000 School Facilities Construction and Improvement Notes, Series 2010, dated February 9, 2010, and maturing July 29, "Project" means constructing school facilities under the State of Ohio Classroom Facilities Assistance Program and related facilities, including science and technology labs and community meeting 2

12 space; renovating, improving and constructing additions to existing facilities; furnishing and equipping the same, including enhanced safety and security devices; improving the sites thereof; and acquiring land and interests in land. "Recovery Zone Economic Development Bonds" means Build America Bonds designated as "recovery zone economic development bonds" under Section 1400U-2(b) of the Code. "Refunded Notes" means $660,000 in aggregate principal amount of the School District's $1,920,790 Energy Conservation Improvement Installment Payment Notes (General Obligation) (Limited Tax), dated July 1, 1999, and maturing on June 1, 2011 through June 1, 2014, both inclusive. "Revised Code" means the Ohio Revised Code, as amended. "School District" means the Xenia Community City School District, Greene and Warren Counties, Ohio "Securities" means the Series 2010 Notes, the Series 2010B Bonds and the Series 2010C Bonds. "Series 2010A Bonds" means the $14,160,000 School Facilities Construction and Improvement Bonds Series 2010A (Federal Taxable Qualified School Construction Bonds Direct Payment), dated July 28, "Series 2010A Direct Payments" means the credit applicable to the Series 2010A Bonds as provided for in Section 6431(f) of the Code, which credit is equal to the applicable credit rate (5.36%) determined under Section 54A(b)(3) of the Code, as provided in Section 6431(f)(1)(C) of the Code. "Series 2010B Bonds" means the $199, School Facilities Construction and Improvement Bonds, Series 2010B (Tax-Exempt), dated July 28, "Series 2010C Bonds" means $20,305,000 School Facilities Construction and Improvement Bonds, Series 2010C (Federal Taxable Build America Bonds Direct Payment), dated July 28, "Series 2010C Direct Payments" means the credit applicable to the Series 2010C Bonds as provided for in Sections 54AA(g) and 6431 of the Code, which credit is equal to 35% of the stated interest paid on the Series 2010C Bonds. For Series 2010C Bonds designated as Recovery Zone Economic Development Bonds, the credit provided for in Section 6431 of the Code is equal to 45% of the stated interest paid on such Series 2010C Bonds. "Series 2010 Notes" means the $670,000 School Facilities Construction and Improvement Refunding Notes, Series 2010 (Tax-Exempt), dated July 28, "State" or "Ohio" means the State of Ohio. "State Auditor" means Auditor of the State. "State Superintendent" means State Superintendent of Public Instruction. "Tax Commissioner" means the Tax Commissioner of the State. "Treasurer" means the Treasurer of the School District. "Treasury" means the United States Department of the Treasury. "Underwriter" means Robert W. Baird & Co. Incorporated, Columbus, Ohio. 3

13 THE SECURITIES Authorization and Purpose The Securities are authorized by a resolution of the Board passed on April 12, 2010 (the "Bond Resolution"). The electors of the School District approved the issuance of bonds in the amount of $34,670,000 at the election held on November 3, 2009, and the Series 2010B Bonds and the Series 2010C Bonds are issued pursuant to such voted authority. The Securities are issued in conformity with Revised Code Chapter 133, and are, therefore, lawful investments for banks, savings and loan associations, credit union share guaranty corporations, trust companies, trustees, fiduciaries, insurance companies, including domestic for life and domestic not for life, trustees or other officers having charge of sinking and bond retirement or other funds of the State, subdivisions and taxing districts, the Commissioners of the Sinking Fund of the State, the Administrator of Workers' Compensation, the State teachers, public employees, and school employees retirement systems, and the police and firemen's disability and pension fund, and are eligible as security for the repayment of the deposit of public moneys. The Series 2010 Notes are limited tax general obligation notes issued for the purpose of currently refunding the Refunded Notes, which Refunded Notes were issued for the purpose of constructing and acquiring school energy conservation improvements. The Series 2010B Bonds and the Series 2010C Bonds are unlimited tax general obligation bonds issued for the purpose of constructing school facilities under the State of Ohio Classroom Facilities Assistance Program and related facilities, including science and technology labs and community meeting space; renovating, improving and constructing additions to existing facilities; furnishing and equipping the same, including enhanced safety and security devices; improving the sites thereof; and acquiring land and interests in land (the "Project"), and retiring the Outstanding Notes of the School District previously issued for the purpose of funding the Project. The final maturity of the Series 2010 Notes cannot be later than June 1 of the year of final maturity of the Refunded Notes. Under Ohio law, the maximum maturity of the Series 2010B Bonds and Series 2010C Bonds may not extend more than 38 years beyond the date of the first principal payment on the Series 2010B Bonds and the Series 2010C Bonds. Plan of Finance In order to finance the Project and refund the Outstanding Notes, the Series 2010B Bonds and the Series 2010C Bonds are being issued concurrently with the Series 2010A Bonds. Form and Terms The Securities will be issued in fully registered form and the Current Interest Securities (as shown on the Cover hereof) will bear interest from their dated date until maturity or earlier redemption, at the rates per annum as set forth on the Cover hereof, payable on June 1 and December 1 of each year, and will mature on June 1 or December 1 in the years as indicated on the Cover of this Official Statement. The Current Interest Securities will be issued in denominations of $5,000 or any integral multiple thereof, provided that, so long as the Current Interest Securities shall be in book-entry form and held by a depository, each Current Interest Security will be of a single maturity, and will be numbered as determined by the Treasurer. 4

14 Interest on the Capital Appreciation Bonds will accrue from the date of delivery until maturity, at the stated interest rates per annum as set forth on the Cover hereof. Interest on the Capital Appreciation Bonds will compound semiannually on June 1 and December 1 (the "Interest Accretion Dates") but will be payable only at maturity. The Capital Appreciation Bonds will mature on December 1 in the years as indicated on the Cover of this Official Statement. The Capital Appreciation Bonds will be issued in the maturity amounts of $5,000 or any integral multiple thereof. Principal of the Securities and accreted interest on the Capital Appreciation Bonds (as shown on the Cover hereof) will be payable at maturity, in lawful money of the United States of America, at the designated corporate trust office of The Huntington National Bank, Columbus, Ohio, which has been designated by the Board as the registrar, paying agent, and transfer agent for the Securities (the "Bond Registrar"). Interest on the Current Interest Securities will be payable to the person whose name appears as the registered holder thereof on the registration records maintained by the Bond Registrar, on the respective Record Date (15th day next preceding an interest payment date) by check mailed to such registered holder at the address of such registered holder as it appears on the registration records. No deduction shall be made for exchange, collection, or service charges. The following table sets forth the adjusted basis for federal income tax purposes of a Bondholder who purchases a Capital Appreciation Bond at the initial offering price for each maturity date and per $5,000 maturity amount, from the date of delivery of the Capital Appreciation Bonds and on each June 1 and December 1 thereafter until maturity. Compound Accreted Value Interest Accretion Date July 28, 2010 $4, $4, $4, $4, $3, December 1, , , , , , June 1, , , , , , December 1, , , , , , June 1, , , , , , December 1, , , , , , June 1, , , , , , December 1, , , , , , June 1, , , , , December 1, , , , , June 1, , , , December 1, , , , June 1, , , December 1, , , June 1, , December 1, , THIS TABLE IS NOT TO BE CONSTRUED AS A REPRESENTATION AS TO THE MARKET VALUE OF THE CAPITAL APPRECIATION BONDS AT ANY TIME IN THE FUTURE. For a discussion of the adjustments to the basis of a holder of a Capital Appreciation Bond resulting from the accretion of original issue discount for federal income tax purposes, see "TAX MATTERS Original Issue Discount" herein. 5

15 Designation of Bonds as Build America Bonds The School District has elected to treat the Series 2010C Bonds as Build America Bonds under Section 54AA(d) of the Code and has elected under Section 54AA(g) to receive the Series 2010C Direct Payments from the Treasury. $7,800,000 of the Series 2010C Bonds maturing on December 1, 2040 have been designated as Recovery Zone Economic Development Bonds under Section 1400U-2(b) of the Code. HOLDERS OF THE SERIES 2010C BONDS WILL NOT BE ENTITLED TO RECEIVE ANY TAX CREDITS WITH RESPECT THERETO. The School District has covenanted that all Series 2010C Direct Payments shall be deposited in either (a) the bond retirement fund of the School District and used to pay debt service on the Series 2010C Bonds; or (b) the general fund of the School District, but only in replenishment of and to the extent that general fund monies were used to pay the debt service on the Series 2010C Bonds. Redemption Provisions The Series 2010 Notes and the Series 2010B Bonds are not subject to redemption prior to stated maturity. Mandatory Sinking Fund Redemption The Series 2010C Term Bonds maturing on December 1, 2030 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows: Year Principal Amount to be Redeemed 2028 $1,055, ,115,000 The remaining principal amount of such Series 2010C Term Bonds ($1,205,000) will be paid at stated maturity on December 1, The Series 2010C Term Bonds maturing on December 1, 2036 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows: Year Principal Amount to be Redeemed 2031 $1,275, ,345, ,495, ,575, ,660,000 The remaining principal amount of such Series 2010C Term Bonds ($1,780,000) will be paid at stated maturity on December 1,

16 The Series 2010C Term Bonds maturing on December 1, 2040 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows: Year Principal Amount to be Redeemed 2037 $1,780, ,855, ,025,000 The remaining principal amount of such Series 2010C Term Bonds ($2,140,000) will be paid at stated maturity on December 1, Optional Redemption The Series 2010C Bonds are subject to redemption at the option of the School District, either in whole or in part, in such order of maturity as the School District shall determine, on any date on or after June 1, 2020, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. Extraordinary Optional Redemption The Series 2010C Bonds are subject to redemption at the option of the School District, in whole or in part, in such order of maturity as the School District shall determine, on any date at a redemption price equal to 100% of the principal amount redeemed, plus accrued interest to the date fixed for redemption, upon the occurrence of an Extraordinary Event. An "Extraordinary Event" will have occurred if Section 54AA or Section 6431 of the Code is amended or repealed, or other final federal action is passed or approved, and such amendment, repeal, or final action would reduce or eliminate payment of the Series 2010C Direct Payments. Redemption Procedures When partial redemption is authorized, the Series 2010C Bonds or portions thereof will be selected by lot within a maturity in such manner as the Bond Registrar may determine, provided, however, that the portion of any such Series 2010C Bond so selected will be in the amount of $5,000 or any integral multiple thereof. The notice of the call for redemption of Series 2010C Bonds shall identify (i) by designation, letters, numbers or other distinguishing marks, such Series 2010C Bonds or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. From and after the specified redemption date, interest on such Series 2010C Bonds (or portions thereof) called for redemption shall cease to accrue. Such notice shall be sent by first class mail to each such registered holder at the address shown in the registration records at least 30 days prior to the redemption date. Failure to receive such notice or any defect therein shall not affect the validity of the proceedings for the redemption of any such Series 2010C Bond. 7

17 ESTIMATED SOURCES AND USES OF FUNDS The proceeds of the Securities, other than accrued interest, if any (which will be deposited in the School District's bond retirement fund and used to pay interest on the Securities), will be applied as follows: Sources 1 Par value of Series 2010 Notes $ 670, Par value of Series 2010B Bonds 199, Par value of Series 2010C Bonds 20,305, Plus: net original issue premium 3,505, Total Sources $24,680, Uses Deposit to bond retirement fund $ 667, (for repayment of the Refunded Notes) Deposit to bond retirement fund 20,801, (for repayment of the Outstanding Notes) Deposit to capitalized interest fund 2,609, Costs of issuance 2 601, Total Uses $24,680, In addition to the Securities, the School District is also issuing the Series 2010A Bonds. (See "THE BONDS Plan of Finance"). 2 Includes Underwriter's compensation, rating fees, printing and distribution costs, legal fees, and miscellaneous expenses. Security for the Series 2010 Notes SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT The Series 2010 Notes are unvoted general obligation debt of the School District, payable from the sources described, subject to Chapter 9 of the Bankruptcy Code and other laws affecting creditors' rights. The basic security for payment of the Series 2010 Notes is the requirement that the School District levy ad valorem taxes within the ten-mill limitation (which limitation is further described in APPENDIX A under "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS"), which taxes are limited as to rate and amount, to the extent necessary to pay the debt service anticipated to become due on the Series 2010 Notes, and to the extent that such debt service is not paid from other sources. Security for the Series 2010B Bonds and Series 2010C Bonds The Series 2010B Bonds and the Series 2010C Bonds are voted general obligation debt of the School District, payable from the sources described, subject to Chapter 9 of the Bankruptcy Code and 8

18 other laws affecting creditors' rights. The basic security for payment of the Series 2010B Bonds and the Series 2010C Bonds is the requirement that the School District levy ad valorem property taxes outside the ten-mill limitation (which limitation is further described in APPENDIX A under "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS"), which taxes are unlimited as to rate and amount, to the extent necessary to pay the anticipated debt service on the Series 2010B Bonds and the Series 2010C Bonds as the same becomes due, and to the extent that such debt service on the Series 2010B Bonds and the Series 2010C Bonds is not paid from other sources. Such taxes can be expended only for the purpose of paying the anticipated debt service on the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds (together with costs of issuing the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds), and since such taxes are unlimited as to rate or amount, the rate of millage actually levied in each year while the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds are outstanding will be such as is determined to be necessary by the County Auditor to produce the amount necessary to pay debt service on the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds due in that year, giving due consideration to the School District's assessed valuation and previous tax collection experience. General Security for All of the Securities The Securities are also secured by a pledge of the full faith and credit of the School District. This pledge includes all of the funds of the School District, except those prohibited from use by the Ohio Constitution, State or federal law, or specifically limited to another use. (See "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally" in APPENDIX A.) In addition to the right of individual holders to sue upon their particular Securities, State law authorizes the holders of not less than 10% in principal amount of the Securities to bring mandamus or other actions to enforce all contractual or other rights of the holders, including the right to require the School District to levy, collect and apply the taxes to pay debt service on the Securities, and in the case of any default in payment of debt service on the Securities, to bring an action to require the School District to account as if it were the trustee of an express trust for the holders or to enjoin any acts that may be unlawful or in violation of the holders' rights. School District Bankruptcy An Ohio school district may file for bankruptcy under Chapter 9 of the Bankruptcy Code if it meets certain prerequisites under both federal and State law. Section 109(c) of the Bankruptcy Code sets forth the requirements for a State political subdivision to file for bankruptcy protection. In addition to requiring the school district to be insolvent 1, the school district must be specifically authorized, in its capacity as a school district or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter. 2 With regard to State law, Revised Code Section requires that a political subdivision which desires to file bankruptcy seek and obtain permission of the Tax Commissioner. Moreover, Revised Code Section (E)(5) provides that a school district may not file for bankruptcy if it owes money to the State. The foregoing federal and State laws also permit an Ohio county to initiate Chapter 9 proceedings which, because a county collects certain revenues on behalf of a school district (particularly ad valorem property taxes), may adversely affect the financial condition of such school district U.S.C. Section 101(32)(C) requires that in order to be "insolvent" a school district must not be paying its debts as they come due. 2 See 11 U.S.C. Section 109(c)(2). 9

19 OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM The School District obtained approval to participate in the Ohio School District Credit Enhancement Program (the "Credit Enhancement Program") on July 7, The additional level of security afforded by the Credit Enhancement Program provides the basis for consideration of a higher debt rating by certain rating agencies (see "RATING" herein). To participate in the Credit Enhancement Program, school districts must meet the following criteria 1 : (1) the amount of Foundation Program Payments received by a school district for the current fiscal year reduced by any current year deficit reported on the five year forecast must exceed by a ratio of at least 2.5 to 1 the outstanding maximum annual debt service on the proposed obligations and on any additional outstanding obligations secured by a pledge of Foundation Program Payments; and (2) the projected amount of Foundation Program Payments remaining to be distributed in the current fiscal year reduced by any deficit reported on the five year forecast must exceed the debt charges remaining to be paid in that fiscal year by a ratio of 1.25 to 1. In connection with the issuance of the Securities, the Department, the School District, and the Bond Registrar will enter into an agreement pursuant to Revised Code Section (the "Agreement") providing for the withholding and deposit of funds that would otherwise be due the School District under Revised Code Chapter 3317 ("Foundation Program Payments") for the payment of debt service charges on the Securities in the event the School District is unable to make debt service payments on the Securities. If the School District is unable to make debt service payments on the Securities, and payment will not otherwise be made pursuant to a credit enhancement facility, the Agreement provides that the Department will promptly pay to the Bond Registrar the lesser of: (i) the amount due for debt service charges on the Securities or (ii) the amount of Foundation Program Payments due the School District for the remainder of the fiscal year. As part of the Agreement, the School District will covenant that it will not pledge Foundation Program Payments as primary security for any additional obligations having a claim on the Foundation Program Payments on a parity with the Securities unless the criteria lasted above are met in regards to the proposed obligations and any obligations to which Foundation Program Payments are already pledged as primary security. This covenant will not prevent the School District from issuing obligations having a claim on Foundation Program Payments subordinate to that of the Securities (such as a solvency assistance advance). The Agreement will be irrevocable as long as any of the School District's Securities are outstanding. If Foundation Program Payments are paid to the Bond Registrar pursuant to the Agreement, the Department is required to evaluate the School District's inability to meet the debt service payments and to recommend corrective actions to be implemented by the School District. Under the Agreement, the Department will be obligated only to redirect funds to the Bond Registrar which would otherwise go to the School District. The existence of the Agreement does not make the Securities obligations, debts, or pledges of the faith, credit, or taxing power of the State, and the holders or owners of the Securities have no right to have taxes levied or appropriations made by the State 1 See Ohio Administrative Code Section for the Department's guidelines for participation in the Credit Enhancement Program. 10

20 legislature for the payment of debt service on the Securities. The Agreement and any payments by the State under it do not constitute the assumption by the State of any debt of the School District. There can be no assurance as to future levels of State funding of the School Foundation Program. The Department's participation in the Credit Enhancement Program is solely for the purpose of enhancing the rating on and marketability of the Securities, and should not indicate any expectation that the Credit Enhancement Program will be called upon to perform. As described above, the Series 2010B Bonds and the Series 2010C Bonds are payable from a voted property tax without limitation as to rate or amount and the Series 2010 Notes are payable from property taxes which are limited as to rate and amount. UNDERWRITING Robert W. Baird & Co. Incorporated (the "Underwriter") has agreed, pursuant to the Debt Purchase Agreement with the School District, dated July 15, 2010 (the "Purchase Agreement"), to purchase all, but not less than all, of the Securities at a purchase price of $24,302, (the "Purchase Price"), which is equal to the par amount of the Securities ($21,174,981.60), plus net original issue premium ($3,505,983.00), less Underwriter's discount ($378,350.00), plus accrued interest, if any. The Underwriter is purchasing the Securities as originally issued for purpose of resale. The Underwriter reserves the right to join with dealers and other underwriters in offering the Securities to the public. The Underwriter may offer and sell the Securities to certain dealers (including dealer banks and dealers depositing the Securities into unit investment trusts, certain of which may be sponsored or managed by the Underwriter), and others at prices lower than the public offering prices noted on the Cover. The initial offering prices of the Securities may be changed, from time to time, by the Underwriter. The Underwriter will retain $223, from the Purchase Price to pay certain costs of issuance of the Securities and the Series 2010A Bonds on behalf of the School District, including rating fees, printing and distribution costs, legal fees, and other miscellaneous expenses. The obligation of the Underwriter to accept delivery of the Securities is subject to the various conditions set forth in the Purchase Agreement. The Underwriter is obligated to purchase all of the Securities if any of the Securities are purchased. RATINGS As noted on the Cover, the School District has applied for a rating of the Securities from Standard & Poor's Ratings Services ("Standard & Poor's"), a division of The McGraw Hill Companies, Inc., which has rated the Securities AA, based on the School District's participation in the Credit Enhancement Program. The Securities also have an underlying rating of A+ from Standard & Poor's. No application for a rating has been made to any other rating agency. The rating reflects only the views of Standard & Poor's. Any explanation of the significance of the rating may only be obtained from Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc., 55 Water Street, New York, New York 10041, telephone (212) The School District furnished to Standard & Poor's certain information and materials, some of which may not have been included in this Official Statement, relating to the Securities and the School District. Generally, rating agencies base their ratings on such information and materials, as well as 11

21 investigation, studies and assumptions by the rating agencies. Such ratings are not recommendations to buy, sell or hold the Securities. The AA rating assumes that the School District has entered into the necessary agreements to provide for diversion of State Aid (Foundation Program Payments) to cover debt service on the Securities in the event property tax revenues are insufficient during any calendar year, pursuant to the Credit Enhancement Program. (See "OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM" herein). Failure to comply with the terms of such agreements or subsequent legislative changes could have a negative impact on such rating. There can be no assurance that a rating, when assigned, will continue for any given period of time or that it will not be lowered or withdrawn entirely by a rating agency if, in the rating agency's judgment, circumstances so warrant. In addition, the School District currently expects to provide to Standard & Poor's (but assumes no obligation to furnish to the Underwriter or the holders of the Securities) further information and materials that it or they may request. However, the School District does not obligate itself hereby to furnish such information and materials to Standard & Poor's, and the School District may issue unrated bonds and notes from time to time. Failure by the School District to furnish such information and materials, or the issuance of unrated bonds or notes, may result in the suspension or withdrawal of a rating agency's rating on the Securities. Any lowering, suspension or withdrawal of such rating may have an adverse effect on the marketability or market price of the Securities. Litigation Generally LITIGATION To the knowledge of the appropriate officials of the School District, no litigation or administrative action or proceeding is pending or threatened restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Securities, or the levy and collection of taxes to pay the debt service on the Securities, or contesting or questioning the proceedings and authority under which the Securities are to be authorized and are to be issued, sold, executed or delivered, or the validity of the Securities. A no-litigation certificate to such effect will be delivered to the Underwriter at the time of original delivery of the Securities to the Underwriter. In common with other political subdivisions, the School District from time to time receives notices of claims for money damages. In the opinion of School Board officials, any such claims outstanding, regardless of their merit, are not in excess of the School District's insurance coverage. The School District is party to various legal proceedings seeking damages or injunctive relief and generally incidental to its operations. These proceedings are unrelated to the Securities or the security therefor. The ultimate disposition of such proceedings is not presently determinable, but will not, in the opinion of School Board officials, have a material adverse effect on the Securities or the security therefor. School Funding Litigation In 1997, the Ohio Supreme Court determined in the case of DeRolph v. State of Ohio that Ohio's elementary and secondary public school financing system violated the Ohio Constitution. Included in the DeRolph decision was a ruling that property taxes may be used as a part of a school funding solution, but could no longer be the primary means of financing schools. In 2003, the Ohio Supreme Court effectively prohibited further judicial review of the DeRolph case and the United States Supreme Court denied the plaintiffs' Petition for Writ of Certiorari, without opinion. 12

22 Throughout its rulings the Ohio Supreme Court did not specifically address, and did not hold as invalid: Voted securities issues (bonds and notes previously issued and bond issues that may be placed on the ballot in the future) and the debt service levy included within such voted authority. Unvoted securities issues (bonds and notes previously issued and future bond and note issues), issued for the purpose of constructing permanent improvements or capital facilities, and the debt service levy included within such authority. Voted levies (property taxes or income taxes). The decisions did not address the current authority of school districts to levy and collect operating levies, and the decisions do not prevent school districts from approving additional levies. LEGAL MATTERS Legal matters incident to the issuance of the Securities and with regard to the excludability of the interest on the Series 2010 Notes and the Series 2010B Bonds from gross income for federal income tax purposes of the interest thereon (see "TAX MATTERS" herein) are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel to the School District. A signed copy of that opinion will be delivered to the Underwriter at the time of original delivery. Assuming no change in applicable law prior to the date of delivery of such opinion, the opinion will be substantially in the form attached hereto as APPENDIX D. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referred to in the opinion subsequent to the date thereof. Certain legal matters will be passed upon for the Underwriter by Benesch, Friedlander, Coplan & Aronoff LLP, Columbus, Ohio. While Bond Counsel has participated in the preparation of portions of this Official Statement, it has not been engaged to confirm or verify, and expresses and will express no opinion as to the accuracy, completeness or fairness of any of the statements in this Official Statement, including its appendices (other than APPENDIX D), or in any other reports, financial information, offering or disclosure documents or other information pertaining to the School District or the Securities that may be prepared or made available by the School District or others to the holders of the Securities or others. General TAX MATTERS In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law, (i) interest on the Series 2010 Notes and the Series 2010B Bonds is excluded from gross income for federal income tax purposes under Section 103(a) of the Code, and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations; and (ii) interest on the Series 2010C Bonds is not excluded from gross income for federal income tax purposes under Section 103(a) of the Code. Further, the Securities are not "private activity bonds" as defined in Section 141(a) of the Code. The Securities, the interest thereon and the transfer, and any profit made on the sale or other disposition, thereof are exempt from taxes levied by the State and its political subdivisions. For purposes of this paragraph, "taxes" means any direct or indirect taxes, including income, ad valorem, transfer, and excise taxes, the commercial activity tax and the corporate franchise tax measured by net income of a 13

23 corporation, but "taxes" does not mean or include (i) the corporate franchise tax measured by net worth of a corporation; (ii) the estate tax; (iii) the taxes levied on insurance companies and dealers in intangibles pursuant to Revised Code Chapter 5725; and (iv) the tax on shares of and capital employed by dealers in intangibles pursuant to Revised Code Section Bond Counsel will express no opinion and make no representation regarding other federal, state or local income tax consequences resulting from the receipt or accrual of interest on the Securities. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications made by the Board and others, and the compliance with certain covenants of the School District, to be contained in the transcript of proceedings and which are intended to evidence and assure the foregoing, including that the Series 2010 Notes and the Series 2010B Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel has not and will not independently verify the accuracy of such certifications and representations. The School District has designated the Series 2010 Notes and the Series 2010B Bonds as "qualified tax exempt obligations" as defined in Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80% of that portion of such financial institution's interest expense allocable to interest on the Series 2010 Notes and the Series 2010B Bonds. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and continue to be so excluded from the date of issuance. Noncompliance with these requirements could cause the interest on the Series 2010 Notes and the Series 2010B Bonds to be included in gross income for federal income tax purposes and thus to be subject to regular federal income tax retroactively to the date of their issuance. The School District has covenanted to take such actions which may be required of it for the interest on the Series 2010 Notes and the Series 2010B Bonds to be and remain excluded from gross income for federal income tax purposes, and not to take any actions which would adversely affect that exclusion. Under the Code, interest on the Series 2010 Notes and the Series 2010B Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States of America and a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes can have certain adverse federal income tax consequences on items of income or deductions for certain taxpayers, including among them financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, and those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations and individuals otherwise eligible for the earned income credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other items of income and expenses of the holders of the Series 2010 Notes and the Series 2010B Bonds. Bond Counsel will express no opinion and make no representation regarding such consequences. Original Issue Discount Certain of the Series 2010B Bonds were sold to the public at a price of less than 100% of their face amount (the "Discount Bonds"). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Discount Bonds. 14

24 Under present federal income tax law, original issue discount (i.e., the difference between the issue price, as hereinafter defined, of a Discount Bond and the stated redemption price at maturity of such Discount Bond), is treated as accruing (accreted) over the term of such Discount Bond. The issue price is the price at which a substantial amount of the Discount Bonds are sold to the public (excluding bond house, brokers or similar persons acting in the capacity of underwriters or wholesalers). In general, the amount of original issue discount which is to be accreted in each "accretion period" will equal (i) the issue price of that Discount Bond, increased by the amount of original issue discount which as been accreted in all prior accretion periods, multiplied by (ii) the initial offering yield of that Discount Bond reflected on the inside cover page of this Official Statement (determined on the basis of compounding at the close of each accretion period and properly adjusted for the length of the accretion period). For these purposes, "accretion period" means a six-month period (or shorter period from the date the Discount Bond was issued) which ends on a day in the calendar year corresponding to the maturity date of that Discount Bond or the date six months before such maturity date. The amount of original issue discount so accreted in a particular accretion period will be considered to accrete ratably on each day of the accretion period. Such accreted amount is used for purposes of determining the adjusted basis for federal income tax purposes of the holder of such Discount Bond but is not included in such holder's gross income for federal income tax purposes. Consequently, a purchaser who buys a Discount Bond in the initial offering at the issue price and holds such Discount Bond to its maturity would not realize any gain or loss for federal income tax purposes upon payment of the stated redemption price of that Discount Bond at maturity. Amortizable Premium Certain of the Securities were sold at issue prices greater than the principal amount payable at maturity or earlier call date (the "Premium Bonds"). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Premium Bonds. Premium Bonds will be considered to be issuable with amortizable premium (the "Security Premium"). A taxpayer who acquires a Premium Bond in the initial public offering will be required to adjust his or her basis in the Premium Bond downward as a result of the amortization of the Security Premium, pursuant to Section 1016(a)(5) of the Code. The amount of amortizable Security Premium will be computed on the basis of the taxpayer's yield to maturity with compounding at the end of each accrual period. Rules for determining (i) the amount of amortizable Security Premium and (ii) the amount amortizable in a particular year are set forth at Section 171(b) of the Code. With respect to Series 2010 Notes and the Series 2010B Bonds that are Premium Bonds ("Tax- Exempt Premium Bonds"), no income tax deduction for the amount of amortizable Security Premium will be allowed to a holder pursuant in Section 171(a)(2) of the Code, but such holder may reduce their basis in the Series 2010 Notes and the Series 2010B Bonds by the amount of such amortizable Security Premium. The amortization of Security Premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining other tax consequences of owning the Tax-Exempt Premium Bonds. A purchaser of a Tax-Exempt Premium Bond at its issue price in the initial public offering who holds that Tax-Exempt Premium Bond to maturity will realize no gain or loss upon the retirement of such Tax-Exempt Premium Bond. 15

25 PROSPECTIVE PURCHASERS OF THE DISCOUNT OR PREMIUM BONDS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE PURCHASE, SALE, TRANSFER, REDEMPTION, PAYMENT, OR OTHER DISPOSITION OF THE DISCOUNT OR PREMIUM BONDS, INCLUDING, WITHOUT LIMITATION, MODIFICATIONS TO THE METHOD FOR AMORTIZING PREMIUM FOR CERTAIN SUBSEQUENT PURCHASERS, AND INCLUDING THE EFFECT OF ANY APPLICABLE STATE OR LOCAL INCOME TAX LAWS. Backup Withholding General information reporting requirements will apply to interest payments made on the Series 2010C Bonds. The recipients of interest payments must furnish their social security number or employer identification number and certify that it is correct (utilizing From W-9, request for Taxpayer Identification Number and Certification or other form). Backup withholding at a rate of 28% will apply to such interest payments if the owner fails to provide an accurate taxpayer identification number or if notified by the Internal Revenue Service that backup withholding is required. BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC's book-entry only system has been obtained from DTC and the School District takes no responsibility for the completeness or accuracy thereof. The School District cannot and does not give any assurances that DTC, Direct Participants or Indirect Participants will distribute to the Beneficial Owners (each as hereinafter defined) (a) payments of interest, principal, or premium, if any, with respect to the Securities, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Securities, or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Securities, or that they will so do on a timely basis or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Securities. The Securities will be issued as fullyregistered Securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each maturity of the Securities, 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 16

26 registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("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 Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities 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 Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Securities. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities 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 Bond Registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities 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 the Securities unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the School District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 17

27 Redemption proceeds, distributions and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the School District or the Bond Registrar, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Bond Registrar, or the School District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the School District or the Bond Registrar, 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. Revision of Book-Entry Only System - Replacement Securities The Bond Resolution provides for issuance of fully registered Securities (the "Replacement Securities") directly to owners other than DTC or its nominee only if DTC determines not to continue to act as security depository of the Securities. In such event, the School District may in its discretion establish a securities depository/book entry relationship with another qualified securities depository. If the School District does not or is unable to do so, and after appropriate notice to DTC, the School District's Bond Registrar will authenticate and deliver fully registered Replacement Securities, in the denominations of $5,000 or any multiple thereof, to or at the direction of and, if the event is not the result of School District action or inaction, at the expense (including printing costs) of, any persons requesting such issuance. Replacement Securities may be transferred, registered and assigned only in the registration books of the School District's Bond Registrar. TRANSCRIPT AND CLOSING DOCUMENTS A complete transcript of proceedings for the Securities, including an appropriate no-litigation certificate (described above under "LITIGATION"), will be delivered by the School District when the Securities are delivered by the School District to the Underwriter. The School District will at that time also provide to the Underwriter a certificate of the Treasurer, in the form attached hereto as APPENDIX E, addressed to the Underwriter relating to the accuracy and completeness of this Official Statement. CONTINUING DISCLOSURE The School District has agreed for the benefit of the holders and beneficial owners of the Securities to provide annual financial and operating information in its Annual Report, not later than December 1 of each year, and to provide notices of certain events, if material. Concurrently with the delivery of the Securities, the School District will deliver a certificate of the Treasurer of the School District (the "Disclosure Certificate"), in the form attached hereto as APPENDIX F, describing the nature of the information to be provided, the persons and entities to whom such information will be provided and the times at which such information will be provided. The School District's failure to comply with any undertaking contained in the Disclosure Certificate will not constitute an event of default under the Securities. 18

28 The Disclosure Certificate is being executed by the School District to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission. Specifically, the School District agrees to provide the Annual Report to the Municipal Securities Rulemaking Board (the "MSRB") in an electronic format, if required, and to provide notice of the enumerated events to the MSRB in an electronic format, if required. CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of such statements will be realized. Information herein has been derived by the School District from official and other sources and is believed by the School District to be reliable, but information other than that obtained from official records of the School District has not been independently confirmed or verified by the School District and its accuracy is not guaranteed. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as or as part of a contract with the original purchasers or holders of the Securities. This Official Statement has been duly prepared and delivered by the School District, and executed for and on behalf of the School District by the President and the Treasurer of the Board. XENIA COMMUNITY CITY SCHOOL DISTRICT GREENE AND WARREN COUNTIES, OHIO By: /s/ Robert P. Dillaplain, M.D. President, Board of Education By: /s/ Rosalie A. Townsend Treasurer, Board of Education 19

29 APPENDIX A THE XENIA COMMUNITY CITY SCHOOL DISTRICT GENERAL INFORMATION Introduction The School District is primarily located in Greene County (the "County") in southwestern Ohio, approximately 20 miles from Dayton, and the School District's territory overlaps the City of Xenia (the "City"). The School District is an independent political subdivision of the State of Ohio and operates subject to the provisions of the Ohio Constitution and various sections of the Revised Code. Under such laws, there is no authority for the School District to have a charter or adopt local laws. The School District is not a part of, nor under the control of, the County or the City. According to information supplied by OMAC, the School District contains portions of the assessed valuation of other subdivisions, as shown below: Overlapping Subdivisions Xenia Community City School District Subdivision Subdivision's Assessed Valuation within the School District School District's Assessed Valuation within the Subdivision Counties Greene County 17.48% 99.89% Warren County Other Subdivisions City of Xenia % 60.32% Beavercreek Township Caesarcreek Township Cedarville Township New Jasper Township Spring Valley Township Wayne Township Xenia Township Greene County Career Center JVSD Greene County Health District Warren County Health District Warren-Clinton County Mental Health District Wayne Fire District Source: Ohio Municipal Advisory Council According to OMAC, the estimated population of the School District in 2006 was 34,630. A-1

30 Map of Geographic Area Xenia Community City School District A-2

31 School District Officials The legislative power of the School District is vested in the Board of Education (the "Board"), consisting of five members elected at large for staggered four-year terms. Regular Board meetings of the Board are held the second Monday of each month. At the first meeting of each year, the Board elects a president and a vice president from its membership, each to serve a one-year term. The Board employs a Superintendent who serves as the executive officer for the Board and a Treasurer who serves as the chief fiscal officer for the Board. Official School District Officials Xenia Community City School District Office Expiration of Current Term Beginning of Tenure Robert P. Dillaplain, M.D. President 12/31/ /01/1994 Ronald L. Roth Vice President 12/31/ /01/2000 Robert Porter Member 12/31/ /01/2010 William Spahr Member 12/31/ /01/1994 Barbara Stafford Member 12/31/ /01/2002 Dr. Jeffrey K. Lewis Superintendent Contract 08/01/2004 Rosalie A. Townsend Treasurer/CFO Contract 01/12/1998 School District Employees The School District currently has 382 certificated employees and 277 classified employees. In Fiscal Year 2008, salaries accounted for 57.16% of the School District's operating expenditures, while fringe benefits accounted for 19.27% of the School District's operating expenditures. Certified Staff Certified staff are represented by the Xenia Education Association ("XEA") in labor negotiations with the School District. The XEA is affiliated with the Ohio Education Association and the National Education Association. The current labor agreement was reached in 2007 and is effective through August The current agreement provided for salary increases of 4.00% in , 4.00% in , and 3.75% in Classified Staff Classified staff includes secretarial, clerical, custodial and cafeteria workers, as well as bus drivers and other non-teaching, non-administrative personnel. Classified Staff are represented by the Xenia Education Support Professionals ("XESP") in labor negotiations with the School district. The XESP is affiliated with the Ohio Education Association and the National Education Association. The current agreement provided for salary increases of 4.00% in , 4.00% in , and 3.75% in A-3

32 Pension Obligations Present and retired employees of the School District are covered under two statewide public retirement (including disability retirement) systems. The State Teachers Retirement System (the "STRS") is applicable to all teachers, principals, supervisors and administrators employed by the School District who are required to hold a certificate issued by the Department pursuant to the Revised Code. Other eligible employees are covered by the School Employees Retirement System (the "SERS"). Pursuant to federal law, all School District employees hired after March 31, 1986 are required to participate in the federal Medicare program which currently requires employee and employer contributions each equal to 1.45% of the employee's wages subject to the Federal Insurance Contribution Act (FICA) wage limit. Otherwise, School District employees are not presently covered under the Federal Social Security Act. STRS and SERS are not presently subject to the funding and vesting requirements of the Federal Employee Retirement Income Security Act of Both STRS and SERS were created by and operate pursuant to Ohio law. The State legislature could determine to amend the format of either system and could revise rates or methods of contribution to be made by the School District into the pension funds and revise benefits or benefits levels. School District Facilities Name of Building The School District presently operates the following schools: Group/ Grades Housed Current School District Facilities Xenia Community City School District Enrollment ( ) Capacity Number of Teachers Pupil/ Teacher Ratio Year Building Completed Year(s) of Additions/ Renovations Arrowood Elementary K n/a Cox Elementary K ; 1964 McKinley Elementary K n/a Shawnee Elementary K ; 1975 Simon Kenton Elementary PK n/a Spring Hill Elementary PK ; 1975 Tecumseh Elementary K Central Middle School Warner Middle School PK & , Xenia High School ,283 1, Total 4,668 6, Source: Xenia Community City School District To address overcrowding issues in the School District, the School District is currently utilizing 720 sq. ft. of modular classroom space. Upon completion of the Project, the School District does anticipate continuing to use modular classrooms. A-4

33 After completion of the Project, the School District will operate the following facilities: School District Facilities upon Completion of the Project Xenia Community City School District Buildings Group/Grades Housed Capacity Expected Enrollment New Construction Cox Elementary PreK McKinley Elementary PreK Shawnee Elementary PreK Tecumseh Elementary PreK (Arrowood site) PreK Existing Facilities Central Middle School Warner Middle School 6-8 1, Xenia High School ,650 1,438 Total 5,821 4,636 Source: Xenia Community City School District [Balance of Page Intentionally Left Blank] A-5

34 Enrollment The daily average enrollments for past school years, together with projected enrollments for future school years, are shown below. Actual and Projected Enrollment Xenia Community City School District Grade * * * * Pre-K K Career Tech Other Totals 4,922 4,926 4,764 4,737 4,668 4,582 4,516 4,510 * Projected. Source: Xenia Community City School District [Balance of Page Intentionally Left Blank] A-6

35 Open Enrollment The School District began allowing open enrollment in The table below displays the net result from open enrollment. School District officials expect that the open enrollment trends will stay the same in the next several years. Certain state funds provided for pupil support exit the School District with students who attend neighboring school districts through open enrollment. Likewise, the School District gains certain state pupil support funds as a result of the addition of students to the School District via open enrollment. School Year Enrollment Changes due to Open Enrollment Xenia Community City School District Students Open-enrolling into the School District Students Open-enrolling out of the School District Net Change due to Open Enrollment Source: Xenia Community City School District Dual Enrollment Programs and Credit Flexibility The School District offers students the opportunity to participate in a dual enrollment program with Clark State Community College, and approximately 67 students participated in that program during the school year. The School District plans to adopt its credit flexibility policy pursuant to Revised Code Section on July 12, Educational Program The School District, which enrolls approximately 5,000 students, has posted a remarkable record of twelve straight years of accelerating student achievement. During this time, individual schools have earned State recognition, including "Schools of Promise" (Arrowood Elementary and Spring Hill Elementary), "Schools of Excellence" (Tecumseh Elementary, Arrowood Elementary, and Central Middle School), and the School District has earned the recognition as a "District of Excellence". The School District serves a diverse student population with a minority population of approximately 15% and a free/reduced lunch population of approximately 50%, and draws students from all strata of society. The School District is recognized for providing an extensive education program serving a wide range of special education students with needs ranging from speech to multiple disabilities. The School District boasts of several National Merit Scholars and appointees to national military academies. Each year, between 75 and 85% of graduating classes attend two-year and four-year colleges. Members of the School District's staff have been recognized for excellence, capturing a number of State and national awards and recognitions, including the Ohio Teacher of the Year, Disney Teacher of the Year, Adapted PE Teacher of the Year, National Teacher-Leader Award, and several National Board Certified status. A-7

36 State Performance Standards According to the Department, the Local Report Card acts as a catalyst for analysis of school improvement and excellence by reporting on the performance of school districts. The Local Report Card includes federal No Child Left Behind requirements, such as full building-level accountability, Adequate Yearly Progress ("AYP"), and separate data reporting for students with disabilities and limited English proficient students. Every school district, building, and community school receives one of the following State designations indicating the general level of performance based on its Local Report Card data: Excellent with Distinction; Excellent; Effective; Continuous Improvement; Academic Watch; and Academic Emergency. The State Superintendent is required to establish an independent Academic Distress Commission ("ADC") for any Academic Emergency school district that fails to meet AYP goals for four or more consecutive years. An ADC may exercise extraordinary authority over school district operations pursuant to Revised Code Section , including the power to reassign or terminate administrators, override collective bargaining agreements and adopt a budget for school district expenditures. The following table summarizes the School District's Local Report Card measures. Further explanation of the measures and a breakdown of the School District's performance on the State Indicators follows. 1 Local Report Card Summary, Xenia Community City School District Number of State Indicators Met 16 out of 30 (53%) Performance Index Score 91.2 Adequate Yearly Progress Not Met Value-Added Measure + (Above) Designation Excellent Source: Ohio Department of Education 1 This discussion of state performance standards is provided for the convenience of the reader and only summarizes the process by which the Department reaches its designation for school districts. For more information about state performance standards, including more detail about the School District's performance, please see the Department's website relating to state and local report card reporting at A-8

37 The four measures summarized below are the basis for assigning State designations. 1. Number of State Indicators Met: Twenty-eight of the thirty State Indicators are based on achievement tests and identify a minimum percentage of students that should be at or above the proficient level on third-, fourth-, fifth-, sixth-, seventh-, eighth-, tenth- and eleventh-grade tests. The remaining two State Indicators identify minimum graduation and attendance rates. The following table shows the School District's performance indicators. Any results at and above the State standard are shown in bold. Performance Indicator State Performance Indicators Xenia Community City School District State Standard School District Performance Indicator State Standard School District 3rd Grade Achievement 8 th Grade Achievement 1. Reading 75% 77.0% 15. Reading 75% 65.9% 2. Mathematics Mathematics Science th Grade Achievement 18. Social Studies Reading 75% 83.6% 4. Mathematics Ohio Graduation Test (10 th Grade) 5. Writing Reading 75% 82.4% 20. Mathematics th Grade Achievement 21. Writing Reading 75% 70.6% 22. Science Mathematics Social Studies Science Social Studies Ohio Graduation Test (11 th Grade) 24. Reading 85% 90.7% 6th Grade Achievement 25. Mathematics Reading 75% 77.5% 26. Writing Mathematics Science Social Studies th Grade Achievement 12. Reading 75% 72.5% 29. Student Attendance Rate 93% 94.1% 13. Mathematics Writing Graduation Rate 90% 88.0% * graduation rate. Source: Ohio Department of Education 2. Performance Index (PI): This measure records the achievement of every tested student, not just those who score proficient or higher. School districts earn points based on how well each student does on all tested subjects in grades 3-8 and the 10th Grade Ohio Graduation Test. Each achievement test has five performance levels: advanced, accelerated, proficient, basic, and limited. The School District's PI is a weighted score from 0 to 120 based on the number of students falling into each performance level. Students who are not tested earn zero points. A-9

38 3. Value-Added Measure: This measure gauges the amount of academic improvement in the performance of students even though the School District may not have met the standard for student achievement. The Value-Added measure attempts to reflect student progress over time, whereas the State Indicators reflect student proficiency at a single point in time. The Value-Added measure is rated as follows: + (Above): school district has achieved more than one year of expected growth in student progress (Met): school district has achieved one year of expected growth in student progress - (Below): school district has achieved less than one year of expected growth in student progress A school district that achieves above expected growth in student progress for two consecutive years may increase its overall rating by one category. 4. AYP: The goal of the Department is for all students to reach the proficient level in reading and mathematics by Until then, yearly goals are set requiring a specific percentage of students in 10 student groups, such as African American, Hispanic and White students, to reach proficiency in these subjects. For the school district to meet its Adequate Yearly Progress ("AYP") goal, goals for each student group must be met. If any goal is missed, the school district does not meet AYP for the year. Determining the State designation for a school district is a two-step process. First, the combination of the percentage of State Indicators met, PI, and AYP for a school district determine its preliminary designation as follows: Indicators Met Performance Index Score AYP Status Preliminary Designation 94%-100% or 100 to 120 and Met or Not Met = Excellent 75%-93.9% or 90 to 99.9 and Met or Not Met = Effective 0%-74.9% or 0 to 89.9 and Met = 50%-74.9% or 80 to 89.9 and Not Met = Continuous Improvement 31%-49.9% or 70 to 79.9 and Not Met = Academic Watch 0%-30.9% and 0 to 69.9 and Not Met = Academic Emergency For the year, the School District met 53% of the State Indicators, scored a PI of 91.2, and did not meet its AYP. The School District's preliminary designation was Effective. [Balance of Page Intentionally Left Blank] A-10

39 Once a school district's preliminary designation is determined, the value-added measure determines the school district's final designation as follows: Preliminary Designation Value-Added Measure Final Designation Excellent Effective Continuous Improvement Academic Watch Academic Emergency and and and and and Above expected growth for at least 2 consecutive years Otherwise no effect on rating Above expected growth for at least 2 consecutive years Otherwise no effect on rating Above expected growth for at least 2 consecutive years Otherwise no effect on rating Above expected growth for at least 2 consecutive years Otherwise no effect on rating Above expected growth for at least 2 consecutive years Otherwise no effect on rating Excellent with Distinction Excellent Excellent Effective Effective Continuous Improvement Continuous Improvement Academic Watch Academic Watch Academic Emergency The School District's value added measure was + (Above) in The School District's final designation for was Excellent. National Standardized Test Scores The following table sets forth ACT results for the 305 seniors who took the test and graduated from the School District in ACT Scores for Seniors Graduating in 2009 Xenia Community City School District School District State of Ohio United States ACT Score Composite English Mathematics Reading Science Percent of students tested ready for college level courses English Composition 90% 72% 67% Algebra Social Science College Biology All 4 classes Sources: ACT and the Xenia Community City School District A-11

40 Comparative Position of the School District The following tables compare the School District with its similar district cohort (as defined by the Department) and the State average in the areas of sources of revenue, expenditures by category, and teacher statistics. Sources of Revenue, Xenia Community City School District School District Similar Districts State of Ohio Local Funding $4, $4, $4, State Funding 4, , , Federal Funding Source: Ohio Department of Education Expenditures by Category, Xenia Community City School District (Dollars per Pupil) School District Similar Districts State of Ohio Instruction $5, $5, $5, Building Operations 1, , , Administration 1, , , Pupil Support 1, , Staff Support Total Spending Per Pupil $10, $9, $10, Source: Ohio Department of Education Teacher Statistics, Xenia Community City School District School District Similar Districts State of Ohio Teachers' Salaries Average teacher salary $55, $53, $55, Teaching experience 0-4 years 21.20% 22.90% 21.22% 4-10 years years K-12 Pupil-Teacher Ratio * * Source: Ohio Department of Education A-12

41 ECONOMY AND EMPLOYMENT Economic Development The School District is located in the Dayton Metropolitan Statistical Area (the "MSA"), which consists of Greene, Miami, Montgomery and Preble Counties. The County has experienced continued growth in both commercial and residential development over the past several years. A well educated population, available acreage along major thoroughfares, and a convenient location between the cities of Cincinnati, Columbus and Dayton are often cited as reasons for the County's attractiveness to new businesses. The quick commute to these cities has also boosted the residential housing market in the County. New construction has increased the County's property tax base by an average of 2.8% per year over the past ten years. In 2008, construction amounted to $89 million, of which $45 million was residential development and $41 million was commercial development. Commercial development has occurred along I-675 which connects with I-75, I-70 and US 35. Development in this area has included: the Fairfield Commons Mall, which offers more than 120 shops covering more than one million square feet of shopping area; the Greene Town Center, a 900,000 square foot shopping and entertainment project in Beavercreek; and numerous restaurants, specialty shops, national retailers, and professional office spaces along the I-675 corridor. While development in the western portion of the County continue to bring commercial and residential growth, the eastern portion of the County has maintained its agricultural roots. The County consists of nearly 244,000 acres of which 178,000 remain agricultural. This provides the County with diversity that cannot be seen in many counties in the State. The County is rich in quality institutions of higher learning. Few counties in the State offer its citizens the educational opportunities that the County affords its citizens. Clark State, Wright State University, Cedarville University, Central State University, Wilberforce University, the McGregor School (part of Antioch), the Greene County Career Center, Park College, located on the grounds of Wright Patterson Air Force Base (WPAFB), and the Sinclair Community College learning center, located on the grounds of the WPAFB, all provide the citizens of the County and beyond with the opportunity to improve themselves through higher education. In addition, WPAFB is home to the Air Force Institute of Technology, the Air Force graduate school for engineering and management. WPAFB is one of the largest, most diverse and organizationally complex Air Force installations. Past, present and future are inextricably linked here, from the pioneering flights of the Wright brothers to the development of today's most advanced aircraft and aerial systems. Missions for the base's more than 60 units vary from acquisition and logistics management, to research and development, advanced education, flight operations, and a vast array of other activities. WPAFB is by far the largest employer in the County. Their demand for technical skills has helped support the colleges and universities in the County. WPAFB employs nearly 25,000 military and civilian workers, but has also spurred local contractors working in high tech fields that help support development projects at the Air Force base. Additional jobs will be coming to the area due to expansion at WPAFB as the results of the most recent Base Realignment and Closure (BRAC) study. As a result of the changes brought about by BRAC, WPAFB will receive additional 1,200 military and civilian positions on the base. The additional units will support missions in the areas of aerospace medicine research, human performance and sensors research. Approximately $332 million in construction and renovation will take place to prepare facilities for new missions. The WPAFB will become the home of Centers of Excellence for Human Performance and Sensors Research. Construction and transition activities at WPAFB will continue through A-13

42 Residential and commercial growth has increased demand for recreational activities in the County. To satisfy this demand, many local communities have festivals, such as the Sweet Corn Festival in Fairborn, Old Fashion Days in Xenia, Popcorn Festival in Beavercreek, Potato Festival in Spring Valley, Bean Festival in Jamestown, Old Clifton Days in Clifton, and Cedarfest in Cedarville. Tourist attractions include the National Museum of the United States Air Force, the oldest and largest military aviation museum in the world, and the National Afro-American Museum in Wilberforce. Construction continues on the County's system of bicycle paths, which have become part of a larger network, not only connecting throughout the County, but also throughout the region. The Nutter Center at Wright State University offers the top names in music entertainment and NCAA Division I basketball. The County has several outdoor facilities such as John Bryan State Park in Yellow Springs, Sugarcreek Reserve in Bellbrook, and the Clifton Gorge State Nature Preserve in Clifton. The County continues to foster strong government-business relationships. Quality commercial, residential and educational opportunities will continue to attract individuals and businesses to the County in the future. Labor Force Statistics Labor force statistics specific to the School District are not available. The County and the MSA information presented in this section is included for informational purposes only. It should not be implied from the inclusion of such data in this Official Statement that the School District is representative of the County or the MSA, or vice versa. Year Greene County Area Unemployment Rates (annual percentages) MSA State of Ohio United States Year Labor Force (in thousands) Greene County % 4.4% 4.4% 4.7% * * 79.9 * Preliminary average through May Source: Ohio Department of Job and Family Services, Bureau of Labor Market Information A-14

43 The following table lists the largest employers in the County. Largest Employers Greene County Rank Firm Number of Employees Industry 1 Wright-Patterson Air Force Base 25,000 Military 2 Wright State University 2,650 Higher Education 3 Greene County 1,445 Government 4 Greene Memorial Hospital 855 Hospital 5 Beavercreek City Schools 783 Education 6 Cedarville University 722 Higher Education 7 Unison Industries 710 Manufacturing Aviation Technologies 8 Xenia Community City Schools 656 Education 9 Krogers (4 stores) 640 Retail 10 Fairborn City Schools 619 Education 11 Teleperformance USA 473 Contact Center Management 12 Central State University 410 Higher Education 13 Target (2 stores) 305 Retail 14 Kohl's (2 stores) 288 Retail 15 Sugarcreek Local Schools 287 Education 16 City of Fairborn 250 Government 17 Super Value Store's Inc. 226 Retail 18 Home Depot 210 Home Improvement Store 19 YMCA of Greater Dayton 209 YMCA 20 Twist, Inc. 180 Metal Fabricating Source: Greene County 2008 Annual Report [Balance of Page Intentionally Left Blank] A-15

44 Ad Valorem Taxes and Assessed Valuation Overview SCHOOL DISTRICT PROPERTY TAX BASE For property taxation purposes, assessment of real property is performed on a calendar year basis by the elected County Auditor subject to supervision by the Tax Commissioner, and assessment of public utility property and tangible personal property is performed by the Tax Commissioner. Property taxes are billed and collected by the County Treasurer. Taxes collected from real property (other than public utility) in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Public utility real and tangible personal property taxes collected in one calendar year are levied in the preceding calendar year on assessed values determined as of December 31 of that second year preceding the tax collection year. Beginning with the 2009 tax year, general business tangible personal property is no longer subject to tax. Real Property The "assessed valuation" of real property is fixed at 35% of true value and is determined pursuant to rules of the Tax Commissioner, except that real property devoted exclusively to agricultural use is assessed at not more than 35% of its current agricultural use value. Beginning in 2008, certain elderly or disabled resident homeowners may receive a flat $25,000 property tax exemption on the market value of their homestead. Ohio law requires the County Auditor, subject to supervision by the Tax Commissioner, to adjust the true value of taxable real property every six years to reflect current fair market values. This "sexennial reappraisal" is done by individual appraisal of properties. In the third year following a sexennial reappraisal, the County Auditor, again subject to supervision by the Tax Commissioner, performs a "triennial update" to adjust the value of taxable real property to reflect true values. The triennial update is done without individual appraisal of properties, but with reference to a sales-assessment ratio over the three-year period. [Balance of Page Intentionally Left Blank] A-16

45 Personal Property In 2005, the State accelerated its phase-out of the tangible personal property tax. The assessment percentages on tangible personal property under the phase-out are displayed in the following table: Phase-Out Assessment Percentages on Tangible Personal Property Tax Year Inventory 23% 18.75% 12.5% 6.25% 0% 0% 0% Machinery, equipment, and all other business tangible Local telephone company property placed into use after 1995 and all long distance and cellular property 25% 18.75% 12.5% 6.25% 0% 0% 0% 25% 25% 20% 15% 10% 5% 0% Telephone company legacy property 67% 46% 20% 15% 10% 5% 0% Source: Ohio Department of Taxation After 2011, tangible personal property will not be subject to tax. Public utility tangible personal property tangible personal property of electric utilities not used for transmission and distribution and all tangible personal property of gas utilities was not included in the phase-out created by the State. All public utility tangible personal property is assessed at varying percentages of its true value depending on the type of property and the type of utility. The State currently reimburses School Districts for tax losses resulting from the phase-out of the tangible personal property tax. (See "SCHOOL DISTRICT PROPERTY TAX BASE State Reimbursement of Property Tax Revenues.") Tax Abatements and Economic Development Incentives Tax abatements are temporary property tax exemptions designed to stimulate economic growth or promote other activities deemed by the State to be in the public interest. Under Ohio law, tax abatements may be granted for urban renewal projects, community redevelopment corporations, community reinvestment areas, property acquired by municipal corporations engaged in urban redevelopment, enterprise zones, railroad property, and for any improvements declared to serve a "public purpose" in municipalities, townships, and counties. Because the burden of tax abatements falls disproportionately on school districts due to their reliance on property taxes, the State has created safeguards that allow school districts to protect their interests. First, school district representatives sit on tax incentive review councils to monitor compliance with tax abatement agreements and make recommendations on abatements to the governmental entity involved. Second, a school district must be given advance notice of a planned abatement, and be allowed to comment on the abatement prior to its granting. Under certain circumstances, a board of education may "veto" a proposed tax abatement and/or negotiate an annual compensation payment. Finally, municipalities with an income tax in place must negotiate a compensation agreement with a school district if a tax abatement is expected to generate a significant amount of increased payroll to the area. A-17

46 The table below summarizes the tax abated real property within the School District: Property Owner Summary of Tax Abatements Xenia Community City School District (2009 Tax Year) Tax Year Begin End After Tax Year Abatement Percentage Assessed Valuation of Property Brown Publishing Co % $ 711,650 CIL Isotope Separations Inc. # ,240 CIL Isotope Separations Inc. # ,240 Lowe's Home Center, Inc ,702,610 OHTA Press U.S. Inc. # ,110 SAS Automation, Ltd ,630 Superion, Inc. # ,070 Twist, Inc. # ,815,190 Yoder Die Casting ,100 Source: Greene County Auditor Total $12,994,840 The School District has entered into a tax abatement compensation agreement related to the abated property for the Lowe's Home Center ("Lowe's"). During each exemption year in which Lowe's receives a real property tax benefit pursuant to the Ohio Enterprise Zone Agreement (the Agreement ) executed by the City of Xenia and Lowe's, the City of Xenia shall pay the negotiated annual payment amount to the School District. The negotiated annual payment amount is equal to 50% of the total annual municipal income tax revenues received by the City of Xenia from its levy on the wages, salaries, commissions and other compensation of "new employees" located at the Lowe's project site when the total payroll for new employees as defined in the Agreement exceeds $1,000,000 as provided in Ohio Revised Code Section (C)(2). [Balance of Page Intentionally Left Blank] A-18

47 Assessed Valuation The following table classifies the School District's assessed valuation of taxable property according to use: Property Classification Assessed Valuation Xenia Community City School District (2010 Collection Year) Amount Percent of Total Assessed Valuation Real Estate 1 Residential/Agricultural $558,356, % Commercial/Industrial/Mineral 96,751, Public Utility Real Total Real Estate $655,108, % Personal Property 2 General $ 1,650, % Public Utility Personal 17,835, Total Personal $19,486, % Total Assessed Valuation $674,594, % Source: Greene County Auditor Tax Collection Year Growth in School District Assessed Valuation Xenia Community City School District Assessed Valuation Percent Increase Over Prior Year 2004 $567,491, ,874, % ,769, ,710, ,362, ,487, ,594,200 (0.43) Source: Greene County Auditor 1 Real property taxes collected in a calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Real property is assessed at 35% of market value and reappraised every six years, with triennial updates every three years. 2 Tangible personal property taxes collected in a calendar year are levied in the same calendar year, on assessed values during and at the close of the most recent fiscal year of the taxpayer (ending on or before March 30 of said calendar year) at tax rates determined in the preceding year. 3 Year of triennial update 4 Year of sexennial reappraisal A-19

48 Largest Taxpayers The following tables list the largest real estate and public utility taxpayers in the School District. Percentage of total assessed valuation is based on a total assessed valuation of $674,594,200 for collection year Real Estate Taxpayers Name Largest Taxpayers Xenia Community City School District (2010 Collection Year) Type of Business Assessed Valuation Percent of School District's Total Assessed Valuation Deer Creek Community LLC Real Estate Development $5,219, % Wal Mart Real Estate Business Retail 4,429, Supervalu Holdings Inc. Retail 3,730, Lowes Home Centers Inc. Retail 3,146, Cemex Inc. Building Materials 2,395, Sue Ann Beam, Trustee Real Estate 2,025, DDR Xenia and New Bern LLC Real Estate Development 1,809, Twist Inc. Manufacturing 1,589, Xenia Nominee LP Real Estate Development 1,465, Gerdes Inc. Lawn Care 1,293, Public Utility Taxpayers Name Type of Business Assessed Valuation Percent of School District's Total Assessed Valuation Dayton Power & Light Electricity $13,975, % Columbus Southern Power & Light Electricity 1,182, Columbus Gas Gas 1,164, Source: Greene County Auditor [Balance of Page Intentionally Left Blank] A-20

49 History of Voted Taxes The table below provides the 20-year history of voted taxes in the School District. Issues listed in bold were passed by the voters. History of Voted Taxes Xenia Community City School District Election Date Levy or Bond Issue Description Voting For Voting Against November 3, 2009 $34,670,000 Bond Issue 51.16% 48.84% November 3, Permanent Improvement Levy (New) May 5, 2009 $79,950,000 Bond Issue and 0.50 Mill Permanent Improvement Levy (New) November 4, 2008 $41,875,000 Bond Issue and 0.5% Income Tax (New) May 2, % Income Tax (Renewal) November 8, Mill Permanent Improvement Levy (Renewal) November 8, Mill Emergency Levy (Renewal) March 2, Mill Emergency Levy (New) November 4, Mill Emergency Levy (New) May 8, Mill Emergency Levy (Renewal) November 7, Mill Permanent Improvement Levy (Renewal) November 7, % Income Tax (Renewal) November 4, Mill Current Expense Levy (Renewal) November 4, % Income Tax (Renewal) November 5, Mill Current Expense Levy (New) March 19, Mill Permanent Improvement Levy (Renewal) March 19, Mill Current Expense Levy (Renewal) November 3, Mill Emergency Levy (New) June 2, Current Expense Levy (New) November 5, % Income Tax August 6, Mill Permanent Improvement Levy (Renewal) August 6, Mill Current Expense Levy (Renewal) May 7, % Income Tax November 6, Mill Current Expense Levy (New) August 7, Mill Current Expense Levy (New) Source: Ohio Municipal Advisory Council The School District anticipates asking the voters to renew at least one of the following levies on the November 2010 ballot and the others in the calendar year 2011: the 0.5% income tax approved in 2006, the 1.3 mill permanent improvement levy approved in 2005, and the emergency levy approved in The School District will also be asking voters for additional funding in calendar year The amount and method of additional funding has not yet been determined by the School District. The School District is reducing expenditures now and will continue to analyze reductions along with additional funding. A-21

50 Property Tax Rates and Collections The following are the rates (in mills per $1.00 of assessed valuation) at which the Board levied ad valorem taxes for the general categories of purposes in recent years (without the reduction factor discussed below). Property Tax Rates Xenia Community City School District Collection Debt Year Operating * Retirement Permanent Improvement Total * Includes inside millage and outside (voted) millage. Source: Ohio Department of Taxation The total School District operating millage of mills for collection year 2010 includes voted operating levies of mills, mills of which relate to the emergency levy approved in 2005 for collection years The balance of 4.30 mills constitutes the School District's mandated share of the ten mills authorized to be levied without a vote of the electors of the School District (See "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally.") The following table identifies the historical tax collections for the School District: Property Tax Collections Xenia Community City School District Collection Year Assessed Valuation Taxes Levied Taxes Collected (including delinquent taxes) Collection Rate 2004 $567,491,615 $15,762,641 $16,014, % ,874,898 20,152,426 20,590, ,769,288 21,168,099 20,715, ,710,512 21,196,506 21,124, ,362,868 21,238,053 21,101, ,487,934 22,106,743 21,801, ,594,200 N/A N/A N/A Source: Greene County Auditor A-22

51 Property Tax Rate Calculations State law has a "reduction factor" mechanism that is intended to negate increases in taxes resulting from increases in the true value of real property due solely to inflation. Legislation implementing a 1980 constitutional amendment classifies real property as either (1) residential and agricultural or (2) all other real property, and provides for tax reduction factors to be separately computed for and applied to each class. Statutory procedures limit the amount realized by each taxing subdivision from real property taxation, by the application of a tax reduction factor, to the amount realized from those taxes in the preceding year plus: (i) the proceeds of any new taxes (other than renewals) approved by the electors, calculated to produce an amount equal to the amount that would have been realized if those taxes had been levied in the preceding year, and (ii) amounts realized from new and existing taxes on the assessed valuation of real property added to the tax duplicate since the preceding year. Such limitations are expressly inapplicable to amounts realized from taxes levied at a rate required to produce a specified amount, such as for debt service charges or emergency school levies, and from taxes levied inside the tenmill limitation or any applicable municipal charter tax rate limitation. Further, such limitations will not reduce operating millage for school districts below 20 mills or for joint vocational school districts below 2 mills. A reduction factor is computed for each separate levy that is subject to the limitation. A resulting "effective tax rate" reflects the aggregate of those reductions, and is the rate at which real property taxes are in fact collected. Real property tax amounts are further reduced by an additional 10% (12-1/2% in the case of certain owner-occupied residential property) or a flat, $25,000 reduction in taxable value applicable to certain elderly or disabled resident homeowners. See "SCHOOL DISTRICT PROPERTY TAX BASE State Reimbursement of Property Tax Revenues" for a discussion of reimbursement by the State for these reductions. [Balance of Page Intentionally Left Blank] A-23

52 Ad Valorem Tax Levies The following table presents certain information concerning the Board's ad valorem tax levies: Year Voted Ad Valorem Tax Levies Xenia Community City School District Current Millage Rates (2010 Collection Year) Authorized Mills Rate Levied for Current Collection Year 1 Residential/ Agricultural Commercial/ Industrial Total Voted Operating Millage Inside (Unvoted) Millage Voted Bond Retirement Millage Permanent Improvement Millage Total Rate This is the "effective rate." The effective tax rates may be less than the authorized rates listed in the first column. See "FINANCES OF THE SCHOOL DISTRICT - Property Tax Rate Calculations." 2 Ohio Department of Taxation does not report the years in which operating levies approved prior to 1976 were voted, thus operating levies approved prior to 1976 are aggregated in this line Source: Ohio Department of Taxation Repeal of Property Tax Levies Each operating tax levy approved for a continuing period is subject to decrease through a statutory referendum procedure requiring (1) a petition signed by qualified electors of the School District equal in number to those who voted in the last governor's race (to be filed at least 75 days before the general election in any year) stating the amount of the proposed decrease and (2) the approval of the decrease by a majority vote at the general election with the decrease to commence at the expiration of the then current year. No petition has been filed with respect to any existing current expense tax levy of the School District. If such a petition is filed and subsequently approved by the electors of the School District, under Revised Code Section , the Board must continue to levy and collect such amount as will be sufficient to pay the principal of and interest on any notes in anticipation of an increased rate of levy approved for a continuing period of time. [Balance of Page Intentionally Left Blank] A-24

53 Total Property Tax Burden The following table displays the total effective tax rates levied on property located in the School District. In addition to the mills levied by the School District, properties in the School District are subject to a county tax levy. Ad Valorem Tax Levies Xenia Community City School District (mills per $1.00 of assessed valuation; 2010 Collection Year) Taxing District Taxing Authority School District County JVSD Township Other * Total Effective Rates Residential & Agricultural All Other Beavercreek Twp. Xenia Schools Caesarcreek Twp. Xenia Schools Cedarville Twp. Xenia Schools New Jasper Twp. Xenia Schools Spring Valley Twp. Xenia Schools Wayne Twp. Xenia Schools Xenia Twp. Xenia Schools City of Xenia Xenia Schools * "Other" includes any taxes levied by the City, Village, County 911 Services; Fire Districts; the County Health District; County Community College District; Township Cemetery Districts; and the Library District. Source: Ohio Department of Taxation State Reimbursement of Property Tax Revenues Rollback and Homestead Exemption Reimbursement The State reimburses taxing districts, including school districts, for decreased tax revenues due to (a) the 10% reduction or "rollback" in non-commercial property taxes, (b) the 2-1/2% reduction applicable to owner-occupied housing, and (c) the flat, $25,000 reduction in taxable value applicable to certain elderly or disabled homeowners. Such reimbursements are subject to repeal or revision by the State. Public Utility Property Tax Loss Reimbursement In tax year 2001, changes took effect which reduced the assessment percentages applicable to electric generation and natural gas tangible personal property, thereby reducing the amount of tangible public utility property tax revenue collected by taxing districts. In order to replace the taxes no longer received due to the lower assessment percentages, State consumption taxes on electricity and natural gas were enacted in 1999 and 2000, respectively. Funds received by school districts from the School Foundation Program ("State Aid") are determined by a complex funding formula (see "OTHER SOURCES OF SCHOOL DISTRICT FUNDING School Foundation Program" for further discussion). Under this funding formula, decreases A-25

54 in property tax revenues generally result in an increase in State Aid, but such increase is not sufficient to completely offset the decrease in a school district's revenues due to the reduction in the assessment percentages of public utility property. As a result, the Department has calculated an "offset" since 2002 that provides funds to a school district such that the school district realizes no loss in revenues due to the reduction in assessment percentages of public utility property (the "Public Utility Property Tax Loss Reimbursement"). If the increase in State Aid paid to the school district between fiscal year 2002 and the current fiscal year is greater than the inflation-adjusted loss attributable to the reduced assessment percentages for the same time period, no further reimbursement payments are made to the school district. No Public Utility Property Tax Loss Reimbursement will be made after fiscal year Tangible Personal Property Tax Loss Reimbursement 1 The State reimburses certain taxing districts for the loss of tax revenues due to the phase-out of the tax on general business tangible personal property, and on the tangible personal property belonging to telephone, telegraph, and interexchange companies (the "Tangible Personal Property Tax Loss Reimbursement"; see "Ad Valorem Taxes and Assessed Valuation Personal Property," above). In order to replace a portion of the lost revenue, a commercial activity tax was enacted in 2005 and is imposed on gross receipts, including receipts of services, in the State. The Tangible Personal Property Tax Loss Reimbursement applies to levies that were in effect for the collection of tangible personable property taxes for Tax Year 2004, Tax Year 2005, and any levies first collected in Tax Year 2006 that were approved by voters prior to September 1, 2005 ("Qualifying Levies"). The Tangible Personal Property Tax Loss Reimbursement uses Tax Year 2004 as a base year to calculate the amount of property tax revenue lost from the tangible personal property phase-out in each subsequent tax year. Fixed-rate levies are reimbursed as a percentage of the sum of the product of qualified levies and the Tax Year 2004 valuation of tangible personal property (the "Base Year Amount") according to the table below: Percent of Base Year Amount of Revenue to School Districts by Tax Year and Class of Property Fixed-Rate Levies FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Inventory Reimbursement 106.5% 104.9% 96.1% 85.0% 73.9% 73.9% Manufacturing M & E Telephone Company Property All Other Property Beginning in fiscal year 2008, Tangible Personal Property Tax Loss Reimbursement payments to school districts are offset by the funding formula increase in State Aid resulting from decreased assessed valuation due to the tangible personal property phase-out. 2 The Tangible Personal Property Tax Loss Reimbursement operates in a different manner with respect to fixed-sum levies. Under existing levy law, a drop in valuation triggers an increase in tax rates for fixed-sum levies. The Tangible Personal Property Tax Loss Reimbursement with respect to Qualifying Levies that are of a fixed sum ("Qualified Fixed-Sum Levies") serves to limit such increase to taxpayers 1 This section only provides a brief summary of the State's Tangible Personal Property Tax Loss Reimbursement procedures. Please see property/ppt_law_changes_ stm for further information. 2 For a detailed description of the Department's methodology for calculating the offset, please see nt= A-26

55 resulting from the tangible personal property phase-out to one-half mill. If the aggregate millage of a school district's Qualified Fixed-Sum Levies times the decrease in assessed valuation resulting from the tangible personal property phase-out exceeds one-half mill of total assessed valuation in the tax year being considered (the "One-Half Mill Threshold"), the State will reimburse the school district 100% of the amount in excess of the One-Half Mill Threshold for the life of the fixed-sum levy. School Foundation Program OTHER SOURCES OF SCHOOL DISTRICT FUNDING The State assists public school districts under a statutory program that includes the School Foundation Program. 1 School Foundation Program funds distributed to a school district are required to be used for current operating expenses, unless specifically allocated by the State for some other purpose. Payments made pursuant to the School Foundation Program are expected to increase due to the projected increase in need resulting from the accelerated phased elimination of the tax on tangible personal property. State reimbursement of property tax losses paid to school districts will be reduced by this increase, if any, in School Foundation Program receipts. (See "SCHOOL DISTRICT PROPERTY TAX BASE State Reimbursement of Property Tax Revenues.") Basic eligibility for School Foundation Program payments is based on a school district's compliance with State-mandated minimum standards. The School District is in compliance with those standards and has no reason to believe it will not remain in compliance. The State also assists school districts by funding the School District Solvency Assistance Fund (the "Solvency Fund"). Created within the Solvency Fund is the School District Shared Resource Account and the Catastrophic Expenditures Account. A school district must be in a state of "fiscal emergency" to qualify for assistance and grants from the School District Shared Resource Account. A school district may qualify for assistance and grants from the Catastrophic Expenditures Account if the school district suffers an unforeseen catastrophic event that severely depletes the financial resources of the school district. School districts receiving assistance and grants from the Solvency Fund are required to repay such advances no later than the end of the second fiscal year following the fiscal year in which they received the assistance and grants, and if they fail to do so, the State will repay the Fund from amounts the school district would otherwise receive pursuant to the School Foundation Program. The School District does not have any outstanding advances from the Solvency Fund. The Solvency Fund, with the exception of the Catastrophic Expenditures Account, evolved from statutes declared unconstitutional in DeRolph. (See "LITIGATION School Funding Litigation.") State Classroom Facilities Assistance The Ohio School Facilities Commission (the "Commission") was created in 1997 to administer the provision of financial assistance to Ohio school districts for the acquisition or construction of classroom facilities in accordance with Revised Code Chapter Revised Code Chapter 3318 provides for several different school facilities assistance programs involving financial assistance from the State. These programs include the Classroom Facilities Assistance Program, the Exceptional Needs School Facilities Assistance Program, and the Expedited Local Partnership Program. Each of these programs provides State funding for all or a portion of qualifying school facilities projects based on financial tests, inadequate facilities, or a combination of the two. Participation in these programs also requires the school district to commit to adhere to Commission requirements for project construction. 1 The Supreme Court of Ohio has declared the School Foundation Program unconstitutional. See "LITIGATION - School Funding Litigation." A-27

56 Classroom Facilities Assistance Program Under the Classroom Facilities Assistance Program (the "Facilities Program"), the State and a school district share the cost of classroom facilities for the school district. (The Supreme Court of Ohio has declared the Classroom Facilities Assistance Program to be unconstitutional to the extent that it is underfunded. See "LITIGATION - School Funding Litigation"). The State share and school district share, or local share, for such facilities are determined after the Commission conducts an on-site assessment of the school district's current classroom facilities. With this assessment, the Commission establishes a master classroom facilities plan, including state and local share amounts, for the school district. The Commission approves a new group of school districts for classroom facilities assistance every calendar year based on a three-year average of each school district's adjusted per pupil valuation. This adjusted per pupil valuation ranking is calculated annually by the Department. Once approved by the Commission, a school district may meet its local share obligation from bonds or other local resources. In the event that a school district chooses to meet its local share obligation via bonds, generally the school district must only issue bonds in an amount equal to the greater of: (1) an amount that increases the total net indebtedness of the school district to within $5,000 of the required level of indebtedness under the Facilities Program; or (2) an amount equal to the required percentage of basic project cost, as defined by the Facilities Program. In addition, the Facilities Program also generally requires the school district to comply with certain other requirements, including generating funds to maintain the school facilities for a 23 year period using either: (1) a voted one-half (1/2) mill levy for maintenance purposes; (2) earmarking an existing continuing permanent improvement levy or income tax (or a combination of the two) in an amount equivalent to the amount produced by a one-half (1/2) mill property tax levy; (3) a local donated contribution in whole or in part; or (4) an annual transfer, upon Commission approval. On August 18, 2008, the State Controlling Board approved the School District's participation in the Facilities Program. The School District participation in the Facilities Program is expected to be in two segments. Segment 1 provides that the School District will participate with $30,991,568 as the local share and $26,400,224 as the State share. The School District has determined to meet its local share and its locally funded initiatives in the amount of $3,678,432 through the issuance of the Series 2010A Bonds, the Series 2010B Bonds, and the Series 2010C Bonds. The School District has determined to meet its maintenance obligation by earmarking its 0.50 mill Permanent Improvement Levy approved November 3, School District Income Tax Under Ohio law, a school district, with the approval of the voters, may impose an income tax for the purpose of providing additional funds for the operation of the school district. The tax may be imposed upon the income of individuals residing in the school district and estates of decedents who at the time of their death were residents of the school district; or solely upon the earned income of individuals residing in the school district. Such selection must be made by the board of education prior to submission of the question of an income tax to the board of elections and be clearly stated on the election ballot. The tax may be imposed either for a specified number of years or for a continuing period of time. If the tax is imposed for a period in excess of five years, the voters of the school district may, by majority vote, repeal the tax, provided that a proposal to repeal the tax may not be initiated more than once in any five-year period. A-28

57 The School District levies a voted 0.5% income tax for general operations on the income of residents and of estates. The income tax had an original effective date of January 1, 1998, and has subsequently been renewed through December 31, Employers of residents are required to withhold income tax on compensation and remit the tax to the State. Taxpayers are required to file an annual return. The State makes quarterly distributions to the School District after withholding amounts for administrative fees and estimated refunds. Income tax revenue is credited to the General Fund. Statutory Debt Limitations Generally SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS The School District may issue voted general obligation bonds, and notes issued in anticipation thereof, pursuant to a vote of the electors of the School District. Ad valorem taxes, without limitation as to amount or rate, assessed to pay debt service on voted bonds are authorized by the electors at the same time they authorize issuance of the bonds. Such voted debt is subject to the direct debt limitations but is not subject to the indirect debt limitation. Voted obligations may also be issued by certain overlapping subdivisions. General obligation bonds and notes issued in anticipation thereof, may also be issued by the School District (and certain overlapping political subdivisions, such as Greene County without a vote of the electors. Unvoted debt is subject to both the direct and indirect debt limitations. A political subdivision's debt limitations are based on its "tax valuation," which is the aggregate of the valuations of real property, personal property, and public utility property that is subject to ad valorem property taxation. For school districts, tax valuation is calculated in accordance with R.C (PP) and excludes the valuation of tangible personal property used in business, telephone or telegraph property, interchange telecommunications company property, or personal property owned or leased by a railroad company and used in railroad operations. Direct Debt Limitations Revised Code Section provides that, exclusive of certain "exempt debt" (discussed below), the net principal amount of unvoted general obligation debt of a school district may not exceed the following percentages of a School District's tax valuation: (a) for permanent improvements generally, one-tenth of one percent (0.10%); and (b) for qualified energy conservation projects under Revised Code Section , nine-tenths of one percent (0.90%). Revised Code Section also provides that the net principal amount of both voted and unvoted general obligation debt of the School District may not exceed 9% of a school district's tax valuation, except in the specific situations discussed below These two limitations, referred to as "the direct debt limitations," may be amended from time to time by the State. State Consents and Special Needs Status Revised Code Section further provides that bonds shall not be submitted to popular vote in an amount which will make the net indebtedness after the issuance of such bonds exceed 4% of a school district's tax valuation, unless the school district obtains the consent of the State Superintendent (acting under policies adopted by the State Board of Education) and the Tax Commissioner (acting under written policies of said Tax Commissioner). Revised Code Section (I) permits school districts to incur net A-29

58 indebtedness in excess of the 4% consent or 9% limitation when necessary to fund the Commissionrequired local effort. 1 Exempt Debt The Revised Code provides that certain debt a school district may issue is exempt from direct debt limitations ("exempt debt"). Exempt debt includes, among other things, bonds payable from school district income taxes under Revised Code Section (E); notes issued in anticipation of the collection of current revenues; notes issued for qualified energy savings projects under Revised Code Section ; and certain bonds issued for school construction purposes following declaration of an emergency. Notes issued in anticipation of "exempt" bonds also are exempt debt. In calculating debt subject to the direct debt limitations, the amount of money in a school district's bond retirement fund allocable to the principal amount of non-exempt debt is deducted from gross non-exempt debt. Indirect Debt Limitation Unvoted general obligation bonds and bond anticipation notes cannot be issued by the School District unless the tax required to be imposed on taxable property in the School District for the payment of the debt service on (a) such bonds (or the bonds in anticipation of which notes are issued), and (b) all outstanding unvoted general obligation bonds (including bonds in anticipation of which notes are issued) of the combination of overlapping taxing subdivisions in the School District resulting in the highest tax rate required for such debt service, in any one year, is ten mills or less per $l.00 of assessed valuation. This indirect debt limitation, the product of which is commonly referred to as the "ten-mill limitation," is imposed by a combination of the provisions of Article XII, Sections 2 and 11 of the Ohio Constitution and Revised Code Section The ten-mill limitation is the maximum aggregate millage for all purposes that may be levied on any single piece of property by all overlapping taxing subdivisions without a vote of the electors. The ten mills which may be levied without a vote of the electors is in fact levied, collected and allocated among the School District and its overlapping taxing subdivisions for general fund purposes pursuant to a statutory formula. This "inside" millage allocated to each overlapping taxing subdivision is required by present Ohio law to be used first for the payment of debt service on unvoted general obligation debt of the subdivision, unless provision has been made for its payment from other sources. The balance of the millage is available for other purposes of the subdivision. Thus, to the extent this inside millage is required for debt service of a taxing subdivision (which may exceed the formula allocation to that subdivision), the amount that would otherwise be available to that subdivision or to other such overlapping subdivisions for general fund purposes is reduced. A subdivision's allocation of inside millage can be exceeded only in the event it is required for the payment of debt service on its unvoted general obligation debt and, in that case, the inside millage allocated to the other overlapping subdivisions would be reduced proportionally to bring the aggregate levies of inside millage down to ten mills. In case of notes issued in anticipation of the issuance of unvoted general obligation bonds, the highest annual debt service estimated for the bonds anticipated by the notes is used to calculate the millage required. 1 Commission-required local effort includes a school district's local share and required locally funded initiatives, but does not include school district-desired locally funded initiatives. A-30

59 The ten-mill limitation applies to all unvoted general obligation debt even if debt service on some of such debt is expected to be paid in fact from special assessments, utility earnings or other sources. In calculating whether or not unvoted debt to be issued by the School District is within the tenmill limitation, it is necessary to determine the total outstanding debt service requirements within the tenmill limitation of all the taxing subdivisions overlapping the School District. According to figures maintained by OMAC, mills of the School District's ten-mill limitation remain available. Bond Anticipation Notes Under Ohio law, notes, including renewal notes, issued in anticipation of the issuance of general obligation bonds may be issued and outstanding from time to time up to a maximum period of twenty years from the date of issuance of the original notes. Any period in excess of five years must be deducted from the permitted maximum maturity of the bonds anticipated, and portions of the principal amount of notes outstanding for more than five years must be retired in amounts at least equal to, and payable not later than, principal maturities that would have been required if bonds had been issued at the expiration of the initial five-year period. The last maturity of any bonds issued to refund general obligation bond anticipation notes may not be later than the year of last maturity permitted by law for the bonds anticipated. Bond anticipation notes may be retired at maturity from the proceeds of the sale of renewal notes, the proceeds of the sale of the bonds anticipated by such notes, from other available funds of the School District, or from a combination of these sources. The ability of the School District to retire its outstanding bond anticipation notes from the proceeds of the sale of either renewal notes or bonds will be dependent upon the marketability of such renewal notes or bonds under market conditions then prevailing. Under present Ohio law, there is no ceiling on the annual interest rate permitted on general obligation notes and bonds of school districts. As of the date of this Official Statement, $34,670,000 of the debt of the School District is in the form of general obligation bond anticipation notes. After issuance of the Series 2010A Bonds, the Series 2010B Bonds, and the Series 2010C Bonds and use of the proceeds of such bonds to retire the Outstanding Notes on July 29, 2010, none of the debt of the School District will be in the form of general obligation bond anticipation notes. [Balance of Page Intentionally Left Blank] A-31

60 School District Debt Currently Outstanding Upon issuance of the Bonds, the School District will have the following issues of bonds and notes outstanding (excluding the Refunded Notes and the Outstanding Notes): Outstanding Debt Xenia Community City School District Issue Dated Date Final Maturity Balance Outstanding July 28, 2010 Series 2010 Notes 07/28/ /01/2014 $ 670, Series 2010A Bonds 07/28/ /01/ ,160, Series 2010B Bonds 07/28/ /01/ , Series 2010C Bonds 07/28/ /15/ ,305, Total $35,334, Source: Xenia Community City School District [Balance of Page Intentionally Left Blank] A-32

61 Debt Service Requirements The following schedule presents the School District's actual debt service requirements for debt currently outstanding and the Securities: Debt Service Requirements Xenia Community City School District Calendar Outstanding Obligations The Securities Total Gross Year Principal (1) Interest (2) Principal Interest (3) Debt Service (4) Total Net Debt Service (5) $581, $ 454, $1,036, $ 602, , $ 170, ,330, ,349, ,077, , , ,327, ,347, ,075, , , ,153, ,268, ,996, , , ,220, ,290, ,018, , , ,321, ,198, ,926, , , ,354, ,218, ,946, $ 810, , , ,572, ,233, ,961, ,170, , ,319, ,338, ,066, ,180, , ,319, ,348, ,076, ,190, , ,319, ,358, ,086, ,300, , ,319, ,468, ,196, ,325, , ,319, ,493, ,221, ,340, , ,319, ,508, ,236, ,390, , ,319, ,558, ,286, ,445, , ,319, ,613, ,341, ,450, , ,319, ,618, ,346, ,560, , ,319, ,303, ,411, ,055, ,319, ,374, ,860, ,115, ,253, ,368, ,878, ,205, ,183, ,388, ,922, ,275, ,108, ,383, ,943, ,345, ,025, ,370, ,960, ,495, , ,432, ,053, ,575, , ,415, ,070, ,660, , ,398, ,088, ,780, , ,410, ,138, ,780, , ,294, ,063, ,855, , ,252, ,073, ,025, , ,299, ,176, ,140, , ,281, ,217, Total $14,160, $14,600, $21,174, $37,292, $87,228, $61,322, (1) Includes the estimated mandatory sinking fund deposits to be made for the Series 2010A Bonds. (2) Includes the interest to be paid on the Outstanding Notes at maturity on July 29, 2010 and the gross interest on the Series 2010A Bonds without deduction for the Series 2010A Direct Payments that the School District expects to receive from the Treasury. The amount of the Series 2010A Direct Payments expected to be received through maturity of the Series 2010A Bonds is $12,782, The School District has covenanted to use the Series 2010A Direct Payments to pay the debt service on the Series 2010A Bonds. (3) Includes the gross interest on the Series 2010C Bonds without deduction for the Series 2010C Direct Payments. The total amount of the Series 2010C Direct Payments expected to be received through maturity of the Bonds is $13,123, The School District has covenanted to use the Series 2010C Direct Payments to pay the debt service on the Series 2010C Bonds. (4) Includes the gross interest on the Series 2010A Bonds and the Series 2010C Bonds without deduction for the Series 2010A Direct Payments and the Series 2010C Direct Payments that the School District expects to receive from the Treasury. The total amount of the Series 2010A Direct Payments and the Series 2010C Direct Payments expected to be received through maturity of the Series 2010A Bonds and the Series 2010C Bonds is $25,906, The School District has covenanted to use the Series 2010A Direct Payments and the Series 2010C Direct Payments to pay the debt service, respectively, on the Series 2010A Bonds and the Series 2010C Bonds. (5) Excludes the total amount ($25,906,158.16) of the Series 2010A Direct Payments and the Series 2010C Direct Payments expected to be received from the Treasury through maturity of the Series 2010A Bonds and the Series 2010C Bonds. The School District has covenanted to use the Series 2010A Direct Payments and the Series 2010C Direct Payments to pay the debt service, respectively, on the Series 2010A Bonds and the Series 2010C Bonds. Source: Xenia Community City School District No bonds have been authorized by the electors that have not yet been issued. The School District is not and has not been in default in the payment of debt service on any of its general obligation bonds or notes. A-33

62 Overlapping Subdivision Indebtedness In addition to the School District, other political subdivisions have the power to issue bonds and to levy taxes or cause taxes to be levied on taxable real property in the School District. The estimated outstanding bonded indebtedness of such political subdivisions (excluding self-supporting debt and debt payable primarily from enterprise revenues or special assessments) is as follows: Overlapping Units Overlapping Debt Xenia Community City School District Estimated Outstanding Debt Percent Applicable to School District Estimated Amount of Overlapping Debt Greene County $29,115, % $5,089,389 Warren County 103, City of Xenia 880, ,000 Beavercreek Township 235, ,434 Greene County Career Center JVSD 183, ,497 Total $6,002,330 Source: Ohio Municipal Advisory Council The following table shows the per capita debt of the residents in the School District based upon the 2006 OMAC estimate of 34,630 people residing in the School District, the above overlapping indebtedness figures and the School District debt shown above, including the Securities: Debt Per Capita Xenia Community City School District School District Debt, per capita $1, Overlapping Debt, per capita Total Debt, per capita $1, Source: Ohio Municipal Advisory Council and Xenia Community City School District calculations [Balance of Page Intentionally Left Blank] A-34

63 Debt Capacity Analysis The following table provides an analysis of the School District's debt capacity as of July 28, The School District's tax valuation is calculated in accordance with R.C (PP) and is based on Collection Year 2010 data provided by the Department and the County Auditor. Debt Capacity Xenia Community City School District A. Tax valuation $672,959,470 B. Total debt, including the Bonds but excluding the Outstanding Notes and the Refunded Notes 35,334,982 C. Exempt debt 0 D. Total non-exempt debt (B minus C) 35,334,982 E. F. G. H. 1/10 of 1% direct debt limitation (1/10 of 1% of tax valuation) Total limited tax non-exempt bonds and notes outstanding (not including Revised Code Section (G) debt) Debt leeway within 1/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (E minus F) 9/10 of 1% direct debt limitation (Section (G) debt) (9/10 of 1% of tax valuation) 672, ,959 6,056,635 I. Total Revised Code Section (G) debt 670,000 J. Debt leeway within 9/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (H minus I) 5,386,635 K. 9% direct debt limitation 60,566,352 L. Debt leeway within 9% direct debt limitation (K minus D) * 25,901,370 * Debt leeway is determined without reference to applicable moneys in the School District's bond retirement fund. Source: Greene County Auditor, Ohio Department of Taxation, and Xenia Community City School District calculations [Balance of Page Intentionally Left Blank] A-35

64 Lease Obligations Under Ohio law, school districts have only the authority to lease or lease purchase any capital asset that is expressly granted by statute or necessarily implied from expressly granted authority. Express statutory authority exists for true leases (i.e., leases where no portion of the lease payment is applied toward the purchase of the capital asset) or lease-purchase or installment sale arrangements for the following: land, office equipment, school buses, administrative office facilities and buildings for any school district purpose. Except in cases where lease-purchase or installment sale arrangements include certain provisions providing that the obligations under such agreement may be terminated at the end of a fiscal year (e.g., a requirement of annual appropriation in order to extend the lease term beyond the current fiscal year), such agreements would constitute "debt" for purposes of the indirect debt limitation and the statutory direct debt limitations discussed more fully herein (see "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS - Statutory Debt Limitations Generally"). The School District currently has eight lease obligations as follows. At the expiration of each lease, the School District will own the leased property. Leased Property Lease Obligations Xenia Community City School District Term of Lease Expiration Date of Lease Total Annual Obligation Apple Computers 4 Years 08/23/2011 $38,623 Dell Computers 4 Years 10/01/ ,095 Phone Equipment 7 Years 07/11/ ,418 Technology Equipment 5 Years 01/01/ ,600 School Buses 10 Years 07/01/ ,500 School Buses 10 Years 10/01/ ,299 Apple Computers 4 Years 08/08/ ,515 Dell Computers 4 Years 09/01/ ,059 Total $358,109 Source: Xenia Community City School District Future Financings Other than the Series 2010 Notes, the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds, the School District does not anticipate any additional capital financings in the next five years. [Balance of Page Intentionally Left Blank] A-36

65 FINANCES OF THE SCHOOL DISTRICT Budgeting, Tax Levy and Appropriations Procedures The Revised Code contains detailed provisions regarding School District budgeting, tax levy and appropriation procedures. These procedures involve review by County officials at several steps. School District budgeting for a fiscal year formally begins with the preparation of a tax budget or alternative document as determined by the County Budget Commission, comprised of the County Auditor, County Treasurer and County Prosecuting Attorney. This budget is adopted by the Board by the January 15th prior to the fiscal year to which it pertains. Among other items, the tax budget must show the amounts required for debt service, the estimated receipts for payment from sources other than ad valorem property taxes and the net amount for which an ad valorem property tax levy must be made. The tax budget then is presented for review by the Budget Commission. The Budget Commission holds a public hearing to review the budget, and issues, by March 1st, the Certificate of Estimated Resources which is the basis for School District appropriations and expenditures for the coming fiscal year. Upon approval of the tax budget and issuance of the Certificate of Estimated Resources, the County Budget Commission certifies its actions to the Board together with the approved tax rates. Thereafter, the Board levies the approved taxes and certifies them to the proper County officials. The approved and certified tax rates are reflected in the tax bills sent to property owners during the collection year. Real property taxes are payable on a calendar year basis, generally in two installments with the first due usually in January and the second due in June or later. At the start of each fiscal year, the Board adopts a temporary appropriation measure to begin that new fiscal year and then, within three months, a permanent appropriation measure for that fiscal year. Permanent appropriation measures may be amended or supplemented during the fiscal year. Annual appropriations may not exceed the County Budget Commission's official estimates of resources. The County Auditor must certify that the Board's appropriation measures, including any supplements or amendments, do not appropriate moneys in excess of the amount set forth in the latest of those official estimates. The County serves as tax collector for the School District. Investments and deposits of County funds are governed by Revised Code Chapter 135 (the "Uniform Depository Act"). The County Treasurer is responsible for those investments and deposits. The County's most recent audited financials contain a recitation of the County's current investment practices and can be obtained at the Ohio Auditor of State website: Financial Reports and Audits The School District's fiscal year is the twelve-month period beginning July 1 and ending June 30. The Board maintains its accounts, appropriations and other fiscal records on a basis in accordance with Generally Accepted Accounting Principals ("GAAP") guidelines. The State Auditor is charged by law with the responsibility for auditing the financial statements of each taxing subdivision and most public agencies and institutions. A financial report for each fiscal year is required to be filed with the State Auditor pursuant to Revised Code Section Such reports are required to be submitted to the State Auditor at the close of each fiscal year. At the time of filing of such report, the Treasurer is required to publish a notice that the report is completed and available for review in the Treasurer's office. A-37

66 The most recent audit of the School District's financial statements by the State Auditor was completed through the fiscal year ending June 30, The Auditor did make certain citations and an adjustment, but did not make any management recommendations or findings for recovery. No bring-down procedures have been undertaken by the State Auditor since the date of the financial statements. The audited Basic Financial Statements for the Year Ended June 30, 2009 are attached hereto as APPENDIX B. Governmental Accounting Standards Board pronouncements and Financial Accounting Standards Board pronouncements are the principal sources used to determine the accounting principles employed under GAAP. These publications, among other things, provide for a modified accrual basis of accounting for governmental funds and for a full accrual basis of accounting for proprietary funds and for each major and aggregated non-major fiduciary funds. The publications also further provide for the preparation of balance sheets for each major and non-major fund, and statements of revenues and expenditures, and changes in fund balances (major and aggregated non-major governmental funds) or statements of revenues, expenses and changes in retained earnings/equity (major and aggregated non-major proprietary funds) and statement of cash flows. The principles further require preparation of a statement of net assets and a statement of activities for the entity's business type and government type activities on the full accrual basis of accounting, and management's discussion and analysis of major events and transactions during the year. Five-Year Projection Boards of education are required to submit a five-year projection of operational revenues and expenditures (commonly known as the "five-year forecast") according to Department rules. Pursuant to such rules, the Department reviews the School District's five-year projection to determine if the School District has projected a deficit during the first three years of the five-year projection period. If the Department determines that further fiscal analysis is needed, the Department must forward the projection to the State Auditor, who will determine if the School District must be formally notified of a pending projected deficit. The School District must then take steps to eliminate any deficit in the current year and to plan to avoid projected deficits. The Board approved a five-year projection on May 10, 2010, a copy of which can be found in APPENDIX C. Deficit projections arising from the "five-year forecast" may have the effect of triggering certain fiscal oversight mechanisms created under State law. Fiscal Oversight System The State has created a fiscal oversight system designed to ensure the financial stability of public school districts so that they can continue to perform the vital governmental mission of educating children while meeting their ongoing obligations to creditors, employees, vendors and suppliers. Under this fiscal oversight system, a school district may be declared to be in a state of "fiscal caution," "fiscal watch," or "fiscal emergency" based on certain triggering criteria established by law. These triggering criteria relate primarily to the size of the school district's current and projected operating deficits, but also include an evaluation of the school district's financial practices and its effectiveness in taking the necessary corrective measures. Increasing levels of intervention and control are imposed with each successive determination, culminating (at the "fiscal emergency" level) in the creation of an independent governing board for the school district. This independent governing board, the Financial Planning and Supervision Commission ("FPSC"), is vested with extraordinary powers, including the power to remove the superintendent and/or the treasurer and to implement staff reductions which would otherwise violate A-38

67 existing collective bargaining agreements. The State Auditor may conduct a performance audit of a school district in fiscal caution, fiscal watch, or fiscal emergency at any time. 1 The School District is not subject to a declaration of fiscal caution, fiscal watch, or fiscal emergency, and is not subject to any directives from the State Auditor, the State Superintendent or the FPSC arising from any prior declaration. General Fund Operations The General Fund is the main operating fund of the School District. It is the fund from which most of the School District's expenditures are paid and into which most of the School District's revenues are deposited. The School District derives most of its revenues from a tax on real and tangible personal property and from State aid, including the School Foundation Program. (See "OTHER SOURCES OF SCHOOL DISTRICT FUNDING School Foundation Program.") Other Funds Ohio school districts are required to establish the following funds as indicated: Textbook and Instructional Materials Fund 2 Fund Source and Amount of Balance Purpose 3% of operating revenues 3 using the state base-cost formula amount for the preceding fiscal year multiplied by the School District's student population for the preceding fiscal year Capital and Maintenance Fund 2 3% of general fund revenues 5 using the state base-cost formula amount for the preceding fiscal year multiplied by the School District's student population for the preceding fiscal year Acquisition of textbooks and instructional software, material, supplies and equipment 4 Acquisition, replacement, enhancement, maintenance, or repair of permanent improvements Any balance remaining in the above funds at the end of the current fiscal year is carried over to the next fiscal year. 1 For more information about the criteria the State Auditor and State Superintendent use to determine whether a school district should be placed on fiscal caution, fiscal watch, or fiscal emergency, please visit the State Auditor's website at 2 A school district may elect to set aside funds pursuant to previous law by notifying the State Auditor within 90 days of the beginning of the fiscal year of such election. 3 A different percentage requirement may be set by the State Auditor. 4 A school district that meets the specified criteria can spend the revenues contained in the Textbook and Instructional Materials Fund for purposes other than those specified. 5 A school district may elect to set aside funds from the proceeds of a permanent improvement levy instead of diverting funds from the general fund to meet this requirement. A-39

68 Investment of Funds According to the Treasurer of the School District, all moneys of the School District, specifically moneys in the general fund, the bond retirement fund, and all project funds containing proceeds of any debt issuances of the School District (including the Securities), are presently or will be invested in accordance with the requirements of Ohio law, and in particular the Uniform Depository Act. Under Revised Code Section , the School District may invest its funds, provided that such investments generally must mature or be redeemable within five years from the date of purchase. The classifications of obligations which are eligible for such investment by the School District range from investment in the State Treasury Asset Reserve of Ohio investment pool ("STAR Ohio") to investment in United States Treasury bills, commercial paper, certificates of deposit and bankers acceptances. Certain investment practices remain exclusive to those school districts whose fiscal officers have completed additional training in accordance with the Uniform Depository Act. Further, pursuant to Revised Code Section , all investments of the School District, except for investments in securities in STAR Ohio and certain no-load money market mutual funds, must be made through members of the National Association of Securities Dealers, Inc., banks, savings banks, or savings and loan associations regulated by the State superintendent of financial institutions or through institutions regulated by the comptroller of the currency, Federal Deposit Insurance Corporation, or board of governors of the Federal Reserve System. The School District interprets the limits on Federal guaranteed investments, bankers' acceptances, commercial paper and all other legal investments very conservatively. No moneys of the School District have ever been invested in interest-only obligations, reverse-repurchase obligations, inverse floater obligations, or other investment vehicles commonly referred to as derivative investments. No moneys of the School District are invested in obligations which mature later than the time at which it is reasonably expected that the School District will need access to such moneys in order to meet current financial commitments. The Treasurer has attended special training in all of the investment areas to assure strict compliance with the strictly conservative investment philosophy of the School District. All investments are transacted with banks or other financial institutions operating in the State. Complete detail of the current investment practices of the School District can be found in the most recent audited financial statements of the School District (see APPENDIX B herein). School District Insurance The School District maintains comprehensive insurance coverage with private carriers for real property, building contents and vehicles in the amount of $145,851,491 with a $5,000 deductible clause per occurrence. In addition, the School District maintains liability coverage with a limit of $2,000,000 in the aggregate ($1,000,000 per occurrence) with a $10,000 deductible clause per occurrence for errors and omissions and no deductible clause for general liability. The School District also carries insurance coverage for sexual misconduct, with limits of $1,000,000 per occurrence and $1,000,000 in the aggregate per year, and $4,000,000 umbrella liability with a $10,000 self insured retention. Ohio law provides immunity for political subdivisions such as the School District from liability in damages. The immunity covers injury, death, or loss to persons or property allegedly caused by an act or omission of such political subdivisions or their employees in connection with governmental and proprietary functions, as defined in the Ohio statutes. Included among such governmental functions is the design, construction, reconstruction, renovation, repair, maintenance, and operation of any school athletic facility, school auditorium, or gymnasium. The statutes have no effect on any liability imposed by federal law or other federal cause of action. Pursuant to Ohio law, there are, however, five areas in which a political subdivision may be held liable for such loss. These include the negligent operation of a motor A-40

69 vehicle by employees engaged within the scope of their employment and authority; negligent performance of proprietary functions; negligent failure to keep public roads in repair, and other negligent failure to remove obstructions from public roads; negligence of employees due to physical defects within or upon the grounds of buildings used in the performance of governmental functions, excluding jails, juvenile detention workhouses and other detention facilities; and liability specifically imposed by statute. Ohio law also imposes a two-year statute of limitations and puts limits on the damages which may be recovered from such political subdivisions. No punitive or exemplary damages can be recovered, and any insurance benefits are deducted from any award against a political subdivision. Although there is no limitation with respect to compensatory damages representing a person's economic loss, there is a $250,000 per person ceiling on the compensatory damage that represents a person's non-economic loss in cases other than wrongful death, in which case there is no maximum limitation. [Balance of Page Intentionally Left Blank] A-41

70 APPENDIX B BASIC FINANCIAL STATEMENTS XENIA COMMUNITY CITY SCHOOL DISTRICT GREENE AND WARREN COUNTIES, OHIO For the Fiscal Year Ended June 30, 2009 B-1

71 Xenia Community School District Greene County, Ohio Basic Financial Statements June 30, 2009 (with Independent Auditors Report) B-2

72 Board of Education Xenia Community School District 578 East Market Street Xenia, Ohio We have reviewed the Independent Auditors Report of the Xenia Community School District, Greene County, prepared by Clark, Schaefer, Hackett & Co., for the audit period July 1, 2008 through June 30, Based upon this review, we have accepted these reports in lieu of the audit required by Section , Revised Code. The Auditor of State did not audit the accompanying financial statements and, accordingly, we are unable to express, and do not express an opinion on them. Our review was made in reference to the applicable sections of legislative criteria, as reflected by the Ohio Constitution, and the Revised Code, policies, procedures and guidelines of the Auditor of State, regulations and grant requirements. The Xenia Community School District is responsible for compliance with these laws and regulations. Mary Taylor, CPA Auditor of State March 3, E. Broad St. / Fifth Floor / Columbus, OH Telephone: (614) (800) Fax: (614) B-3

73 TABLE OF CONTENTS Independent Auditors Report Basic Financial Statements: Management s Discussion and Analysis Statement of Net Assets...11 Statement of Activities...12 Balance Sheet Governmental Funds...13 Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities...14 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds...15 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (Non-GAAP) and Actual General Fund Statement of Fund Net Assets Proprietary Funds...18 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds...19 Statement of Cash Flows Proprietary Funds...20 Statement of Net Assets Fiduciary Funds Statement of Changes in Fiduciary Net Assets Private Purpose Trust Notes to the Basic Financial Statements Schedule of Expenditures of Federal Awards...52 Notes to the Schedule of Expenditures of Federal Awards...53 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs Independent Accountants Report on Applying Agreed-Upon Procedures B-4

74 INDEPENDENT AUDITORS REPORT Board of Education Xenia Community School District 578 East Market Street Xenia, Ohio We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Xenia Community School District (the District) as of and for the year ended June 30, 2009, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the District, as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2009, on our consideration of the 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management s discussion and analysis on pages 3 through 10, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it north limestone street, ste. 103 springfield, oh cincinnati columbus dayton middletown springfield p f B-5

75 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the District. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Springfield, Ohio December 31, 2009 B-6 2

76 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 The discussion and analysis of Xenia Community School District s financial performance provides an overall review of the School District s financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the School District s financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District s financial performance. Financial Highlights Key financial highlights for 2009 are as follows: For governmental activities, net assets decreased $645,387, which represents an 4 percent decrease from Net assets of business-type activities decreased $19,524 or 11.6 percent from General revenues and transfers accounted for $44,607,411 in revenue or 87 percent of all governmental revenues. Program specific revenues in the form of charges for services, operating grants and contributions and interest and capital grants and contributions accounted for $6,918,733 or 13 percent of total governmental revenues of $51,526,144. The School District had $52,171,531 in expenses related to governmental activities; only $6,918,733, of these expenses was offset by program specific charges for services, grants or contributions. General revenues (primarily taxes and unrestricted state aid) and transfers of $44,607,411 were able to provide for these programs. The General Fund had $45,134,796 in revenues and $46,123,803 in expenditures. The General Fund s balance decreased $927,437 from Net assets for business-type activities decreased $19,524 due to an increase in salaries and fringe benefits. Total business-type expenses were $2,001,378; $1,952,661 received in program revenues contributed to covering these expenses. Using this Generally Accepted Accounting Principles Report (GAAP) This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand Xenia Community School District as a financial whole, an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. The Statement of Net Assets and Statement of Activities provide information about the activities of the whole School District, presenting both an aggregate view of the School District s finances and a longerterm view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District s most significant funds with all other nonmajor funds presented in total in one column. In the case of Xenia Community School District, the General Fund is by far the most significant fund. 3 B-7

77 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Reporting the School District as a Whole Statement of Net Assets and the Statement of Activities While this document contains the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, How did we do financially during 2009? The Statement of Net Assets and the Statement of Activities answer this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current fiscal year s revenues and expenses regardless of when cash is received or paid. These two statements report the School District s net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, and some not. Non-financial factors include the School District s property tax base, current property tax laws in Ohio restricting revenue growth, facility condition, required educational programs and other factors. In the Statement of Net Assets and the Statement of Activities, the School District is divided into two distinct kinds of activities: Governmental Activities Most of the School District s programs and services are reported here including instruction, support service, operation and maintenance of plant, pupil transportation and extracurricular activities. Business-Type Activities These services are provided on a charge for goods or services basis to recover all of the expenses of the goods or services provided. The School District s food service, Pre-school, and uniform school supplies program are reported as business activities. Reporting the School District s Most Significant Funds Fund Financial Statements Fund financial statements provide detailed information about the School District s major funds. The School District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the School District s most significant funds. The School District s only major fund is the General Fund. Governmental Funds Most of the School 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 fiscal year-end available for spending in the future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities 4 B-8

78 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. Proprietary Funds Proprietary funds use the same basis of accounting as business-type activities; therefore, these statements will essentially match the information provided in the statements for the School District as a whole. Internal service funds are used to report activities that provide services to the School District s other programs or functions. Fiduciary Funds Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore are not used to support the School District s own programs. Fiduciary fund reporting focuses on net assets and changes in net assets. The School District as a Whole Governmental Activities Table 1 provides a summary of the School District s net assets for 2009 compared to 2008: Table 1 Net Assets Governmental Activities Business-Type Activities Total Assets Current and Other Assets $30,120,825 $30,008,352 $327,505 $333,674 $30,448,330 $30,342,026 Capital Assets 12,909,770 12,577,511 65,096 58,753 12,974,866 12,636,264 Total Assets 43,030,595 42,585, , ,427 43,423,196 42,978,290 Liabilities Long-Term Liabilities 4,734,229 4,422,835 70,346 86,815 4,804,575 4,509,650 Other Liabilities 22,396,573 22,908, , ,083 22,550,775 23,065,705 Total Liabilities 27,130,802 27,331, , ,898 27,355,350 27,575,355 Net Assets Invested in Capital Assets, Net of Debt 10,814,192 10,481,909 65,096 58,753 10,879,288 10,540,662 Restricted 1,660,776 1,789, ,660,776 1,789,336 Unrestricted 3,424,825 2,983, ,957 89,776 3,527,782 3,072,937 Total Net Assets $15,899,793 $15,254,406 $168,053 $148,529 $16,067,846 $15,402,935 Contributing to the decrease in governmental assets was a decrease in equity in pooled cash and cash equivalents of $518,824. Other liabilities increased during fiscal year 2009 due to increases in accrued wages and intergovernmental payables as salaries and fringe benefits increased. In addition, matured compensated absences and early retirement incentive liabilities were higher in fiscal year The School District had eleven employees elect the early retirement incentive during fiscal year 2009 versus six in fiscal year Long-term liabilities decreased as the School District continues to make payments 5 B-9

79 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 on its energy conservation loan and employees elect to retire under the early retirement incentive program. Governmental activities, unrestricted net assets are the part of net assets that can be used to finance day-to-day activities without constraints established by grants or legal requirements. Unrestricted assets for governmental activities decreased $441,664. Table 2 shows the changes in net assets for fiscal year 2008 and Table 2 Change in Net Assets Governmental Activities Business-Type Activities Total Revenues Program Revenues: Charges for Services $1,244,264 $1,027,752 $866,286 $818,102 $2,110,550 $1,845,854 Operating Grants and Contributions 5,682,786 5,838,131 1,058,001 1,134,559 6,740,787 6,972,690 Capital Grants and Contributions 42,493 52, ,493 52,850 Total Program Revenues 6,969,543 6,918,733 1,924,287 1,952,661 8,893,830 8,871,394 General Revenues Property Taxes and Income Taxes 21,917,417 22,751, ,917,417 22,751,207 Grants and Entitlements Not Restricted 21,261,872 21,671, ,261,872 21,671,217 Other 347, ,987 4,849 4, , ,180 Tranfers (25,000) (25,000) 25,000 25, Total General Revenues and Transfers 43,502,170 44,607,411 29,849 29,193 43,532,019 44,636,604 Total Revenues 50,471,713 51,526,144 1,954,136 1,981,854 52,425,849 53,507,998 Program Expenses Instruction 29,159,215 30,833, ,159,215 30,833,999 Support Services: Pupils and Instructional Staff 6,760,156 7,385, ,760,156 7,385,685 Board of Education, Administration, Fiscal and Business 5,505,332 5,304, ,505,332 5,304,982 Operation and Maintenance of Plant 3,434,794 3,751, ,434,794 3,751,404 Pupil Transportation 2,993,064 2,950, ,993,064 2,950,185 Central 354, , , ,753 Operation of Non-Instructional Services 392, , , ,913 Extracurricular Activities 1,010, , ,010, ,911 Interest and Fiscal Charges 122, , , ,699 Food Service 0 0 1,895,000 1,930,482 1,895,000 1,930,482 Uniform School Supplies ,060 56,275 15,060 56,275 Pre-School ,055 14,621 69,055 14,621 Total Expenses 49,733,364 52,171,531 1,979,115 2,001,378 51,712,479 54,172,909 Increase (Decrease) in Net Assets $738,349 ($645,387) ($24,979) ($19,524) $713,370 ($664,911) Governmental Activities The School District s income tax revenue fell during fiscal year 2009 as a result of the slow economy; however, property tax increases offset the decrease in income tax. Operating grants and contributions increased as a result of the receipt of a $996,904 Greene County History Grant. However, the School District grant award amounts for Title VI-B fell almost $445,000, Title I fell $250,000, and the School District did not receive the 21 st Century Grant of $234,000 during fiscal year B-10

80 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Capital grants and contributions increased because the School District bus allocation from the State increased during fiscal year Interest revenue, which is shown with other, decreased as interest rates fell during The unique nature of property taxes in Ohio creates the need to routinely seek voter approval for the School District operations. The overall revenue generated by a voted levy does not increase solely as a result of inflation. As an example, a homeowner with a home valued at $100,000 and taxed at 1.0 mill would pay $35 annually in taxes. If three years later the home were reappraised and increased to $200,000 (and this inflationary increase in value is comparable to other property owners) the effective tax rate would become.5 mills and the owner would still pay $35. The School District, dependent upon property taxes, is hampered by a lack of revenue growth and must regularly return to the voters to maintain a constant level of service. Property taxes made up 38.4 percent of revenues for governmental activities for the Xenia Community School District for fiscal year Income taxes added another 6.3 percent. Grants and entitlements not restricted, the School District s largest source of revenues consists largely of state foundation monies. Instruction comprises 59.1 percent of School District expenses. Support services expenses make up 37.9 percent of expenses. 7 B-11

81 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table 3 Total and Cost of Program Services Governmental Activities Total Cost of Net Cost of Total Cost of Net Cost of Services 2008 Services 2008 Services 2009 Services 2009 Instruction $29,159,215 ($24,801,616) $30,833,999 ($26,703,716) Support Services: Pupils and Instructional Staff 6,760,156 (5,446,797) 7,385,685 (6,382,731) Board of Education, Administration, Fiscal and Business 5,505,332 (5,327,171) 5,304,982 (5,176,960) Operation and Maintenance of Plant 3,434,794 (3,423,164) 3,751,404 (3,746,404) Pupil Transportation 2,993,064 (2,875,359) 2,950,185 (2,848,583) Central 354,191 (307,456) 376,753 (332,669) Operation of Non-Instructional Services 392, , ,913 33,869 Extracurricular Activities 1,010,829 (707,743) 955,911 (691,199) Interest and Fiscal Charges 122,898 (122,898) 114,699 (114,699) Total Expenses $49,733,364 ($42,763,821) $52,171,531 ($45,963,092) The dependence upon state foundation and tax revenues is apparent. Approximately 87 percent of instruction activities are supported through taxes and other general revenues; for all activities general revenue support is 88 percent. The community, as a whole, provides significant support for the Xenia Community School District. Business-Type Activities Net assets of business-type activities decreased $19,524 during fiscal year This was despite a $25,000 transfer from the general fund for the uniform school supplies program. Business-type activities include food service, uniform school supplies and pre-school. Management anticipates future general fund support to business-type activities. The School District s Funds Governmental funds are accounted for using the modified accrual basis of accounting. All governmental funds had total revenues of $51,047,849 and expenditures of $52,617,243. The net change in fund balance for the School District s operating fund, the General Fund, was a decrease of $927,437. Income taxes decreased with the slow economy. Interest revenue decreased with the decline in interest rates. Intergovernmental revenues increases offset these declines. Expenditures increased as salaries were higher than previous year. 8 B-12

82 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 General Fund Budgeting Highlights The School District s budget is prepared according to Ohio law and is based on accounting for certain transactions on a basis of cash receipts, disbursements, and encumbrances. The most significant budgeted fund is the General Fund. The School District uses site-based budgeting and the budgeting systems are designed to tightly control total site budgets but provide flexibility for site management. For the General Fund, final budgeted revenue was $932,828 over the original budgeted revenue estimate due to increases in property tax estimates. Expenditures were tightly monitored which enabled actual expenditures to be $1,145,858 under the final appropriations. Capital Assets At the end of fiscal year 2009, the School District had $12,577,511 invested in governmental capital assets. Table 4 shows fiscal year 2009 balances compared to Table 4 Capital Assets at June 30, Governmental Activities Business-Type Activities Land $450,091 $450,091 $0 $0 Buildings and Improvements 25,969,411 25,991, Other Improvements 280, , Infrastructure 17,125 17, Furniture/Euipment/Fixtures 8,499,727 8,884, , ,901 Vehicles 2,656,633 2,931,193 41,218 41,218 Less: Accumulated Depreciation (24,963,997) (25,983,643) (472,023) (478,366) $12,909,770 $12,577,511 $65,096 $58,753 In fiscal year 2009, capital asset depreciation expense exceeded capital asset additions for governmental capital assets. The School District s governmental assets additions included computers, buses, core aerator, smart boards, scrubbers, and football and volleyball equipment. See accompanying notes to the basic financial statements for more capital asset information. 9 B-13

83 Xenia Community School District Management s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Debt Administration Table 5 summarizes the debt outstanding: Table 5 Outstanding Debt at June 30, Energy Conservation Loan $940,000 $805,000 Capital Leases 1,155,578 1,290,602 Totals $2,095,578 $2,095,602 The School District's overall legal debt margin was $61,175,981, the energy conservation debt margin was $5,312,598 and the un-voted debt margin was $679,733 at June 30, Additional debt information can be found in the notes to the basic financial statements. Current Financial Issues and Concerns Xenia Community School District passed a 7.9 mill operation levy in March The revenue from this levy helped strengthen the School District s financial position. As the preceding information shows, the School District depends heavily on its property taxpayers. With the passage of a 7.9 mill operating levy and collection beginning in January 2005, the School District will be able to continue in its educational programs. On November 3, 2009, the School District voters approved 3.2 mills to construct five elementary school buildings. Of the total millage, 2.7 mills will be for construction; the remaining 0.5 mill is required by the state for maintenance on the school buildings. This levy will provide $34,670,000 to finance the local portion of the $125.4 million school construction project. The remainder of the financing will come from the Ohio School Facilities Commission. The new schools will be built on the current sites of Cox Elementary School, McKinley Elementary School, Shawnee Elementary School, Tecumseh Elementary School and Arrowood Elementary School. The Xenia Board of Education has set an aspiration goal of 25 percent for including local vendors and companies in the building project Contacting the School District s Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District s finances and to reflect the School District s accountability for the monies it receives. Questions concerning any of the information in this report or requests for additional information should be directed to Rosalie Townsend, Treasurer at Xenia Community School District, 578 East Market Street, Xenia, Ohio B-14

84 Xenia Community School District Statement of Net Assets June 30, 2009 Governmental Business-Type Activities Activities Total Assets: Equity in Pooled Cash and Cash Equivalents $8,721,894 $164,329 $8,886,223 Accounts Receivable 28,665 4,151 32,816 Intergovernmental Receivable 1,239, ,869 1,397,896 Inventory Held for Resale 0 14,218 14,218 Internal Balances 8,792 (8,792) 0 Prepaid Assets 9, ,978 Income Taxes Receivable 1,186, ,186,933 Property Taxes Receivable 18,813, ,813,962 Depreciable Capital Assets, Net 12,127,420 58,753 12,186,173 Nondepreciable Capital Assets 450, ,091 Total Assets 42,585, ,427 42,978,290 Liabilities: Accounts Payable 307,650 1, ,530 Accrued Wages and Benefits Payable 3,737, ,117 3,843,635 Intergovernmental Payable 1,360,866 49,086 1,409,952 Unearned Income 16,944, ,944,545 Accrued Interest Payable 3, ,757 Matured Compensated Absences Payable 384, ,036 Early Retirement Incentive 170, ,250 Long Term Liabilities: Due Within One Year 671, ,292 Due In More Than One Year 3,751,543 86,815 3,838,358 Total Liabilities 27,331, ,898 27,575,355 Net Assets: Invested in Capital Assets, Net of Related Debt 10,481,909 58,753 10,540,662 Restricted for: Capital Projects 161, ,779 Other Purposes 1,613, ,613,088 Bus Purchases 14, ,469 Unrestricted 2,983,161 89,776 3,072,937 Total Net Assets $15,254,406 $148,529 $15,402,935 See Accompanying Notes to the Basic Financial Statements 11 B-15

85 Xenia Community School District Statement of Activities For the Fiscal Year Ended June 30, 2009 Net (Expense) Revenue Program Revenues and Changes in Net Assets Operating Grants, Charges for Contributions Capital Grants Governmental Business-Type Expenses Services and Interest and Contributions Activities Activities Total Governmental Activities: Instruction: Regular $21,027,137 $524,185 $296,608 $0 ($20,206,344) $0 ($20,206,344) Special 7,268, ,573 1,613,160 0 (5,497,755) 0 (5,497,755) Vocational 559, ,447 0 (478,933) 0 (478,933) Student Intervention Services 1,599, ,458,310 0 (141,154) 0 (141,154) Other 379, (379,530) 0 (379,530) Support Services: Pupils 3,680, ,817 0 (3,601,640) 0 (3,601,640) Instructional Staff 3,705, ,634,431 0 (2,070,797) 0 (2,070,797) Board of Education 30, (30,172) 0 (30,172) Administration 3,969, ,692 0 (3,897,264) 0 (3,897,264) Fiscal 614,423 24,663 4,113 0 (585,647) 0 (585,647) Business 690,431 26, (663,877) 0 (663,877) Operation and Maintenance of Plant 3,751,404 5, (3,746,404) 0 (3,746,404) Pupil Transportation 2,950,185 45,374 3,378 52,850 (2,848,583) 0 (2,848,583) Central 376, ,084 0 (332,669) 0 (332,669) Operation of Non-Instructional Services 497, , , ,869 Extracurricular Activities 955, ,403 20,309 0 (691,199) 0 (691,199) Interest and Fiscal Charges 114, (114,699) 0 (114,699) Total Governmental Activities 52,171,531 1,027,752 5,838,131 52,850 (45,252,798) 0 (45,252,798) Business-Type Activities: Food Service 1,930, ,513 1,134, (22,410) (22,410) Uniform School Supplies 56,275 33, (22,747) (22,747) Pre-School 14,621 11, (3,560) (3,560) Total Business-Type Activities 2,001, ,102 1,134, (48,717) (48,717) Totals $54,172,909 $1,845,854 $6,972,690 $52,850 (45,252,798) (48,717) (45,301,515) General Revenues and Transfers: Property Taxes Levied for: General Purposes 19,146, ,146,600 Capital Outlay 385, ,177 Income Tax 3,219, ,219,430 Payments in Lieu of Taxes 23, ,394 Grants and Entitlements not Restricted to Specific Programs 21,671, ,671,217 Investment Earnings 177, ,538 Miscellaneous 9,143 4,105 13,248 Transfers (25,000) 25,000 0 Total General Revenues and Transfers 44,607,411 29,193 44,636,604 Change in Net Assets (645,387) (19,524) (664,911) Net Assets Beginning of Year 15,899, ,053 16,067,846 Net Assets End of Year $15,254,406 $148,529 $15,402,935 See Accompanying Notes to the Basic Financial Statements 12 B-16

86 Xenia Community School District Balance Sheet Governmental Funds June 30, 2009 Other Total Governmental Governmental General Funds Funds Assets: Equity in Pooled Cash and Cash Equivalents $7,104,393 $1,506,173 $8,610,566 Receivables: Property and Other Taxes 18,462, ,904 18,813,962 Income Taxes 1,186, ,186,933 Accounts 26,194 2,471 28,665 Intergovernmental 74,677 1,164,350 1,239,027 Prepaid Items 8, ,079 Restricted Asset: Equity in Pooled Cash and Cash Equivalents 14, ,469 Total Assets $26,877,684 $3,025,017 $29,902,701 Liabilities and Fund Balances Liabilities: Accounts Payable $130,001 $177,649 $307,650 Accrued Wages and Benefits Payable 3,399, ,578 3,725,376 Intergovernmental Payable 1,029,244 77,381 1,106,625 Interfund Payable 150,039 13, ,230 Matured Compensated Absences Payable 366,040 17, ,036 Early Retirement Incentive 170, ,250 Deferred Revenue 17,308,840 1,087,541 18,396,381 Total Liabilities 22,554,212 1,699,336 24,253,548 Fund Balances Reserved for Encumbrances 292, , ,994 Reserved for Property Taxes 1,153,218 20,076 1,173,294 Reserved for Bus Purchases 14, ,469 Unreserved, Designated for: Budget Reserve 573, ,354 Unreserved, Undesignated, Reported in: General Fund 2,290, ,290,208 Special Revenue Funds 0 874, ,533 Capital Projects Funds 0 71,301 71,301 Total Fund Balances 4,323,472 1,325,681 5,649,153 Total Liabilities and Fund Balances $26,877,684 $3,025,017 $29,902,701 See Accompanying Notes to the Basic Financial Statements 13 B-17

87 Xenia Community School District Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities June 30, 2009 Total Governmental Fund Balances $5,649,153 Amounts reported for governmental activities in the statement of net assets 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 450,091 Building and Improvements 25,991,031 Other Improvements 287,129 Infrastructure 17,125 Furniture and Equipment 8,884,585 Vehicles 2,931,193 Accumulated Depreciation (25,983,643) Total Capital Assets 12,577,511 Other long-term assets are not available to pay for currentperiod expenditures and therefore are deferred in the funds: Property Taxes 696,123 Intergovernmental 755,713 1,451,836 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. These liabilities consist of: Accrued Interest on Loans (3,757) Energy Conservation Loans Payable (805,000) Capital Lease Payable (1,290,602) Compensated Absences (2,324,735) (4,424,094) Net Assets of Governmental Activities $15,254,406 See Accompanying Notes to the Basic Financial Statements 14 B-18

88 Xenia Community School District Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2009 Other Total Governmental Governmental General Funds Funds Revenues: Property Taxes $18,992,222 $383,007 $19,375,229 Income Taxes 3,219, ,219,430 Tuition and Fees 777, ,168 Interest 177, ,797 Intergovernmental 21,854,026 5,289,554 27,143,580 Payments in Lieu of Taxes 23, ,394 Extracurricular Activities 26, , ,203 Charges for Services 51, ,217 Gifts and Donations 0 22,559 22,559 Rent 5, ,000 Miscellaneous 8, ,272 Total Revenues 45,134,796 5,913,053 51,047,849 Expenditures: Current: Instruction: Regular 20,205, ,579 20,576,876 Special 5,515,075 1,713,765 7,228,840 Vocational 538, ,913 Student Intervention Services 1,261 1,547,178 1,548,439 Other 379, ,530 Support Services: Pupils 3,556, ,183 3,712,293 Instructional Staff 2,802, ,185 3,739,156 Board of Education 29, ,834 Administration 4,096,987 83,149 4,180,136 Fiscal 639,966 4, ,017 Business 685, ,953 Operation and Maintenance of Plant 3,462, ,801 3,595,300 Pupil Transportation 2,656,195 92,401 2,748,596 Central 206, , ,213 Operation of Non-Instructional Services 0 539, ,638 Extracurricular Activities 680, , ,221 Capital Outlay 236, , ,054 Debt Service: Principal Retirement 321, , ,905 Interest and Fiscal Charges 108,175 7, ,329 Total Expenditures 46,123,803 6,493,440 52,617,243 Excess of Revenues Under Expenditures (989,007) (580,387) (1,569,394) Other Financing Sources (Uses): Proceeds from Sale of Capital Assets 1, ,570 Inception of Capital Lease 230, , ,929 Transfer In 0 145, ,000 Transfer Out (170,000) 0 (170,000) Total Other Financing Sources (Uses) 61, , ,499 Net Change in Fund Balances (927,437) (200,458) (1,127,895) Fund Balances at Beginning of Year 5,250,909 1,526,139 6,777,048 Fund Balances at End of Year $4,323,472 $1,325,681 $5,649,153 See Accompanying Notes to the Basic Financial Statements 15 B-19

89 Xenia Community School District Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2009 Net Change in Fund Balances - Total Governmental Funds ($1,127,895) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay 713,716 Depreciation Expense (1,044,904) Capital Outlay Under Depreciation Expense (331,188) Governmental funds report only the disposal of capital assets to the extent proceeds are received from the sale. In the statement of activities, a gain or loss is reported for each sale: Loss on Sale of Capital Assets (1,071) Repayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. In the current fiscal year, these amounts consist of: Energy Conservation Loans Principal Payments 135,000 Capital Lease Payments 329, ,905 Some revenues that will not be collected for several months after the School District's fiscal year-end are not considered "available" revenues and are deferred in the governmental funds. Deferred revenues changed by these amounts: Property Taxes 156,548 Intergovernmental 345, ,724 Some capital additions were financed through capital leases. In governmental funds, a capital lease arrangement is considered a source of financing, but in the statement of net assets, the lease obligation is reported as a liability. (464,929) Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of: Decrease in Accrued Interest 630 Decrease in Compensated Absences 312, ,067 Change in Net Assets of Governmental Activities ($645,387) See Accompanying Notes to the Basic Financial Statements 16 B-20

90 Xenia Community School District Statement of Revenues, Expenditures and Changes In Fund Balance - Budget (Non-GAAP Basis) and Actual General Fund For the Fiscal Year Ended June 30, 2009 Variance with Budgeted Amounts Final Budget Positive Original Final Actual (Negative) Revenues: Property Taxes $18,516,312 $19,449,140 $18,729,243 ($719,897) Income Taxes 3,233,154 3,233,154 3,308,531 75,377 Tuition and Fees 875, , ,751 (4,249) Interest 275, , ,562 (82,438) Intergovernmental 22,090,220 22,090,220 21,785,753 (304,467) Payments in Lieu of Taxes ,394 23,394 Charges for Services ,217 51,217 Extracurricular Activities 30,000 30,000 25,844 (4,156) Rent 0 0 5,000 5,000 Miscellaneous 120, ,000 12,535 (107,465) Total Revenues 45,139,686 46,072,514 45,004,830 (1,067,684) Expenditures: Instruction: Regular 20,624,659 20,776,308 20,059, ,028 Special 5,708,662 5,634,669 5,484, ,199 Vocational 508, , ,501 10,203 Student Intervention Services 0 2,800 1,261 1,539 Other 287, , ,530 (25,630) Support Services: Pupils 3,397,460 3,380,666 3,356,327 24,339 Instructional Staff 2,851,486 2,819,495 2,755,085 64,410 Board of Education 29,598 29,598 30,108 (510) Administration 4,098,203 4,020,606 3,982,368 38,238 Fiscal 605, , ,561 (33,563) Business 690, , ,495 (21,058) Operation and Maintenance of Plant 3,603,982 3,647,902 3,581,892 66,010 Pupil Transportation 2,979,459 2,814,477 2,719,675 94,802 Central 191, , ,695 (655) Extracurricular Activities 712, , ,448 62,934 Capital Outlay 6,577 6,577 6,577 0 Debt Service: Principal Retirement 426, , , Interest and Fiscal Charges 125, , ,175 (3,155) Total Expenditures 46,848,230 46,688,921 45,543,063 1,145,858 Excess of Revenues Over (Under) Expenditures (1,708,544) (616,407) (538,233) 78,174 Other Financing Sources (Uses): Sale of Capital Assets 0 0 1,570 1,570 Refund of Prior Year Expenditures Contingency (250,000) (250,000) 0 250,000 Transfers Out (120,000) (170,000) (170,000) 0 Advances In 0 50,000 50,000 0 Total Other Financing Sources (Uses) (370,000) (370,000) (118,136) 251,864 Net Change in Fund Balances (2,078,544) (986,407) (656,369) 330,038 Fund Balance at Beginning of Year 6,951,870 6,951,870 6,951,870 0 Prior Year Encumbrances Appropriated 403, , ,342 0 Fund Balance at End of Year $5,276,668 $6,368,805 $6,698,843 $330,038 See Accompanying Notes to the Basic Financial Statements 17 B-21

91 Xenia Community School District Statement of Fund Net Assets Proprietary Funds June 30, 2009 Business-Type Governmental Activities Activities Nonmajor Internal Enterprise Service Funds Fund Assets Current Assets: Equity in Pooled Cash and Cash Equivalents $164,329 $96,859 Accounts Receivable 4,151 0 Intergovernmental Receivable 158,869 0 Interfund Receivable 0 172,022 Inventory Held for Resale 14,218 0 Prepaid Items Total Current Assets 342, ,881 Non-current Assets: Depreciable Capital Assets, Net 58,753 0 Total Assets 401, ,881 Liabilities Current Liabilities: Accounts Payable 1,880 0 Accrued Salaries Payable 106,117 12,142 Intergovernmental Payable 49, ,241 Interfund Payable 8,792 0 Total Current Liabilities 165, ,383 Non-current Liabilities: Compensated Absences Payable 86,815 2,498 Total Liabilities 252, ,881 Net Assets Invested in Capital Assets 58,753 0 Unrestricted 89,776 0 Total Net Assets $148,529 $0 See Accompanying Notes to the Basic Financial Statements 18 B-22

92 Xenia Community School District Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Fiscal Year Ended June 30, 2009 Business-Type Governmental Activities Activities Nonmajor Internal Enterprise Service Funds Fund Operating Revenues Tuition and Fees $11,061 $0 Charges for Services 807,041 0 Interfund Charges 0 403,116 Other Revenues 4,105 0 Total Operating Revenues 822, ,116 Operating Expenses Salaries 737,156 29,871 Fringe Benefits 400, ,245 Purchased Services 14,180 0 Materials and Supplies 744,552 0 Cost of Sales 99,097 0 Depreciation 6,343 0 Total Operating Expenses 2,001, ,116 Operating Loss (1,179,171) 0 Non-operating Revenues (Expenses) Federal Donated Commodities 94,823 0 Intergovernmental 1,039,736 0 Interest 88 0 Total Non-operating Revenues (Expenses) 1,134,647 0 Loss before Transfers (44,524) 0 Transfers In 25,000 0 Change in Net Assets (19,524) 0 Net Assets at Beginning of Year 168,053 0 Net Assets at End of Year $148,529 $0 See Accompanying Notes to the Basic Financial Statements 19 B-23

93 Xenia Community School District Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2009 Business-Type Activities Nonmajor Enterprise Funds Governmental Activities Internal Service Fund Increase (Decrease) in Cash and Cash Equivalents: Cash Flows from Operating Activities Cash Received from Customers and Support $820,043 $0 Cash Received from Interfund Charges 0 368,856 Cash Payments for Employee Services (715,491) (21,289) Cash Payments for Employee Benefits (396,628) (108,119) Cash Payments for Goods and Services (761,911) (281,933) Net Cash Used for Operating Activities (1,053,987) (42,485) Cash Flows from Noncapital Financing Activities Grants Received 880,867 0 Transfers In 25,000 0 Net Cash Received from Noncapital Financing Activities 905,867 0 Cash Flows from Investing Activities Interest on Investments 88 0 Net Decrease in Cash and Cash Equivalents (148,032) (42,485) Cash and Cash Equivalents Beginning of Year 312, ,344 Cash and Cash Equivalents End of Year $164,329 $96,859 Reconciliation of Operating Loss to Net Cash Used for Operating Activities: Operating Loss ($1,179,171) $0 Adjustments to Reconcile Operating Loss to Net Cash Used for Operating Activities: Depreciation 6,343 0 Donated Commodities 94,823 0 Changes in Assets and Liabilities: Increase in Accounts Receivable (2,164) 0 Decrease in Inventory Held for Resale 4,274 0 Increase in Interfund Receivable 0 (34,260) Decrease in Prepaid Items 1,860 0 Decrease in Accounts Payable (4,296) 0 Increase in Accrued Salaries Payable 4,180 10,862 Increase in Interfund Payable Increase (Decrease) in Intergovernmental Payable 2,997 (20,105) Increase in Compensated Absences Payable 16,469 1,018 Net Cash Provided Used for Operating Activities ($1,053,987) ($42,485) Non-Cash Transaction: During the fiscal year, the Food Service Enterprise Fund used material and supplies inventory valued at $94,823. This inventory was donated to the School District and no cash payments were made to acquire the inventory. An expense for the usage was included in the operating loss of the fund and therefore, donated commodities must be recognized as an adjustment to reconcile net cash used for operating activities. See Accompanying Notes to the Basic Financial Statements 20 B-24

94 Xenia Community School District Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2009 Private Purpose Trust Scholarship Agency Assets: Equity in Pooled Cash and Cash Equivalents $70,337 $56,296 Liabilities: Accounts Payable 0 $1,306 Undistributed Monies 0 19,394 Due to Students 0 35,596 0 $56,296 Net Assets: Held in Trust for Scholarships - Non-exendable 25,000 Held in Trust for Scholarships - Exendable 45,337 Total Net Assets $70,337 See Accompanying Notes to the Basic Financial Statements 21 B-25

95 Xenia City School District Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Fiscal Year Ended June 30, 2009 Private Purpose Trust Scholarship Additions: Interest $864 Gifts and Contributions 3,350 Total Additions 4,214 Deductions: Scholarships Awarded 14,650 Change in Net Assets (10,436) Net Assets Beginning of Year 80,773 Net Assets End of Year $70,337 See Accompanying Notes to the Basic Financial Statements 22 B-26

96 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 1 - DESCRIPTION OF THE SCHOOL DISTRICT AND REPORTING ENTITY Xenia Community School District (the School District ) was chartered by Ohio State Legislature. In 1953 state laws were enacted to create local Boards of Education. Today, the School District operates under current standards prescribed by the Ohio State Board of Education as provided in division (D) of Section and Section of the Ohio Revised Code. The School District operates under a locally-elected five member Board form of government and provides educational services as mandated by State statute and federal guidelines. This Board controls the School District s instructional and support facilities that provides services to 5,079 students and other community members. The School District currently operates 7 elementary schools, 2 middle schools (grades 6-8) and 1 high school (grades 9-12). Reporting Entity A reporting entity is comprised of the primary government, component units, and other organizations that are included to insure that the financial statements of the School District are not misleading. The primary government consists of all funds, departments, boards, and agencies that are not legally separate from the School District. For Xenia Community School District, this includes general operations, food service, and student related activities of the School District. Component units are legally separate organizations for which the School District is financially accountable. The School District is financially accountable for an organization if the School District appoints a voting majority of the organization s governing board and (1) the School District is able to significantly influence the programs or services performed or provided by the organization; or (2) the School District is legally entitled to or can otherwise access the organization s resources; the School District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or the School District is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the School District in that the School District approves the budget, the issuance of debt, or the levying of taxes. The School District has no component units. The School District participates in three jointly governed organizations and one insurance purchasing pool. These organizations are discussed in Note 15 to the basic financial statements. These organizations are: Jointly Governed Organizations: Miami Valley Educational Computer Association Southwestern Ohio Educational Purchasing Council Greene County Career Center Insurance Purchasing Pool: Southwestern Ohio Educational Purchasing Council Workers Compensation Group Rating Plan 23 B-27

97 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Xenia Community School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The School District also applies Financial Accounting Standards Board (FASB) Statements and Interpretations issued on or before November 30, 1989, to its governmental activities, business-type activities and propriety funds provided they do not conflict with or contradict GASB pronouncements. The School District has elected not to apply FASB Statements and Interpretations issued after November 30, 1989, to its business-type and to its proprietary funds. The most significant of the School District s accounting policies are described below. A. Basis of Presentation The School District s basic financial statements consist of government-wide statements, including a statement of net assets and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government-wide Financial Statements: The statement of net assets and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. Internal service fund activity is eliminated to avoid the doubling up of revenues and expenses. The government-wide financial statements distinguish between those activities of the School District that are governmental and those that are business-type activities. The statement of net assets presents the financial condition of the governmental activities and businesstype activities of the School District at fiscal year-end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function of the School District s governmental activities and for the business-type activities of the School District. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues which are not classified as program revenues are presented as general revenues of the School District. The comparison of direct expenses with program revenues identifies the extent to which each governmental function or business activity is self-financing or draws from the general revenues of the School District. 24 B-28

98 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fund Financial Statements: During the fiscal year, the School District segregates transactions related to certain School District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the School District at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The internal service fund is presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. B. Fund Accounting The School District uses funds to maintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The School District divides its funds into three categories: governmental, proprietary and fiduciary. Governmental Funds: Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following is the School District's major governmental fund: General Fund - The general fund is the operating fund of the School District and is used to account for all financial resources except those required to be accounted for in another fund. The general fund balance is available to the School District for any purpose provided it is expended or transferred according to the general laws of Ohio. This fund includes the revenue and expenditures for the emergency levy of the School District. The other governmental funds of the School District account for grants and other resources whose use is restricted to a particular purpose. Proprietary Funds Proprietary fund reporting focuses on the determination of operating income, changes in net assets, financial position and cash flows. Proprietary funds are classified as either enterprise or internal service. Enterprise Funds Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods and services. The School District s enterprise funds are food service, uniform school supply and pre-school. Internal Service Fund The internal service fund accounts for the financing of services provided by one department or agency to other departments or agencies of the School District, or to other governments, on a cost reimbursement basis. The internal service fund of the School District accounts for the collections and disbursements of the workers compensation premiums. 25 B-29

99 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fiduciary Fund Types: Fiduciary fund reporting focuses on net assets and changes in net assets. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds and agency funds. Trust funds are used to account for assets held by the School District under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the School District s own programs. The School District s only trust fund is a private purpose trust which accounts for a college scholarship program for students. The agency fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. The School District s agency fund accounts for those student activity programs which have student participation in the activity and have students involved in the management of the program. This fund typically includes those student activities which consist of a student body, student president, student treasurer, and faculty advisor. The agency fund also accounts for unclaimed moneys owed to individuals outside of the school district. C. Measurement Focus Government-wide Financial Statements: The government-wide financial statements are prepared using the economic resources measurement focus. All assets and liabilities associated with the operation of the School District are included on the Statement on Net Assets. The Statement of Activities accounts for increases (i.e., revenues) and decreases (i.e., expenses) in total net assets. Fund Financial Statements: All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds. Like the government-wide statements, all proprietary funds are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net assets. The statement of changes in fund net assets presents increases (i.e., revenues) and decreases (i.e., expenses) in total net assets. The statement of cash flows provides information about how the School District finances and meets the cash flow needs of its proprietary activities. The private purpose trust fund is reported using the economic resources measurement focus. 26 B-30

100 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting; proprietary and fiduciary funds also use the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, the recording of deferred revenue, and in the presentation of expenses versus expenditures. Revenues - Exchange and Non-exchange Transactions: Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixty days of fiscal year-end. Non-exchange transactions, in which the School District receives value without directly giving equal value in return, include property and income taxes, grants, entitlements and donations. On an accrual basis, revenue from income taxes is recognized in the fiscal year in which the exchange on which the tax is imposed takes place and revenue from property taxes is recognized in the fiscal year for which the taxes are levied (See Note 5). Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the fiscal year when the resources are required to be used or the fiscal year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Under the modified accrual basis, the following revenue sources are considered to be both measurable and available at fiscal year-end: property taxes available as an advance, income taxes, grants, tuition, and student fees. Deferred Revenue: Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Property taxes for which there is an enforceable legal claim as of June 30, 2009, but which were levied to finance fiscal year 2010 operations, have been recorded as deferred revenue. Grants and entitlements and monies from other school districts received before the eligibility requirements are met are also recorded as deferred revenue. On governmental fund financial statements, receivables that will not be collected within the available period have also been reported as deferred revenue. 27 B-31

101 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Expenses/Expenditures: On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocation of costs, such as depreciation and amortization are not recognized in governmental funds. E. Cash and Cash Equivalents To improve cash management, all cash received by the School District is pooled. Monies for all funds are maintained in this pool. Individual fund integrity is maintained through School District records. Interest in the pool is presented as Equity in Pooled Cash and Cash Equivalents. During fiscal year 2009, the School District invested in Fifth Third Institutional Government Money Market Inst. Class and repurchase agreements. For investments in open-ended mutual funds, fair value is determined by the fund s share price. The Board of Education has, by resolution, specified the funds to receive an allocation of interest earnings. Interest revenue credited to the general fund during fiscal year 2009 amounted to $177,450, which includes $29,821 assigned from other School District funds. Investments of the cash management pool and investments with an original maturity of three months or less at the time they are purchased by the School District are reported as cash equivalents. Investments with an initial maturity of more than three months are reported as investments. F. Inventory Inventories are presented at the lower of cost or market on a first-in, first-out basis and are expensed when used. Inventories of proprietary funds consist of expendable supplies held for consumption and purchased and donated food held for resale. G. Prepaid Items Payments made to vendors for services that will benefit periods beyond June 30, 2009, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the fiscal year in which services are consumed. 28 B-32

102 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) H. Interfund Balances On the fund financial statements, outstanding interfund loans and unpaid amounts for interfund services are reported as Interfund Receivables/Payables. Interfund loans which do not represent available expendable resources are offset by a fund balance reserve account. Interfund balances amounts are eliminated in the statement of net assets, except for any net residual amounts due between governmental and business-type activities, which are presented as Internal Balances. I. Capital Assets General capital assets are those not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net assets but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported in both the business-type activities column of the government-wide statement of net assets and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the fiscal year. Donated fixed assets are recorded at their fair market values as of the date received. The School District follows the policy of not capitalizing assets with a cost of less than $1,000 and a useful life of less than 3 years. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset s life are not. All reported capital assets except for land are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Description Buildings and Improvements Other Improvements Infrastructure Furniture Equipment Fixtures Vehicles Estimated Lives 50 years 20 years 15 years 10 years 5 years 10 years 10 years 29 B-33

103 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) J. Accrued Liabilities and Long-term Obligations All payables, accrued liabilities and long-term obligations are reported in the government-wide financial statements, and all payables, accrued liabilities and long-term obligations payable from proprietary funds are reported on the proprietary fund financial statements. In general, payables and accrued liabilities those, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, compensated absences that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are due for payment during the current fiscal year. Capital leases and the energy conservation loan are recognized as a liability in the fund financial statements when due. K. Compensated Absences Vacation benefits are accrued as a liability as the benefits are earned if the employees rights to receive compensation are attributable to services already rendered and it is probable that the School District will compensate the employees for the benefits through paid time off or some other means. The School District records a liability for accumulated unused vacation time when earned for all employees with more than one year of service. Sick leave benefits are accrued as a liability using the vesting method. The liability includes the employees who are currently eligible to receive termination benefits and those the School District has identified as probable of receiving payment in the future. The amount is based on accumulated sick leave and employees wage rates at fiscal year-end, taking into consideration any limits specified in the School District's termination policy. The School District records a liability for accumulated unused sick leave for all employees who have reached the age of 50. The entire compensated absences liability is reported on the government-wide financial statements. On governmental fund financial statements, compensated absences are reported as liabilities and expenditures to the extent payments come due each period upon the occurrence of employee resignations and retirements. These amounts are recorded in the account Matured Compensated Absences Payable in the funds from which the employees will be paid. The non-current portion of the liability is not reported. In proprietary funds, the entire amount of compensated absences is reported as a fund liability. L. Fund Balance Reserves and Designations The School District reserves those portions of fund equity which are legally segregated for a specific future use or which do not represent available expendable resources and therefore are not available for appropriation or expenditure. Fund balance designations may be established to indicate tentative planned expenditures of financial resources. The designation reflects the School District s intentions and is subject to change. Unreserved fund balance indicates that portion of fund equity which is available for appropriation in future periods. Fund equity reserves have been established for encumbrances, property taxes and bus purchases. A fund designation has been established for budget stabilization (See Note 16). The reserve for property taxes represents taxes recognized as revenue under generally accepted accounting principles but not available for appropriation under State statute. 30 B-34

104 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) M. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Net assets restricted for other purposes include activities for music and athletic programs and federal and state grants restricted to expenditures for specified purposes. The School District applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. None of the restricted net assets were restricted by enabling legislation. N. Operating Revenues and Expenses Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the School District, these revenues are tuition for preschool, sales for food service and uniform school supplies, and interfund charges for workers compensation premium. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of the fund. Revenues and expenses that do not meet these definitions are reported as non-operating. O. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues /expenses in the proprietary funds. Repayments from funds responsible for particular expenditures to the funds that initially paid for them are not presented on the financial statements. P. Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 31 B-35

105 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Q. Budgetary Data All funds, other than the agency fund, are legally required to be budgeted and appropriated. The major documents prepared are the tax budget, the appropriation resolution and the certificate of estimated resources, which are prepared on the budgetary basis of accounting. The tax budget demonstrates a need for existing or increased tax rates. The certificate of estimated resources establishes a limit on the amounts that the Board of Education may appropriate. The appropriation resolution is the Board s authorization to spend resources and sets annual limits on expenditures plus encumbrances at a level of control selected by the Board. The legal level of control has been established by the Board of Education at the fund level. Any budgetary modifications at this level may only be made by resolution of the Board of Education. The certificate of estimated resources may be amended during the fiscal year if projected increases or decreases in revenue are identified by the School District Treasurer. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the certificate when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts in the final amended certificate issued during fiscal year The appropriation resolution is subject to amendment by the Board throughout the fiscal year with the restriction that appropriations may not exceed estimated revenues. The amounts reported as the original budgeted amounts reflect the first appropriation for that fund that covered the entire fiscal year, including amounts automatically carried over from prior fiscal years. The amounts reported as the final budgeted amounts represent the final appropriation amounts passed by the Board during the fiscal year. NOTE 3 - BUDGETARY BASIS OF ACCOUNTING While the School District is reporting financial position, results of operations and changes in fund balance on the basis of generally accepted accounting principles (GAAP), the budgetary basis as provided by law is based upon accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non- GAAP Basis) and Actual presented for the general fund is presented on the budgetary basis to provide a meaningful comparison of actual results with the budget. The major differences between the budget basis and GAAP basis are as follows: 1. Revenues are recorded when received in cash (budget) as opposed to when susceptible to accrual (GAAP). 2. Expenditures are recorded when paid in cash (budget) as opposed to when the fund liability is incurred (GAAP). 3. Encumbrances are treated as expenditures (budget) rather than as a reservation of fund balance (GAAP). 4. Advances are operating transactions (budget) as opposed to balance sheet transactions (GAAP). 32 B-36

106 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 3 - BUDGETARY BASIS OF ACCOUNTING (continued) 5. The change in the fair market value of investments is not included as revenue on the budget basis operating statement. This amount is included as revenue on the GAAP basis operating statements. The following table summarizes the adjustments necessary to reconcile the GAAP basis statements to the budgetary basis statements: General GAAP Basis ($927,437) Revenue Accruals (130,831) Expenditure Accruals 771,918 Advances 50,000 Change in Fair Market Value of Investments 1,159 Encumbrances (421,178) Budget Basis ($656,369) NOTE 4 - DEPOSITS AND INVESTMENTS State statutes classify monies held by the School District into three categories. Active deposits are public deposits necessary to meet current demands on the treasury. Such monies must be maintained either as cash in the School District Treasury, in commercial accounts payable or withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts. Inactive monies are public deposits that the Board of Education has identified as not required for use within the current five year period of designation of depositories. Inactive deposits must either be evidenced by certificates of deposit maturing not later than the end of the current period of designation of depositories, or by savings or deposit accounts including but not limited to passbook accounts. Interim deposits are deposits of interim monies. Interim monies are those monies which are not needed for immediate use but which will be needed before the end of the current period of designation of depositories. Interim monies must be evidenced by time certificates of deposit maturing not more than one year from the date of deposit or by savings accounts including but not limited to passbook accounts. Protection of the School District s deposits is provided by the Federal Deposit Insurance Corporation (FDIC), by eligible securities pledged by the financial institution as security for repayment, by surety company bonds deposited with the Treasurer by the financial institution, or by a single collateral pool established by the financial institution to secure the repayment of all public monies deposited with the institution. Interim monies are to be deposited or invested in the following securities: 1. United States Treasury Notes, Bills, Bonds, or any other obligation or security issued by the United States Treasury or any other obligation guaranteed as to principal and interest by the United States; 33 B-37

107 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 4 - DEPOSITS AND INVESTMENTS (continued) 2. Bonds, notes, debentures, or any other obligations or securities issued by any federal government agency or instrumentality, including but not limited to, the Federal National Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation, Government National Mortgage Association, and Student Loan Marketing Association. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities; 3. Written repurchase agreements in the securities listed above provided that the market value of the securities subject to the repurchase agreement must exceed the principal value of the agreement by at least two percent and be marked to market daily, and that the term of the agreement must not exceed thirty days; 4. Bonds and other obligations of the State of Ohio; 5. No-load money market mutual funds consisting exclusively of obligations described in division (1) or (2) and repurchase agreements secured by such obligations, provided that investments in securities described in this division are made only through eligible institutions; 6. The State Treasurer's investment pool (STAR Ohio); 7. Certain bankers' acceptances and commercial paper notes for a period not to exceed one hundred eighty days from the purchase date in an amount not to exceed twenty-five percent of the interim monies available for investment at any one time; and, 8. Under limited circumstances, corporate debt interests rated in either of the two highest rating classifications by at least two nationally recognized rating agencies. Investments in stripped principal or interest obligations, reverse repurchase agreements and derivatives are prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage and short selling are also prohibited. Deposits Custodial credit risk is the risk that in the event of bank failure, the government s deposits may not be returned to it. The School District has no deposit policy for custodial credit risk beyond the requirements of State statute. Ohio law requires that deposits be either insured or protected by eligible securities pledged to and deposited either with the School District or a qualified trustee by the financial institution in security for repayment, or by a collateral pool of eligible securities deposited with a qualified trustee and pledged to secure the repayment of all public monies deposited in the financial institution whose market value at all times shall be at least 105 percent of the deposits being secured. At fiscal year-end, the carrying amount of the School District s deposits was $1,187,199 and the bank balance was $1,790,087. $801,477 of the School District s deposits was insured by federal depository insurance. Based on the criteria described in GASB Statement No. 40, Deposits and Investment Risk Disclosures, as of June 30, 2009, $988,610 of the School District s bank balance of $1,790,087 was exposed to custodial risk as it was uninsured and collateralized by securities held by the institution s trust department. 34 B-38

108 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 4 - DEPOSITS AND INVESTMENTS (continued) Investments At June 30, 2009, the School District had the following investments. Investments Average Maturity Fair Value Repurchase Agreement 1 day $3,327,580 Fifth Third Institutional Govt Money Market Inst Class 53 days 4,498,077 $7,825,657 Interest Rate Risk - The Ohio Revised Code generally limits security purchases to those that mature within five years of the settlement date. The School District s investment policy does not further limit its investment choices. Credit Risk State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. The School District s investment policy does not further limit its investment choices. The School District s investments in the Fifth Third Institutional Government Money Market is rated AAAm by Standard & Poor s. Concentration of Credit Risk - The School District places no limits on the amount the School District may invest in any one issuer. More than 5 percent of the School District s investments are in the following: Investments Percent Repurchase Agreement 43% Fifth Third Institutional Government Money Market 57% Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the School District will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. The School District has no investment policy dealing with custodial credit risk beyond the requirements of State statue which prohibit payment for investments prior to the delivery of the securities representing the investments to the Treasurer or qualified trustee. The repurchase agreement is exposed to custodial credit risk as it is uninsured, unregistered, and held by the counterparty s trust department or agent but not in the School District s name. 35 B-39

109 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 5 - PROPERTY TAXES Property taxes are levied and assessed on a calendar year basis, while the School District s fiscal year runs from July through June. First-half tax distributions are received by the School District in the second half of the fiscal year. Second-half tax distributions are received in the first half of the following fiscal year. Property taxes include amounts levied against all real property, public utility property, and tangible personal (used in business) property located in the School District. Real property tax receipts received in calendar year 2009 represent the collection of calendar year 2008 taxes. Real property taxes received in calendar year 2009 were levied after April 1, 2008, on the assessed values as of January 1, 2008, the lien date. Assessed values for real property taxes are established by State statute at 35 percent of appraised market value. Real property taxes are payable annually or semiannually. If paid annually, payment is due December 31; if paid semiannually, the first payment is due December 31, with the remainder payable by June 20. Under certain circumstances, State statute permits alternate payment dates to be established. Public utility property tax receipts received in calendar year 2009 represent the collection of calendar year 2008 taxes. Public utility real and tangible personal property taxes received in calendar year 2009 became a lien on December 31, 2007, were levied after April 1, 2008, and are collected with real property taxes. Public utility real property is assessed at 35 percent of true value; public utility tangible personal property is currently assessed at varying percentages of true value. Tangible personal property tax receipts received in calendar year 2009 (other than public utility property) represent the collection of calendar year 2009 taxes levied against local and inter-exchange telephone companies. Tangible personal property tax on business inventory, manufacturing machinery and equipment and furniture and fixtures is no longer levied and collected. The October 2008 tangible personal property tax settlement was the last property tax settlement for general personal property taxes. Tangible personal property taxes received from telephone companies in calendar year 2009 were levied on October 1, 2008, on the value as of December 31, Amounts paid by multi-county taxpayers are due September 20. Single county taxpayers may pay annually or semiannually. If paid annually, payment is due April 30; if paid semiannually, the first payment is due April 30, with the remainder payable by September 20. Tangible personal property taxes paid by April 30 are usually received by the School District prior to June 30. The School District receives property taxes from Greene County. The County Auditor periodically advances to the School District its portion of the taxes collected. Second-half real property tax payments collected by the County by June 30, 2009, are available to finance fiscal year 2009 operations. The amount available to be advanced can vary based on the date the tax bills are sent. Accrued property taxes receivable includes real property, public utility property and tangible personal property taxes which are measurable as of June 30, 2009, and for which there is an enforceable legal claim. Although total property tax collections for the next fiscal year are measurable, only the amount of real property taxes available as an advance at June 30 was levied to finance current fiscal year operations and is reported as revenue at fiscal year-end. The portion of the receivable not levied to finance current fiscal year operations is offset by a credit to deferred revenue. 36 B-40

110 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 5 - PROPERTY TAXES (continued) The amount available as an advance is recognized as revenue. On an accrual basis, collectible delinquent property taxes have been recorded as a receivable and revenue, while on a modified accrual basis the revenue has been deferred. The amount available as an advance at June 30, 2009, was $1,153,218 in the General Fund and $20,076 in the Permanent Improvement Capital Projects Fund. The amount available as an advance at June 30, 2008, was $890,239 in the General Fund and $16,367 in the Permanent Improvement Capital Projects Fund. The assessed values upon which the fiscal year 2009 taxes were collected are: 2008 Second- Half Collections 2009 First- Half Collections Amount Percent Amount Percent Real Property - Residential/Agricultural $512,097, % $558,250, % Commercial/Industrial 84,582, % 92,664, % Tangible Personal Property 36,682, % 28,818, % Total $633,362, % $679,733, % Tax Rate per $1,000 of Assessed Valuation $47.35 $43.10 NOTE 6 INCOME TAX The School District levies a voted tax of ½ percent for general operations on the income of residents and of estates. The tax had an original effective date of January 1, 1998, and has subsequently been renewed through December 31, Employers of residents are required to withhold income tax on compensation and remit the tax to the State. Taxpayers are required to file an annual return. The State makes quarterly distributions to the School District after withholding amounts for administrative fees and estimated refunds. Income tax revenue is credited to the General Fund. 37 B-41

111 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 7 - RECEIVABLES Receivables at June 30, 2009, consisted of property and income taxes, accounts (tuition and student fees), interfund, and intergovernmental grants. All receivables are considered collectible in full due to the ability to foreclose for the nonpayment of taxes, the stable condition of State programs, and the current year guarantee of federal funds. All receivables except property taxes are expected to be received within one year. Property taxes, although ultimately collectible, include some portion of delinquents that will not be collected within one year. A summary of the principal items of intergovernmental receivables are as follows: Intergovernmental Receivable Amounts Governmental Activities: High Schools That Work $245 Special Education Part B IDEA 158,513 Early Childhood Education 19,569 Title I 160,995 Title I - Delinquent 34,485 School Improvement - Title I 5,295 IDEA ECSE 5,542 Title II-A 30,000 Project More Grant - 2,400 Safe and Drug Free Schools, Tile IV-A 2,639 Greene County History Project 744,667 State Foundation FY 09 adjustments 74,677 Total Governmental Activities 1,239,027 Proprietary Activities: Breakfast Reimbursement 1,416 Lunch Reimbursement 144,354 Summer Schools - Food 13,099 Total Proprietary Activities 158,869 Total Intergovernmental Receivable $1,397, B-42

112 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 8 - CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2009, was as follows: Balance Balance 6/30/2008 Additions Deletions 6/30/2009 Governmental Assets Capital Assets, not being depreciated Land $450,091 $0 $0 $450,091 Capital Assets, being depreciated Building and Improvements 25,969,411 21, ,991,031 Other Improvements 280,780 6, ,129 Infrastructure 17, ,125 Furniture/Equipment/Fixtures 8,499, ,927 (12,069) 8,884,585 Vehicles 2,656, ,820 (14,260) 2,931,193 Total Capital Assets, being depreciated 37,423, ,716 (26,329) 38,111,063 Less: Accumulated Depreciation Buildings and Improvements (16,766,328) (473,771) 0 (17,240,099) Other Improvements (71,759) (8,939) 0 (80,698) Infrastructure (5,851) (856) 0 (6,707) Furniture/Equipment/Fixtures (6,695,290) (352,191) 10,998 (7,036,483) Vehicles (1,424,769) (209,147) 14,260 (1,619,656) Total Accumulated Depreciation (24,963,997) (1,044,904) 25,258 (25,983,643) Total Capital Assets, being depreciated, net 12,459,679 (331,188) (1,071) 12,127,420 Governmental Activities Capital Assets, net $12,909,770 ($331,188) ($1,071) $12,577,511 Busines-Type Activities Capital Assets, being depreciated Furniture and Equipment $495,901 $0 $0 $495,901 Vehicles 41, ,218 Total Capital Assets, being depreciated 537, ,119 Less: Accumulated Depreciation Furniture and Equipment (430,804) (6,343) 0 (437,147) Vehicles (41,219) 0 0 (41,219) Total Accumulated Depreciation (472,023) (6,343) 0 (478,366) Business-Type Activities Capital Assets, net $65,096 ($6,343) $0 $58, B-43

113 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 8 - CAPITAL ASSETS (continued) Depreciation expense was charged to governmental functions as follows: Instruction: Regular $636,562 Special 15,256 Vocational 4,529 Support Services: Pupils 9,865 Instructional Staff 10,454 Board of Education 338 Administration 60,001 Fiscal 693 Business 508 Operation and Maintenance of Plant 48,646 Transportation 192,491 Operation of Non-Instructional Services 37,659 Extracurricular Activities 27,902 Total $1,044,904 NOTE 9 - RISK MANAGEMENT A. Property and Liability The School 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. During fiscal year 2009, the School District contracted with Indiana Insurance Company for general liability insurance with $1,000,000 single occurrence with a $3,000,000 aggregate. Property is protected by Indiana Insurance. The School District s vehicles are covered under a business policy with Indiana Insurance with additional vehicle coverage under Monticello. Settled claims have not exceeded this commercial coverage in the past three fiscal years. There has been no significant reduction in insurance coverage from last fiscal year. B. Workers Compensation For fiscal year 2009, the School District participated in the Southwestern Ohio Educational Purchasing Council Workers Compensation Group Rating Plan (GRP), a workers compensation insurance purchasing pool (Note 15). The intent of the GRP is to achieve the benefit of a reduced premium for the School District by virtue of its grouping and representation with other participants in the GRP. The workers compensation experience of the participating school districts is calculated as one experience and a common premium rate is applied to all school districts in the GRP. Each participant pays its workers compensation premium to the State based on the rate for the GRP rather than its individual rate. Total savings are then calculated and each participant s individual performance is compared to the overall savings percentage of the GRP. 40 B-44

114 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 9 - RISK MANAGEMENT (Continued) A participant will then either receive money from or be required to contribute to the Equity Pooling Fund. This equity pooling arrangement insures that each participant shares equally in the overall performance of the GRP. Participation in the GRP is limited to school districts that can meet the GRP s selection criteria. The firm of Hunter Consulting provides administrative, cost control and actuarial services to the GRP. NOTE 10 - DEFINED BENEFIT PENSION PLANS A. School Employees Retirement System Plan Description - The School District contributes to the School Employees Retirement System (SERS), a cost-sharing multiple employer pension plan. SERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Authority to establish and amend benefits is provided by Chapter 3309 of the Ohio Revised Code. SERS issues a publicly available, stand-alone financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the School Employees Retirement System, 300 East Broad Street, Suite 100, Columbus, Ohio or by calling toll free (800) It is also posted on SERS website at under Employers/Audit Resources. Funding Policy - Plan members are required to contribute 10 percent of their annual covered salary and the School District is required to contribute 14 percent of annual covered payroll. The contribution requirements of plan members and employers are established and may be amended, up to statutory maximum amounts, by the SERS Retirement Board. The Retirement Board acting with the advice of the actuary, allocates the employer contribution rating among four of the funds (Pension Trust Fund, Death Benefit Fund, Medicate B Fund and Health Care Fund) of the System. For fiscal year 2009, the allocation to pension and death benefits is 9.09 percent of annual covered salary. The remaining 4.91% of the 14% employer contribution rate is allocated to the Health Care and Medicare B Funds. The School District s required contributions for pension obligations to SERS for the fiscal years ended June 30, 2009, 2008 and 2007 were $693,332, $604,786, and $683,350 respectively; percent has been contributed for fiscal year 2009 and 100 percent for fiscal years 2008 and B. State Teachers Retirement System of Ohio Plan Description - The School District participates in the State Teachers Retirement System of Ohio (STRS Ohio), a cost-sharing, multiple employer public employee retirement plan. STRS Ohio provides retirement and disability benefits to members and death and survivor benefits to beneficiaries. STRS Ohio issues a stand-alone financial report that may be obtained by writing to STRS Ohio, 275 E. Broad St., Columbus, OH , by calling (888) , or by visiting the STRS Ohio Web site at New members have a choice of three retirement plans, a Defined Benefit (DB) Plan, a Defined Contribution (DC) Plan and a Combined Plan. The DB plan offers an annual retirement allowance based on final average salary times a percentage that varies based on years of service, or an allowance based on a member s lifetime contributions and earned interest matched by STRS Ohio funds divided by an actuarially determined annuity factor. The DC Plan allows members to place all their member contributions and employer contributions equal to 10.5 percent of earned compensation into an investment account. Investment decisions are made by the member. 41 B-45

115 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 10 - DEFINED BENEFIT PENSION PLANS (continued) A member is eligible to receive a retirement benefit at age 50 and termination of employment. The member may elect to receive a lifetime monthly annuity or a lump sum withdrawal. The Combined Plan offers features of both the DC Plan and the DB Plan. In the Combined Plan, member contributions are invested by the member, and employer contributions are used to fund the defined benefit payment at a reduced level from the regular DB Plan. The DB portion of the Combined Plan payment is payable to a member on or after age 60; the DC portion of the account may be taken as a lump sum or converted to a lifetime monthly annuity at age 50. Benefits are established by Chapter 3307 of the Ohio Revised Code. A DB or Combined Plan member with five or more years credited service who becomes disabled may qualify for a disability benefit. Eligible spouses and dependents of these active members who die before retirement may qualify for survivor benefits. Members in the DC Plan who become disabled are entitled only to their account balance. If a member of the DC Plan dies before retirement benefits begin, the member s designated beneficiary is entitled to receive the member s account balance. Funding Policy - For the fiscal year ended June 30, 2009, plan members were required to contribute 10 percent of their annual covered salaries. The School District was required to contribute 14 percent; 13 percent was the portion used to fund pension obligations. Contribution rates are established by the State Teachers Retirement Board, upon recommendations of its consulting actuary, not to exceed statutory maximum rates of 10 percent for members and 14 percent for employers. Chapter 3307 of the Ohio Revised Code provides statutory authority for member and employer contributions. The School District s required contributions for pension obligations to STRS Ohio for the fiscal years ended June 30, 2009, 2008, and 2007 were $3,098,554, $2,919,536, and $2,724,205, respectively; percent has been contributed for fiscal year 2009 and 100 percent for fiscal years 2008 and The School District did not make any contributions to the DC and Combined Plans for fiscal year NOTE 11 POSTEMPLOYEMENT BENEFITS A. School Employees Retirement System Plan Description The School District participates in two cost-sharing multiple employer defined benefit OPEB plans administered by the School Employees Retirement System for non-certificated retirees and their beneficiaries, a Health Care Plan and a Medicare Part B Plan. Medicare Part B Plan The Medicare B plan reimburses Medicare Part B premiums paid by eligible retirees and beneficiaries as set forth in Ohio Revised Code (ORC) Qualified benefit recipients who pay Medicare Part B premiums may apply for and receive a monthly reimbursement from SERS. The reimbursement amount is limited by statute to the lesser of the January 1, 1999, Medicare Part B premium or the current premium. The Medicare Part B premium for calendar year 2009 was $96.40, SERS reimbursement to retirees was $ The Retirement Board, acting with advice of the actuary, allocates a portion of the employer contribution to the Medicare B Fund. For fiscal year 2009, this actuarially required allocation was 0.75 percent of covered payroll. The School District s contributions for Medicare Part B for the fiscal years ended June 30, 2009, 2008, and 2007 were $57,206, $43,576, and $42,230 respectively; percent has been contributed for fiscal year 2009 and 100 percent for fiscal years 2008 and B-46

116 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 11 - POSTEMPLOYMENT BENEFITS (continued) Health Care Plan ORC and permit SERS to offer health care benefits to eligible retirees and beneficiaries. SERS Retirement Board reserves the right to change or discontinue any health plan or program. SERS offers several types of health plans from various vendors, including HMOs, PPOs, Medicare Advantage and traditional indemnity plans. A prescription drug program is also available to those who elect health coverage. SERS employs two third-party administrators and a pharmacy benefit manager to manage the self-insurance and prescription drug plans, respectively. The ORC provides the statutory authority to fund SERS postemployment benefits through employer contributions. Active members do not make contributions to the postemployment benefit plans. The Health Care Fund was established under, and is administered in accordance with Internal Revenue Code 105(e). Each year after the allocation for statutorily required benefits, the Retirement Board allocates the remainder of the employer 14 percent contribution to the Health Care Fund. For the year ended June 30, 2009, the health care allocation is 4.16 percent. An additional health care surcharge on employers is collected for employees earning less than an actuarially determined minimum compensation amount, pro-rated according to service credit earned. Statutes provide that no employer shall pay a health care surcharge greater than 2 percent of that employer s SERS covered payroll; nor may SERS collect in aggregate more than 1.5 percent of the total statewide SERS covered payroll for health care surcharge. The surcharge, added to the unallocated portion of the 14% employer contribution rate is the total amount assigned to the Health Care Fund. The School District s contributions for health care for the fiscal years ended June 30, 2009, 2008, and 2007 were $423,665, $376,267, and $306,589 respectively; percent has been contributed for fiscal year 2009 and 100 percent for fiscal years 2008 and The SERS Retirement Board establishes the rules for the premiums paid by the retirees for health care coverage for themselves and their dependents or for their surviving beneficiaries. Premiums vary depending on the plan selected, qualified years of service, Medicare eligibility, and retirement status. The financial reports of both Plans are included in the SERS Comprehensive Annual Financial Report which is available by contacting SERS at 300 East Broad St., Suite 100, Columbus, Ohio or by calling toll free (800) It is also posted on the SERS at under employers/audit resources. B. State Teachers Retirement System of Ohio Plan Description The School District contributes to the cost sharing multiple employer defined benefit Health Plan administered by the State Teachers Retirement System of Ohio (STRS Ohio) for eligible retirees who participated in the defined benefit or combined pension plans offered by STRS Ohio. Benefits include hospitalization, physicians fees, prescription drugs and reimbursement of monthly Medicare Part B premiums. The Plan is included in the report of STRS Ohio which may be obtained by visiting or by calling (888) B-47

117 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 11 POSTEMPLOYEMENT BENEFITS (Continued) Funding Policy Ohio law authorizes STRS Ohio to offer the Plan and gives the Retirement Board authority over how much, if any, of the health care costs will be absorbed by STRS Ohio. Active employee members do not contribute to the Plan. All benefit recipients pay a monthly premium. Under Ohio law, funding for post-employment health care may be deducted from employer contributions. For 2009, STRS Ohio allocated employer contributions equal to 1 percent of covered payroll to the Health Care Stabilization Fund. The School District s contributions for health care for the fiscal years ended June 30, 2009, 2008, and 2007 were $238,350, $224,580, and $209,554, respectively; percent has been contributed for fiscal year 2009 and 100 percent for fiscal years 2008 and NOTE 12 - OTHER EMPLOYEE BENEFITS A. Compensated Absences The criteria for determining vacation and sick leave benefits are derived from negotiated agreements and State laws. Classified employees earn ten to twenty days of vacation per fiscal year, depending upon length of service with a maximum accumulation of 22 days. Teachers do not earn vacation time. The Superintendent and Treasurer earn twenty days per calendar year, with a maximum accumulation of 27 days. Teachers, administrators, and classified employees earn sick leave at the rate of one and one-fourth days per month. Sick leave may be accumulated for all personnel. Upon retirement, payment is made for twenty-five percent of accrued, but unused sick leave credit to a maximum of 81 days for certificated employees, twenty-eight percent of accrued, but unused sick leave credit to a maximum of 91 days for classified employees and one-third of accrued, but unused sick leave credit to a maximum of 118 days for administrators. B. Early Retirement Incentive Program During the fiscal year ended June 30, 2008 and through June 30, 2010, the School District offered a retirement incentive program to its employees who retire for the first time. A summary of the program is as follows: Certificated Employees: 1. Any employee eligible to retire and has ten year of service with the District shall receive an incentive of $2,500 for fiscal year 2008 and $3,000 for fiscal years 2009 and 2010 for providing the district with notification of their retirement on or before March 1. Employees must retire between June 1 and August 1 of that year. 2. Employees who retire in the first year they are eligible, shall receive a monthly payment of $450, which shall continue for a period of 24 months, to defray the cost of medical insurance. 3. Employees who have earned thirty-five years of service and elect to retire prior to exceeding thirty-six years of service, and notifies the School District by March 1 indicating pending retirement on or before August 31 of that year shall receive a $10,000 stipend upon retirement. Employees electing the benefit noted in benefit 2 above are not eligible to receive this benefit. 44 B-48

118 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 12 - OTHER EMPLOYEE BENEFITS (Continued) Classified Employees (effective through fiscal year 2010): 1. Full-Time employees who retire under SERS regulations for the first time and give the School District timely notices of that retirement will receive a one-time incentive of $5, Part-Time employees who retire under SERS regulations for the first time and give the School District timely notices of that retirement will receive a one-time incentive of $1, For fiscal year 2009, employees must retire after reaching 120 days as required by SERS and must notify the Board in writing of their resignation for retirement purposes 30 days prior to reaching the 120 days to receive the incentive. Administrative Employees: 1. Any administrator who reaches eligibility of either 30 years or more at any age or 25 years and at least age 55 for retirement with STRS and who retires for the first time under STRS regulation and notifies the Board of Education in writing by February 1, shall receive a one-time incentive of $5, Administrators shall also receive a monthly payment of $500, which shall continue for a period of 24 months, to defray the cost of medical insurance. During the year ended June 30, 2009, eleven employees notified the School District of their pending retirement who met the requirements of the retirement incentive program. As a result, a liability of $170,250 has been accrued for the retirement incentive associated with these individuals at June 30, C. Insurance Benefits The School District provides medical, life and dental insurance to most employees. Medical insurance is through United Healthcare, dental insurance is through Superior Dental, and life insurance is through Unimerica Insurance Company. NOTE 13 - CAPITAL LEASES - LESSEE DISCLOSURE In prior fiscal years, the School District entered into capital leases for the acquisition of a phone system, computers, and school buses to be used by the students of the School District. During fiscal year 2009, the School District entered into additional leases for school buses and computer equipment. Each lease meets the criteria of a capital lease as defined by Statement of Financial Accounting Standards No. 13, "Accounting for Leases, which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee. New capital leases are reflected in the accounts capital outlay and inception of capital leases in the General Fund. The School District made $329,905 in principal payments on the leases during fiscal year Capital assets acquired by lease have been capitalized in the statement of net assets for governmental activities in the amount of $2,234,154, which is equal to the present value of the minimum lease payments at the time of acquisition. Accumulated depreciation on these assets at June 30, 2009, was $563,915 and the carrying value was $1,670,239. The following is a schedule of the future long-term minimum lease payments required under the capital leases and the present value of the minimum lease payments as of June 30, B-49

119 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 13 - CAPITAL LEASES - LESSEE DISCLOSURE (Continued) Fiscal Year Ending June 30, Total Payments 2010 $309, , , , , ,329 Total 1,493,081 Less: Amount Representing Interest (202,479) Present Value of Net Minimum Lease Payments $1,290,602 NOTE 14 - LONG-TERM OBLIGATIONS The changes in the School District s long-term obligations during fiscal year 2009 were as follows: Amount Amount Amount Outstanding Outstanding Due in 6/30/2008 Additions Deletions 6/30/2009 One Year Govermental Activities Energy Conservation Loan % $940,000 $0 ($135,000) $805,000 $145,000 Capital Leases 1,155, ,929 (329,905) 1,290, ,603 Compensated Absences 2,638,651 72,617 (384,035) 2,327, ,689 Total Governmental Activities Long-Term Liabilities $4,734,229 $537,546 ($848,940) $4,422,835 $671,292 Business-Type Activities Compensated Absences $70,346 $16,469 $0 $86,815 $0 In June 1999, the School District issued $1,920,790 in school energy conservation improvement notes to finance the design and implementation of energy conversation measures in buildings throughout the School District which were intended to significantly reduce the energy consumption in those buildings. The repayment of these notes will be made from the School District s general fund with the savings realized through the implementation of the energy conservation measures over the ensuing fifteen years. 46 B-50

120 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 14 - LONG-TERM OBLIGATIONS (Continued) Capital leases will be paid from the General Fund and Capital Improvement Fund. Compensated absences will be paid from the General Fund, the Title I, Poverty Based Assistance, Miscellaneous Federal Grants, EMIS, Title VI-B, Title II-A and Auxiliary Special Revenue Funds, and the Food Service Enterprise Fund. The School District's overall legal debt margin was $61,175,981, the energy conservation debt margin was $5,312,598 and the un-voted debt margin was $679,733 at June 30, Principal and interest requirements to retire the energy conservation loan outstanding at June 30, 2009, are as follows: Fiscal Year Ending June 30, Principal Interest Total 2010 $145,000 $45,080 $190, ,000 36, , ,000 28, , ,000 19, , ,000 10, ,080 Totals $805,000 $140,280 $945,280 NOTE 15 - JOINTLY GOVERNED ORGANIZATIONS AND INSURANCE PURCHASING POOLS A. Jointly Governed Organizations Miami Valley Educational Computer Association - The School District is a participant in the Miami Valley Educational Computer Association (MVECA) which is a computer consortium. MVECA is an association of public school districts within the boundaries of Clark, Clinton, Fayette, Greene and Highland Counties. The organization was formed for the purpose of applying modern technology with the aid of computers and other electronic equipment to administrative and instructional functions among member school districts. The governing board of MVECA consists of six representatives from the member districts elected by majority vote of all charter member school districts within each county plus one representative from the fiscal agent and the executive director. The School District paid MVECA $149,177 for services provided during the fiscal year. Financial information can be obtained from Norma Stewart, Executive Director, at MVECA at 330 East Enon Road, Yellow Springs, Ohio B-51

121 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 15 - JOINTLY GOVERNED ORGANIZATIONS AND INSURANCE PURCHASING POOLS (continued) Southwestern Ohio Educational Purchasing Council -The Southwestern Ohio Educational Purchasing Council (SOEPC) is a purchasing cooperative made up of 126 school districts in 18 counties. The purpose of the cooperative is to obtain prices for quality merchandise and services commonly used by schools. All member districts are obligated to pay all fees, charges, or other assessments as established by the SOEPC. Each member district has one voting representative. Title to any and all equipment, furniture and supplies purchased by the SOEPC is held in trust for the member districts. Any district withdrawing from the SOEPC shall forfeit its claim to any and all SOEPC assets. One year prior notice is necessary for withdrawal from the group. During this time, the withdrawing member is liable for all member obligations. Payments to SOEPC are made from the general fund. During fiscal year 2009, the School District paid $279,897 to SOEPC. To obtain financial information, write to the Southwestern Ohio Educational Purchasing Council, Ken Swink, who serves as Director, at 303 Corporate Center Drive, Vandalia, OH Greene County Career Center The Greene County Career Center is a distinct political subdivision of the State of Ohio operated under the direction of a Board consisting of one representative from each of the seven participating school districts elected Boards, which possesses its own budgeting and taxing authority. During fiscal year 2009, the School District did not make any payments to the Greene County Career Center. To obtain financial information, write to the Greene County Career Center, Judith Geers, who serves as Treasurer, at 2960 W. Enon Road, Xenia, Ohio B. Insurance Purchasing Pool Southwestern Ohio Educational Purchasing Council Workers Compensation Group Rating Plan - The School District participates in the Southwestern Ohio Educational Purchasing Council Workers Compensation Group Rating Plan (GRP). The GRP s business and affairs are conducted by an eleven member committee consisting of the Chairperson, a representative from the Montgomery County Educational Service Center, and eight other members elected by a majority vote of all member school districts. The Chief administrator of GRP serves as the coordinator of the program. Each fiscal year, the participating school districts pay an enrollment fee to the GRP to cover the costs of administering the program. NOTE 16 - SET-ASIDE REQUIREMENTS The School District is required by State statute to annually set aside in the general fund an amount based on a statutory formula for the purchase of textbooks and other instructional materials and an equal amount for the acquisition and construction of capital improvements. Amounts not spent by fiscal year-end or offset by similarly restricted resources received during the fiscal year must be held in cash at fiscal yearend and carried forward to be used for the same purposes in future fiscal years. The following cash basis information describes the change in the fiscal year-end set-aside amounts for textbooks and instructional materials and capital acquisition. Disclosure of this information is required by State statute. 48 B-52

122 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 16 - SET-ASIDE REQUIREMENTS (continued) Capital Textbooks Improvement Total Set-aside balance June 30, 2008 $77,302 $0 $77,302 Current year set-aside requirement 753, ,155 1,506,310 Current year offset 0 (461,122) (461,122) Qualifying expenditures (830,662) (418,498) (1,249,160) Totals ($205) ($126,465) ($126,670) Set-aside carried forward to future years ($205) $0 ($205) The School District had qualifying disbursements that reduced the textbooks amounts below zero. This extra amount can be carried forward to future years. The School District had qualifying disbursements and offsets during the fiscal year that reduced the capital acquisitions amounts below zero; however, this extra amount may not be used to reduce the set-aside requirements in future fiscal years. The $573,354 reported as unreserved but designated fund balance in the General Fund represents monies that were accumulated in conjunction with the prior requirement that school districts establish a budget reserve account. While the State of Ohio eliminated the mandatory set-aside for budget reserve accounts, the Board of Education deemed it appropriate to maintain the reserve with funds already accumulated. NOTE 17 DONOR-RESTRICTED ENDOWMENTS The School District s private purpose trust funds include donor-restricted endowments. Net assets held in trust for scholarships non-expendable of $25,000 represent the principal portion of the endowment. The amount of appreciation in donor-restricted investments that is available for expenditures by the governing body is $45,337 and is included as net assets held in trust for scholarships - expendable. State law permits the governing board to appropriate, for purposes consistent with the endowment s intent, net appreciation, realized and unrealized, unless the endowment terms specify otherwise. The endowment indicates that the interest should be used to provide a scholarship each fiscal year. NOTE 18 INERFUND ACTIVITY At June 30, 2009, the General Fund had an interfund payable of $150,039 to the Internal Service Fund for additional amounts owed for workers compensation. The Other Governmental Funds owed an additional $13,191 and the Food Service Enterprise Fund owed $8,792. During fiscal year 2009, the General Fund transferred $95,000 and $50,000, respectively, to the EMIS and Athletic Special Revenue Funds which are shown with other governmental funds. The EMIS transfer was to provide additional central services support. The Athletic transfer was to provide support to the school s athletic programs. Also during fiscal year 2009, the General Fund transferred $25,000 to the Uniform School Supplies Enterprise fund to help support the purchase of the school supplies. 49 B-53

123 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 19 CONTRACTUAL COMMITMENT On February 27, 2008 the Board of Education approved the purchase of land for $905,000 or $12,859 per acre contingent upon the passage of a bond levy by voters in November 2008 or March Seller agreed to hold the land until November 2009 if the levy did not pass by March 2009; however the purchase price per acre increased to $13,859 for a total purchase price of $975,379. The levy was approved in November 2009 (See Note 22.) NOTE 20 - CONTINGENCIES Grants The School District received financial assistance from federal and state agencies in the form of grants. The expenditure of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the general fund or other applicable funds. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the School District at June 30, NOTE 21 CHANGES IN ACCOUNTING PRINCIPLE For fiscal year 2009, the School District implemented GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, Statement No. 51, Accounting for Intangible Assets, Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, and Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. GASB Statement No. 49 establishes accounting and financial reporting requirements for pollution remediation obligations by requiring more timely and complete reporting of the obligations and by requiring all governments to account for pollution remediation obligations in the same manner. The implementation of this statement did not result in any changes to the financial statements. GASB Statement No. 51 establishes accounting and financial reporting requirements for intangible assets to reduce inconsistencies thereby enhancing comparability of the accounting and financial reporting of such assets among state and local governments. The implementation of this statement did not result in any changes to the financial statements. GASB Statement No. 52 establishes consistent standards for reporting land and other real estate held as investments. It requires endowments to report land and other real estate investments at fair value, to report the changes in fair value as investment income, and to disclose methods and significant assumptions used to determine fair value. The implementation of this statement did not result in any changes to the financial statements. GASB Statement No. 53 addresses the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. The implementation of this statement did not result in any changes to the financial statements. 50 B-54

124 Xenia Community School District Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 22 SUBSEQUENT EVENTS On August 5, 2009, the School District entered into a lease purchase agreement in the amount of $78,655 for the purchase of Apple computer equipment. Four annual payments of $20,515 are required under the lease terms. The interest rate on the lease is 2.9%. In addition on August 5, 2009, the School District entered into a lease purchase agreement in the amount $106,313 with Dell Financial Services for computer equipment. Four annual payments of $29,059 are required under the lease terms. The interest rate on the lease is 6.2%. On September 14, 2009, the School District entered into a contract with A.H. Sturgill for roofing at Xenia High School in the amount $188,205. On November 3, 2009, the School District voters approved 3.2 mills to construct five elementary school buildings. Of the total millage, 2.7 mills will be for construction; the remaining 0.5 mill is required by the state for maintenance on the school buildings. This levy will provide $34,670,000 to finance the local portion of the $125.4 million school construction project. The remainder of the financing for the project will come from the Ohio School Facilities Commission. The School District approved issuance of $34.7 million of general obligation bonds to provide financing for the local portion of the construction project. On December 30, 2009, the School District issued $19.7 million of bond anticipation notes, series 2009 to provide temporary financing until the general obligation bonds can be issued. 51 B-55

125 Xenia Community School District Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2009 Pass Through Federal Entity CFDA Award Award Number Number Receipts Disbursements U.S. DEPARTMENT OF AGRICULTURE Passed Through Ohio Department of Education Child Nutrition Cluster Non-Cash Assistance (Food Distribution): National School Lunch Program N/A ,549 90,549 Cash Assistance: National School Breakfast Program 05-PU ,550 76,550 National School Lunch Program LLP , ,200 Summer Food Service Program 24-PU ,073 23,073 Total Nutrition Cluster 942, ,372 Total U.S. Department of Agriculture 942, ,372 U.S. DEPARTMENT OF EDUCATION Passed Through Ohio Department of Education Title I Grant C1-SD ,156,544 1,136,733 Special Education Cluster: Special Education Grant 6B-SF ,727 1,012,522 Special Education - Preschool Grant PG-S ,770 33,760 Total Special Education Cluster 978,497 1,046,282 Title IV-A Safe & Drug Free Schools and Communities DR-S ,582 20,529 21st Century Community Learning Center T1-S ,115 19,481 Innovative Programs Grant C2-S ,455 9,427 Education Technology Grant TJ-SL ,648 5,838 Improving Teacher Quality Grant TR-S , ,295 Education for Homeless Children and Youth ,802 40,962 Direct Award Federal Grantor/Program Title The Greene County History Project N/A , ,237 Total U.S. Department of Education 2,767,760 2,853,784 TOTAL FEDERAL AWARDS $ 3,710,132 $ 3,796,156 See accompanying notes to the Schedule of Expenditures of Federal Awards. B-56 52

126 Xenia Community School District Notes to the Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2009 Note A Significant Accounting Policies The accompanying Schedule of Expenditures of Federal Awards summarizes the activity of the School District s federal award programs. The Schedule has been prepared on the cash basis of accounting. Note B U.S. Department Of Agriculture Programs Cash receipts from the U.S. Department of Agriculture are commingled with State and Local funds. It is assumed federal monies are expended first. Note C Food Distribution Programs Non-monetary assistance, such as food received from the U.S. Department of Agriculture, is reported in the Schedule of Expenditures of Federal Awards at the fair market value of the commodities received and consumed. At June 30, 2009, the School District had no significant food commodities in inventory. Note D Matching Requirements Certain federal programs require the School District to contribute non-federal funds (matching funds) to support federally-funded programs. The District has complied with the matching requirements. The expenditure of non-federal (matching) funds is not included on the Schedule of Expenditures of Federal Awards. B-57 53

127 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Education Xenia Community School District 578 East Market Street Xenia, Ohio We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Xenia Community School District (the District), as of and for the year ended June 30, 2009, which collectively comprise the District s basic financial statements and have issued our report thereon dated December 31, 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District s internal control over financial reporting as a basis for designing our auditing procedures 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 District s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a deficiency in internal control over financial reporting that we consider to be a significant deficiency. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the District s financial statements that is more than inconsequential will not be prevented or detected by the District s internal control. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the District s internal control north limestone street, ste. 103 springfield, oh cincinnati columbus dayton middletown springfield B-58 p f

128 Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and, accordingly, would not disclose all significant deficiencies that are also considered to be material weaknesses. However, we do not believe the significant deficiency described above is a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the 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. The District s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the District s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, the finance committee, Board of Education, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Springfield, Ohio December 31, 2009 B-59 55

129 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Board of Education Xenia Community School District 578 East Market Street Xenia, Ohio Compliance We have audited the compliance of the Xenia Community School District (the District), with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, The District s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the District s management. Our responsibility is to express an opinion on the District s compliance based on our audit. 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 District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the District s compliance with those requirements. In our opinion, the District, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, Internal Control Over Compliance The management of the District is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the District s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, 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 District s internal control over compliance north limestone street, ste. 103 springfield, oh cincinnati columbus dayton middletown springfield B-60 p f

130 A control deficiency in an entity s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity s internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the finance committee, others within the entity, Board of Education, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Springfield, Ohio December 31, 2009 B-61 57

131 Xenia Community School District Schedule of Findings and Questioned Costs Fiscal Year Ended June 30, 2009 Section I Summary of Auditors Results Financial Statements Type of auditors report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified not considered to be material weakness(es)? Noncompliance material to financial statements noted? Unqualified None noted Yes None noted Federal Awards Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified not considered to be material weakness(es)? Type of auditors report issued on compliance for major programs: Any audit findings that are required to be reported in accordance with 510(a) of Circular A-133? None noted None noted Unqualified None noted Identification of major programs: Title I Grant - CFDA Title II-A Improving Teacher Quality - CFDA Dollar threshold to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? Yes Section II Financial Statement Findings Finding Financial Statement Adjustments The District received the Greene County History Grant in fiscal year 2009, which has a grant period of three years. The District accounted for the portion received in the available period; however the remainder of the grant was not recorded as a receivable during the GAAP conversion process. An adjustment was made to the Other Governmental Funds opinion unit of the financial statements for the remainder portion to the Grant that had not been received as of fiscal year end. The total grant receivable should have been recorded on the financial statements at year-end. The school district should ensure that all significant transactions are appropriately identified during the GAAP conversion process and reported in the financial statements. Management Response: The District was made aware of, and agrees, with the adjustment noted above and it has been posted to the financial statements. B-62 58

132 Section III Federal Awards Findings and Questioned Costs None noted Section IV Summary of Prior Audit Findings and Questioned Costs Finding Financial Statement Adjustments Not corrected. See Finding B-63 59

133 INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Board of Education Xenia Community School District 578 E. Market Street Xenia, Ohio Ohio Revised Code Section states the auditor of state shall identify whether the school district or community school has adopted an anti-harassment policy in accordance with Section of the Revised Code. This determination shall be recorded in the audit report. The auditor of state shall not prescribe the content or operation of any anti-harassment policy adopted by a school district or community school. Accordingly, we have performed the procedures enumerated below, which were agreed to by the Board, solely to assist the Board in evaluating whether Xenia Community School District (the District) has adopted an anti-harassment policy in accordance with Ohio Revised Code Section Management is responsible for complying with this requirement. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the Board. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. 1. We noted the Board adopted an anti-harassment policy at its meeting on October 10, 2005 which was amended on December 10, We read the policy, noting it included the following requirements from Ohio Rev. Code Section (B): (1) A statement prohibiting harassment, intimidation, or bullying of any student on school property or at school-sponsored events; (2) A definition of harassment, intimidation, or bullying that includes the definition in division (A) of Ohio Rev. Code Section ; (3) A procedure for reporting prohibited incidents; (4) A requirement that school personnel report prohibited incidents of which they are aware to the school principal or other administrator designated by the principal; (5) A requirement that parents or guardians of any student involved in a prohibited incident be notified and, to the extent permitted by section of the Revised Code and the Family Educational Rights and Privacy Act of 1974, Stat. 571, 20 O.S.C. 1232q, as amended, have access to any written reports pertaining to the prohibited incident. (6) A procedure for documenting any prohibited incident that is reported; 2525 north limestone street, ste. 103 springfield, oh cincinnati columbus dayton middletown springfield B-64 p f