OFFICIAL STATEMENT. Ratings: Standard & Poor's: AAA SPUR: AA- (Assured Guaranty Corp. insured) See "RATINGS" and "MUNICIPAL

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1 Ratings: Standard & Poor's: AAA SPUR: AA- (Assured Guaranty Corp. insured) See "RATINGS" and "MUNICIPAL NEW ISSUE BOOK-ENTRY FORM ONLY BOND INSURANCE" herein. In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law and assuming compliance with certain covenants, interest on the 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, and is exempt from certain taxes imposed by the State of Ohio. The Bonds are not "private activity bonds." The School District has designated the Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code. Interest on the Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Bonds. See "TAX MATTERS" herein. OFFICIAL STATEMENT $15,999,994 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO SCHOOL FACILITIES CONSTRUCTION AND IMPROVEMENT BONDS, SERIES 2009 (General Obligation-Unlimited Tax) Voted November 4, 2008 Dated: Date of Delivery Due: December 1, as shown on the inside cover The Bonds are voted general obligation debt of the Buckeye Valley Local School District, Delaware, Morrow, Marion, and Union Counties, Ohio (the "School District"), and full faith, credit and revenue of the School District are irrevocably pledged for the prompt payment of the principal of and interest on the Bonds. See "SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT" herein. Interest on the Current Interest Bonds 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, 2009, to the Bondholders of record as of the record dates described in the Bond Resolution (as defined herein). 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 Bonds will be payable at the main office of U.S. Bank National Association, Cincinnati, Ohio, as registrar, paying agent and transfer agent for the Bonds. The Bonds will be issuable as fully registered bonds without coupons in the denominations set forth herein. The Bonds 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 Bonds to the ultimate purchasers. The Underwriter has satisfied the requirements of DTC for the Bonds to be eligible for its book-entry services. See "BOOK-ENTRY ONLY SYSTEM" herein. Current Interest Bonds maturing on or after December 1, 2019 will be subject to optional redemption prior to stated maturity, as set forth herein. Bonds maturing December 1, 2036 will be subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. See "THE BONDS Redemption Provisions" herein. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by ASSURED GUARANTY CORP. The Bonds 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 Bonds are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel, Columbus, Ohio. See "LEGAL MATTERS" and "TAX MATTERS" herein. This cover page contains certain information for general reference only. It is not a summary of the provisions of the Bonds. 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 Bonds. It is expected that delivery of the Bonds in definitive form will be made through DTC on or about April 20, The date of this Official Statement is April 6, 2009, and the information herein speaks only as of that date.

2 $15,999,994 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO SCHOOL FACILITIES CONSTRUCTION AND IMPROVEMENT BONDS, SERIES 2009 (General Obligation-Unlimited Tax) Dated April 20, 2009 $9,835,000 CURRENT INTEREST SERIAL BONDS Year Principal Maturing Interest Rate Price CUSIP $635, % % BG , BH , BJ , BK , BL , BM , BR , BS , BT , BU , BV , BW , BX , BY , BZ , CA , CB , CC , CD 4 Original Principal Amount $419,994 CAPITAL APPRECIATION BONDS 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 + Maturity Year Amount 2015 $162, $450, % $1, $3, % BN , , % 1, , % BP , , % 1, , % BQ 6 $5,295, % CURRENT INTEREST TERM BONDS MATURING DECEMBER 1, 2036, PRICE %, CUSIP CE 2 Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading "MUNICIPAL BOND INSURANCE" and "APPENDIX G Specimen Financial Guarantee Insurance Policy". + 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 $15,999,994 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO SCHOOL FACILITIES CONSTRUCTION AND IMPROVEMENT BONDS, SERIES 2009 (General Obligation-Unlimited Tax) Dated April 20, 2009 BOARD OF EDUCATION Rodney H. Boester President Debra A. Crecelius Vice President Michael S. Bell Member Thomas E. Kaelber Member Thomas L. Sheppard Member DISTRICT ADMINISTRATION John J. Schiller Superintendent Sandra M. Griscom Treasurer PROFESSIONAL SERVICES Fifth Third Securities, Inc. Underwriter Bricker & Eckler LLP Bond Counsel U.S. Bank National Association 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 Bonds (the "Bonds") of the Buckeye Valley Local School District, Delaware, Morrow, Marion and Union 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 which 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. UPON ISSUANCE, THE BONDS 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 BONDS HAVE NOT BEEN APPROVED OR DISPROVED 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 BONDS 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 BONDS 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 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS 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 Bonds, like all obligations of state and local government, are subject to changes in value due to changes in the condition of the market for 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 Bonds could be adversely affected. With regard to the risk involved in a downward revision or withdrawal of the rating for the Bonds shown on the cover hereof, see "RATINGS" 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 Bonds, see "TAX MATTERS" herein. Prospective purchasers of the Bonds should consult their own tax advisors prior to any purchase of the Bonds as to the impact of the Internal Revenue Code of 1986, as amended (the "Code"), upon their acquisition, holding or disposition of the Bonds. 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 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 taxexempt 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 Bonds allow the School District to prepay certain principal of the Bonds without penalty. (See "THE BONDS Redemption Provisions Optional Redemption" herein.) If such 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 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 BOND ISSUE SUMMARY The information contained in this Bond Issue Summary is qualified in its entirety by the entire Official Statement, which should be reviewed in its entirety by potential investors. Issuer: Buckeye Valley Local School District Delaware, Morrow, Marion and Union Counties, Ohio Issue: $15,999,994 School Facilities Construction and Improvement Bonds, Series 2009 Dated Date: Interest Payment Dates: Principal Payment Dates: Redemption: Purpose: Security: Credit Rating: Bond Insurance: Date of Delivery Interest on Current Interest Bonds 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. Current Interest Serial Bonds: December 1, 2009 through December 1, 2014, inclusive; and December 1, 2018 through December 1, 2030, inclusive; Capital Appreciation Bonds: December 1, 2015 through December 1, 2017, inclusive; Current Interest Term Bonds: December 1, Current Interest Bonds maturing on or after December 1, 2019 are subject to redemption at the option of the School District, either in whole, or in part, in such order as the School District shall determine, on any date on or after December 1, 2018, 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 BONDS Redemption Provisions Optional Redemption" herein. The Bonds maturing on December 1, 2036 are subject to mandatory sinking fund redemption prior to stated maturity. See "THE BONDS Redemption Provisions Mandatory Sinking Fund Redemption" herein. The Bonds issued for the purpose of (i) retiring the School District's $15,000,000 School Facilities Construction and Improvement Notes, Series 2008, dated December 23, 2008 (the "Outstanding Notes"), previously issued for the purpose of constructing school facilities; renovating, improving and constructing additions to existing school facilities, including improvements to school technology; furnishing and equipping the same; and improving the sites thereof (the "Project"), and (ii) paying $1,000,000 in additional costs associated with the Project. The Bonds will be voted general obligations of the School District and will contain a pledge of the full faith and credit of the School District for the payment of the principal of and interest on the Bonds when due. The School District has applied for a rating of the Bonds from Standard and Poor's Ratings Service, a division of The McGraw Hill Companies, Inc., ("S&P"), which has rated the Bonds AAA, on the understanding that the Bonds will be guaranteed by a financial guaranty insurance policy issued by Assured Guaranty Corp., upon their issuance. The Bonds also have an underlying rating of AA- from S&P. The Bonds will be secured by a municipal bond insurance policy, to be issued on the date of delivery of the Bonds, securing the payment, when due, of the principal of and interest on the Bonds. See "MUNICIPAL BOND INSURANCE" herein. iv

7 Tax Matters: Bank Qualification: Legal Opinion: Underwriter: Bond Registrar and Paying Agent: Book-Entry Only System: Delivery and Payment: School District Official: In the opinion of Bond Counsel, under existing law and assuming compliance with certain covenants, interest on the 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, and is exempt from certain taxes imposed by the State of Ohio. The Bonds are not "private activity bonds." Interest on the Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Bonds. See "TAX MATTERS" herein. The School District has designated the Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Bricker & Eckler LLP, Columbus, Ohio. Fifth Third Securities, Inc., Columbus, Ohio. U.S. Bank National Association, Cincinnati, Ohio. The Bonds are being issued as fully registered Bonds in book-entry form only and bookentry interests therein will be available for purchase in amounts of $5,000 and integral multiples thereof with respect to the Current Interest Bonds 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 bond certificates. DTC or its nominee will receive all payments with respect to the Bonds from the Paying Agent and 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 Bonds in definitive form will be made through DTC on or about April 20, The Bonds will be released to the Underwriter against payment in federal funds. Questions concerning the Official Statement should be directed to Sandra M. Griscom, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio Telephone: (740) 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 BOND ISSUE SUMMARY... iv TABLE OF CONTENTS... vi INTRODUCTORY STATEMENT... 1 DEFINITIONS... 2 THE BONDS... 3 Authorization and Purpose... 3 Form and Terms... 3 Redemption Provisions... 5 ESTIMATED SOURCES AND USES OF FUNDS... 6 SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT... 6 School District Bankruptcy... 7 MUNICIPAL BOND INSURANCE... 7 The Insurance Policy... 7 The Insurer... 8 UNDERWRITING RATINGS LITIGATION Litigation Generally School Funding Litigation LEGAL MATTERS TAX MATTERS General Original Issue Discount Amortizable Bond Premium BOOK-ENTRY ONLY SYSTEM Revision of Book-Entry Only System - Replacement Bonds TRANSCRIPT AND CLOSING DOCUMENTS CONTINUING DISCLOSURE CONCLUDING STATEMENT APPENDIX A THE BUCKEYE VALLEY LOCAL SCHOOL DISTRICT...A-1 GENERAL INFORMATION...A-1 Introduction...A-1 Map of Geographic Area...A-3 School District Officials...A-4 School District Employees...A-5 Pension Obligations...A-6 School District Facilities...A-7 Enrollment...A-8 Educational Program...A-8 State Performance Standards...A-9 National Standardized Test Scores...A-11 Comparative Position of the School District...A-12 vi

9 ECONOMY AND EMPLOYMENT...A-13 Economic Development...A-13 Building Permit Values...A-13 Labor Force Statistics...A-14 Largest Employers...A-15 Largest Employers...A-16 SCHOOL DISTRICT PROPERTY TAX BASE...A-17 Ad Valorem Taxes and Assessed Valuation...A-17 Tax Abatements and Economic Development Incentives...A-18 Assessed Valuation...A-19 Growth In School District Assessed Valuation...A-19 Largest Taxpayers...A-20 School District History of Voted Taxes...A-21 School District 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-24 Reimbursement of Lost 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-29 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-36 Budgeting, Tax Levy and Appropriations Procedures...A-36 Financial Reports and Audits...A-37 Five-Year Projection...A-37 Fiscal Oversight System...A-38 General Fund Operations...A-38 Other Funds...A-39 Investment of Funds...A-39 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 APPENDIX G Specimen Financial Guaranty Insurance Policy...G-1 vii

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11 $15,999,994 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO SCHOOL FACILITIES CONSTRUCTION AND IMPROVEMENT BONDS, SERIES 2009 (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 Bonds 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 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, Sandra M. Griscom, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio 43015, telephone (740) , 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. 1

12 DEFINITIONS The following capitalized terms, as used in this Official Statement and the Appendices attached hereto, have the following meanings unless otherwise indicated: "Board" means the Board of Education of the School District. "Bond Counsel" means Bricker & Eckler LLP, Columbus, Ohio. "Bond Registrar" means U.S. Bank National Association, Cincinnati, Ohio. "City" means the City of Delaware, Ohio. "Cover" means the cover page and the inside cover of this Official Statement. "County" means Delaware County, the dominant county of the School District, as defined by the Revised Code. "County Auditor" means County Auditor of the County. "Department" means the State Department of Education. "MSA" means the Columbus Metropolitan Statistical Area, as defined by the United States Office of Management and Budget. "OMAC" means Ohio Municipal Advisory Council. "Outstanding Notes" means the School District's $15,000,000 School Facilities Construction and Improvement Notes, Series 2008, dated December 23, 2008, and maturing June 23, "Project" means constructing school facilities; renovating, improving and constructing additions to existing school facilities, including improvements to school technology; furnishing and equipping the same; and improving the sites thereof. "Revised Code" means the Ohio Revised Code. "School District" means the Buckeye Valley Local School District, Delaware, Morrow, Marion and Union Counties, Ohio. "State" means the State of Ohio. "State Auditor" means Auditor of the State. "State Superintendent" means State Superintendent of Public Instruction. "Underwriter" means Fifth Third Securities, Inc., Columbus, Ohio. 2

13 THE BONDS Authorization and Purpose The Bonds are authorized by a resolution of the Board passed on November 18, 2008 (the "Bond Resolution"). The electors of the School District approved the issuance of bonds in the amount of $16,000,000 at the election held on November 4, 2008, and the Bonds are issued pursuant to such voted authority. The Bonds 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 Bonds are unlimited tax general obligation bonds issued for the purpose of (i) retiring the School District's $15,000,000 School Facilities Construction and Improvement Notes, Series 2008, dated December 23, 2008 (the "Outstanding Notes"), previously issued for the purpose of constructing school facilities; renovating, improving and constructing additions to existing school facilities, including improvements to school technology; furnishing and equipping the same; and improving the sites thereof (the "Project"), and (ii) paying $1,000,000 in additional costs associated with the Project. Under Ohio law, the maximum maturity of the bonds may not extend more than 28 years beyond the date of the first principal payment on the Bonds. Form and Terms The Bonds will be issued in fully registered form and the Current Interest Bonds (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 December 1 in the years as indicated on the Cover of this Official Statement. The Current Interest Bonds will be issued in denominations of $5,000 or any integral multiple thereof, provided that, so long as the Bonds shall be in book-entry form and held by a depository, each Bond will be of a single maturity, and will be numbered consecutively from R-1 upward. 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 Bonds 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 main office of U.S. Bank National Association, Cincinnati, Ohio, which has been designated by the Board as bond registrar, paying agent, and transfer agent for the Bonds (the "Bond Registrar"). Interest on the Current Interest Bonds 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 (15 th day next 3

14 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 table below 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. Interest Accretion Date April 20, 2009 $3, $3, $3, 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, , , , 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. 4

15 Redemption Provisions Mandatory Sinking Fund Redemption The Current Interest 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: Principal Amount Year to be Redeemed 2031 $780, , , , ,000 The remaining principal amount of such Current Interest Term Bonds ($995,000) will be paid at stated maturity on December 1, Optional Redemption The Current Interest Bonds maturing on or after December 1, 2019 are subject to redemption at the option of the School District, either in whole, or in part, in such order as the School District shall determine, on any date on or after December 1, 2018, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. When partial redemption is authorized, the Current Interest 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 Bond so selected will be in the amount of $5,000 or any integral multiple thereof. The notice of the call for redemption of Current Interest Bonds shall identify (i) by designation, letters, numbers or other distinguishing marks, such 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 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 Bond 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 Bond. 5

16 ESTIMATED SOURCES AND USES OF FUNDS The proceeds of the Bonds, other than any accrued interest, if any (which will be deposited in the School District's Bond Retirement Fund and used to pay interest on the Bonds), will be applied as follows: Sources Par Value of Bonds $15,999, Plus: Net Original Issue Premium 483, Total Sources $16,483, Uses Deposit to Bond Retirement Fund $15,150, (for repayment of the Outstanding Notes) Deposit to Project Fund 1,000, Costs of Issuance 1 329, Deposit to Project Fund (Premium to School District) 4, Total Uses $16,483, SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT'S GENERAL OBLIGATION DEBT The Bonds are voted general obligation debt of the School District, payable from the sources described, subject to Chapter 9 of the Federal Bankruptcy Code and other laws affecting creditors' rights. The basic security for payment of the 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 Bonds as the same becomes due, and to the extent that such debt service on the Bonds is not paid from other sources. Such taxes can be expended only for the purpose of paying the anticipated debt service on the Bonds (together with costs of issuing the Bonds) and since such taxes are unlimited as to rate or amount, the rate of millage actually levied in each year while the 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 Bonds due in that year, giving due consideration to the School District's assessed valuation and previous tax collection experience. The Bonds 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. 1 Includes Underwriter's compensation, rating fees, bond insurance premium, printing and distribution costs, legal fees, and other miscellaneous expenses. 6

17 In addition to the right of individual bondholders to sue upon their particular Bonds, State law authorizes the holders of not less than 10% in principal amount of the Bonds to bring mandamus or other actions to enforce all contractual or other rights of the bondholders, including the right to require the School District to levy, collect and apply the taxes to pay debt service on the Bonds, and in the case of any default in payment of debt service on the Bonds, to bring an action to require the School District to account as if it were the trustee of an express trust for the bondholders or to enjoin any acts that may be unlawful or in violation of bondholder rights. The Bonds are further secured by the financial guaranty insurance policy described herein. 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. Title 11, Section 109(c) of the United States 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 of the State. 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. MUNICIPAL BOND INSURANCE The following information is not complete and reference is made to APPENDIX G for a specimen of the financial guaranty insurance policy (the "Policy") of Assured Guaranty Corp. ("Assured Guaranty" or the "Insurer"). The Insurance Policy Assured Guaranty has made a commitment to issue the Policy relating to the Bonds, effective as of the date of issuance of such Bonds. Under the terms of the Policy, Assured Guaranty will unconditionally and irrevocably guarantee to pay that portion of principal of and interest on the Bonds that becomes Due for Payment but shall be unpaid by reason of Nonpayment (the "Insured Payments"). Insured Payments shall not include any additional amounts owing by the Issuer solely as a result of the failure by the Trustee or the Paying Agent to pay such amount when due and payable, including without limitation any such additional amounts as may be attributable to penalties or to interest accruing at a default rate, to amounts payable in respect of indemnification, or to any other additional amounts payable by the Trustee or the Paying Agent by reason of such failure. The Policy is non-cancelable for any reason, including without limitation the non-payment of premium 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). 7

18 "Due for Payment" means, when referring to the principal of the Bonds, the stated maturity date thereof, or the date on which such Bonds shall have been duly called for mandatory sinking fund redemption, and does not refer to any earlier date on which payment is due by reason of a call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless Assured Guaranty in its sole discretion elects to make any principal payment, in whole or in part, on such earlier date) and, when referring to interest on such Bonds, means the stated dates for payment of interest. "Nonpayment" means the failure of the Issuer to have provided sufficient funds to the Trustee or the Paying Agent for payment in full of all principal and interest Due for Payment on the Bonds. It is further understood that the term Nonpayment in respect of a Bond also includes any amount previously distributed to the Holder (as such term is defined in the Policy) of such Bond in respect of any Insured Payment by or on behalf of the Issuer, which amount has been recovered from such Holder pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction that such payment constitutes an avoidable preference with respect to such Holder. Nonpayment does not include nonpayment of principal or interest caused by the failure of the Trustee or the Paying Agent to pay such amount when due and payable. Assured Guaranty will pay each portion of an Insured Payment that is Due for Payment and unpaid by reason of Nonpayment, on the later to occur of (i) the date such principal or interest becomes Due for Payment, or (ii) the business day next following the day on which Assured Guaranty shall have received a completed notice of Nonpayment therefor in accordance with the terms of the Policy. Assured Guaranty shall be fully subrogated to the rights of the Holders of the Bonds to receive payments in respect of the Insured Payments to the extent of any payment by Assured Guaranty under the Policy. The Policy is not covered by any insurance or guaranty fund established under New York, California, Connecticut or Florida insurance law. The Insurer Assured Guaranty Corp. ("Assured Guaranty") is a Maryland-domiciled insurance company regulated by the Maryland Insurance Administration and licensed to conduct financial guaranty insurance business in all fifty states of the United States, the District of Columbia and Puerto Rico. Assured Guaranty commenced operations in Assured Guaranty is a wholly owned, indirect subsidiary of Assured Guaranty Ltd. ("AGL"), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol "AGO." AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, structured finance and mortgage markets. Neither AGL nor any of its shareholders is obligated to pay any debts of Assured Guaranty or any claims under any insurance policy issued by Assured Guaranty. Assured Guaranty is subject to insurance laws and regulations in Maryland and in New York (and in other jurisdictions in which it is licensed) that, among other things, (i) limit Assured Guaranty's business to financial guaranty insurance and related lines, (ii) prescribe minimum solvency requirements, including capital and surplus requirements, (iii) limit classes and concentrations of investments, (iv) regulate the amount of both the aggregate and individual risks that may be insured, (v) limit the payment of dividends by Assured Guaranty, (vi) require the maintenance of contingency reserves, and (vii) govern changes in control and transactions among affiliates. Certain state laws to which Assured Guaranty is subject also require the approval of policy rates and forms. 8

19 Assured Guaranty's financial strength is rated "AAA" (stable) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., "AAA" (stable) by Fitch, Inc. and "Aa2" (stable) by Moody's Investors Service, Inc. Each rating of Assured Guaranty should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of any security guaranteed by Assured Guaranty. Assured Guaranty does not guaranty the market price of the securities it guarantees, nor does it guaranty that the ratings on such securities will not be revised or withdrawn. Recent Developments On November 14, 2008, AGL announced that it had entered into a definitive agreement to purchase Financial Security Assurance Holdings Ltd. ("FSA"), the parent of financial guaranty insurance company Financial Security Assurance, Inc. For more information regarding the proposed acquisition by AGL of FSA, see the Annual Report on Form 10-K filed by AGL with the Securities and Exchange Commission (the "SEC") on February 26, Capitalization of Assured Guaranty Corp. As of December 31, 2008, Assured Guaranty had total admitted assets of $1,803,146,295 (unaudited), total liabilities of $1,425,012,944 (unaudited), total surplus of $378,133,351 (unaudited) and total statutory capital (surplus plus contingency reserves) of $1,090,288,113 (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of December 31, 2007, Assured Guaranty had total admitted assets of $1,361,538,502 (audited), total liabilities of $961,967,238 (audited), total surplus of $399,571,264 (audited) and total statutory capital (surplus plus contingency reserves) of $982,045,695 (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. The Maryland Insurance Administration recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Maryland Insurance Code, and for determining whether its financial condition warrants the payment of a dividend to its stockholders. No consideration is given by the Maryland Insurance Administration to financial statements prepared in accordance with accounting principles generally accepted in the United States in making such determinations. Incorporation of Certain Documents by Reference The portions of the following documents relating to Assured Guaranty are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof: The Annual Report on Form 10-K of AGL for the fiscal year ended December 31, 2008 (which was filed by AGL with the SEC on February 26, 2009); and The Current Reports on Form 8-K filed by AGL with the SEC, as they relate to Assured Guaranty. All consolidated financial statements of Assured Guaranty and all other information relating to Assured Guaranty included in documents filed by AGL with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date of this Official Statement and prior to the termination of the offering of the Bonds shall be deemed to be incorporated by 9

20 reference into this Official Statement and to be a part hereof from the respective dates of filing such consolidated financial statements. Any statement contained in a document incorporated herein by reference or contained herein under the heading "MUNICIPAL BOND INSURANCE The Insurer" shall be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any subsequently filed document which is incorporated by reference herein also modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. Copies of the consolidated financial statements of Assured Guaranty incorporated by reference herein and of the statutory financial statements filed by Assured Guaranty with the Maryland Insurance Administration are available upon request by contacting Assured Guaranty at 1325 Avenue of the Americas, New York, New York or by calling Assured Guaranty at (212) In addition, the information regarding Assured Guaranty that is incorporated by reference in this Official Statement that has been filed by AGL with the SEC is available to the public over the Internet at the SEC's web site at and at AGL's web site at from the SEC's Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C , and at the office of the New York Stock Exchange at 20 Broad Street, New York, New York Assured Guaranty makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, Assured Guaranty has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding Assured Guaranty supplied by Assured Guaranty and presented under the heading "MUNICIPAL BOND INSURANCE." UNDERWRITING Fifth Third Securities, Inc. (the "Underwriter") has agreed, pursuant to the Bond Purchase Agreement with the School District dated April 6, 2009 (the "Purchase Agreement"), to purchase all, but not less than all, of the Bonds at a purchase price of $16,384, (the "Purchase Price"), which is equal to the par amount of the Bonds ($15,999,994.00), plus net original issue premium ($483,926.75), less Underwriter's discount ($99,537.77), plus accrued interest thereon, if any. The Underwriter is purchasing the Bonds as originally issued for purpose of resale. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers (including dealer banks and dealers depositing the Bonds 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 Bonds may be changed, from time to time, by the Underwriter. The Bonds will be initially offered for resale at a price calculated to produce a gross spread in favor of the Underwriter of $329, Such spread will be used to pay the Underwriter's compensation ($99,537.77) and to pay certain other costs of issuance including rating fees, bond insurance premium, printing and distribution costs, legal fees, and other miscellaneous expenses. The obligation of the Underwriter to accept delivery of the Bonds is subject to various conditions of the Purchase Agreement. The Underwriter is obligated to purchase all of the Bonds if any of the Bonds are purchased. 10

21 RATINGS As noted on the Cover, the School District has applied for a rating of the Bonds from Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc., ("S&P"), which has rated the Bonds AAA (the "Insured Rating"), on the understanding that the Bonds will be guaranteed under a financial guaranty insurance policy to be issued by the Insurer upon their issuance. The Bonds also have an underlying rating of AA- from S&P. No application for a rating has been made to any other rating agency. The ratings reflect only the views of such rating agency. Any explanation of the significance of the rating may only be obtained from such rating agency at Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041, telephone (212) The School District furnished to the rating agency certain information and materials, some of which may not have been included in this Official Statement, relating to the Bonds and the School District. Generally, rating agencies base their ratings on such information and materials, as well as investigation, studies and assumptions by the rating agencies. Such ratings are not recommendations to buy, sell or hold the Bonds. The Insured Rating assumes, upon delivery of the Bonds, the issuance of the Policy by the Insurer, a copy of which is attached to this Official Statement as APPENDIX G. See "MUNICIPAL BOND INSURANCE" herein. Pursuant to the Policy, the Insurer will insure the payment, when due, of principal of and interest on the Bonds, as described in this Official Statement. The ongoing stability of the Insurer and the Insurer's ability to pay principal of and interest on the Bonds, and otherwise to perform its obligation under the Policy, are the primary basis for the Insured Rating assigned to the Bonds and the ultimate security for the payment of principal of and interest on the Bonds. A decline in the financial condition of the Insurer could have an adverse effect on the Insured Rating and, consequently, on the market price of the Bonds. 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 Bonds) further information and materials that it or they may request. The School District does not, however, obligate itself hereby to furnish such information and materials, and 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 Bonds. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the marketability or market price of the Bonds. 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 Bonds, or the levy and collection of taxes to pay the debt service on the Bonds, or contesting or questioning the proceedings and authority under which the Bonds are to be authorized and are to be issued, sold, executed or delivered, or the validity of the Bonds. 11

22 A no-litigation certificate to such effect will be delivered to the Underwriter at the time of original delivery of the Bonds to such Underwriter. The School District is not a party to any legal proceedings seeking damages or injunctive relief. School Funding Litigation In 1997, in DeRolph v. State of Ohio, the Ohio Supreme Court determined that Ohio's elementary and secondary public school financing system violated the Ohio Constitution, including in that ruling a determination 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. 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 Bonds and with regard to the excludability 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, and a copy will be printed on the Bonds. 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. 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 Bonds that may be prepared or made available by the School District or others to the holders of the Bonds or others. 12

23 TAX MATTERS General In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law interest on the 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; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. Further, the Bonds are not "private activity bonds" as defined in Section 141(a) of the Code. The Bonds, the interest on the Bonds and the transfer, and any profit made on the sale or other disposition, of the Bonds 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, commercial activity tax and the corporate franchise tax measured by net income of a 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 Bonds. 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 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 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 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 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 covenants in the Bond Resolution to take such actions which may be required of it for the interest on the 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 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 13

24 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 Bonds. Bond Counsel will express no opinion and make no representation regarding such consequences. Original Issue Discount The Capital Appreciation Bonds will be sold to the public at a substantial discount from the respective maturity amounts thereof. In addition, certain of the Current Interest Bonds may be sold to the public at a price of less than 100% of their face amount (the Capital Appreciation Bonds, together with such Current Interest Bonds, are hereinafter referred to as 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. 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 for purposes of determining the adjusted basis for federal income tax purposes of the holder of the 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 offering price at which a substantial amount of the Discount Bonds were sold to the public (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. 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 has been accreted in all prior accretion periods, multiplied by (ii) the initial offering yield of that Discount Bond reflected on the Cover 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), minus, with respect to the Current Interest Bonds, interest actually paid during such 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. Amortizable Bond Premium The initial public offering price of certain of the Bonds may be greater than the principal amount payable at maturity or earlier call date (the "Premium Bonds"). As a result, the Premium Bonds will be considered to be issuable with amortizable bond premium (the "Bond 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 Bond Premium, pursuant to Section 1016(a)(5) of the Code. The amount of amortizable Bond 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 Bond Premium and (ii) the amount amortizable in a particular year are set forth at Section 171(b) of the Code. No income tax deduction for the amount of amortizable Bond Premium will be allowed pursuant to Section 171(a)(2) of the Code. The amortization of Bond 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 Premium Bonds. A purchaser of a Premium Bond at its issue price in the initial public offering who holds that Bond to maturity will realize no gain or loss upon the 14

25 retirement of that Bond. Special rules governing the treatment of Bond Premium, which are applicable to dealers in tax-exempt securities, are found at Section 75 of the Code. 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 ACCRETING ORIGINAL ISSUE DISCOUNT OR AMORTIZING PREMIUM FOR CERTAIN SUBSEQUENT PURCHASERS, AND INCLUDING THE EFFECT OF ANY APPLICABLE STATE OR LOCAL INCOME TAX LAWS. 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 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Bonds, 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 Bonds. The Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & 15

26 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 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bonds. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the 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 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the 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 16

27 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 Bonds The Bond Resolution provides for issuance of fully registered Bonds (the "Replacement Bonds") directly to owners other than DTC or its nominee only if DTC determines not to continue to act as security depository of the Bonds. 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 Bonds, 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 Bonds 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 Bonds, including an appropriate no-litigation certificate (described above under "LITIGATION"), will be delivered by the School District when the Bonds 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 of the School District, 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 Bonds 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 Bonds, 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 Bonds. 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 (the "SEC"). Specifically, the School District agrees to provide the Annual Report to each National Repository and the State Information Depository, and to provide notice of material events enumerated in the Disclosure Certificate to each National Repository or the Municipal Securities Rule Making Board (the "MSRB"), and to the State Information Depository. On December 5, 2008, the SEC issued Release No , amending Rule 15c2-12 (the "Rule"). Effective July 1, 2009 (or such other date as the SEC may designate as the "Effective Date"), the 17

28 amended Rule will require the School District to provide its Annual Report and notice of material events enumerated in the Disclosure Certificate exclusively to the MSRB through the Electronic Municipal Market Access ("EMMA") system. The Disclosure Certificate provides that, starting on the Effective Date and in compliance with the amended Rule, the School District will make all required filings under the Disclosure Certificate to EMMA in the manner proscribed by the MSRB. 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 Bonds. 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 Board President and Treasurer. BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION, AND UNION COUNTIES, OHIO By: /s/ Rodney H. Boester Board President By: /s/ Sandra M. Griscom Treasurer 18

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30 APPENDIX A THE BUCKEYE VALLEY LOCAL SCHOOL DISTRICT GENERAL INFORMATION Introduction The School District is in the northern portion of Delaware County (the "County"), and extends into Marion, Morrow and Union counties. The City of Delaware (the "City"), just south of the School District, is a college town of 26,000 located 20 miles north of Columbus, Ohio. The City is home to Ohio Wesleyan University. The County is included in the Columbus Metropolitan Statistical Area (the "Columbus MSA"), which has a population of 1.3 million. Three national highway routes and two state routes cross through the County, and an Interstate 71 interchange is seven miles to the east. Cincinnati, Toledo, Cleveland, Pittsburgh and Wheeling are all within 200 miles of the School District. The School District's central Ohio location is also convenient to national markets and population concentrations; 52% of the population, 53% of the disposable income, and 62% of the manufacturing income of the United States lie within a 500 mile radius of the School District. The County is experiencing rapid growth. The population of the County has almost doubled from 66,929 in the 1990 census to 125,399 in the 2000 census. A diversified economic base, including agriculture, industry, retail business, higher education and service establishments, provides a wide range of employment opportunities, and the area has enjoyed steady development for almost two decades. Despite the proximity of Columbus, the County has avoided becoming a "bedroom community" for the Columbus metropolitan area. Many residents continue to work in the County. Those who commute to Columbus, Marion, or other cities are still very active in civic life within the County. Recreational opportunities in the area are numerous and easily accessible. Ohio Wesleyan University's Branch Rickey Physical Education Center offers public memberships and has activities ranging from handball and squash to swimming. Five State parks, including two large reservoirs, are located in the County and are complemented by six City parks and seven County parks. In the County, four private and twelve public golf courses currently operate. Fairs and festivals celebrate the Delaware area's past and continuing agricultural heritage, while the Memorial Golf Tournament in the nearby City of Dublin and the City of Delaware's Little Brown Jug Harness Race attract international attention. Recreation Unlimited, a 160 acre model facility for disabled camping built in 1986, is located in the northern portion of the County and provides unique recreational experiences for disabled individuals. Within an easy commuting distance are several public and private two-year and four-year colleges and universities providing a wide range of educational facilities and opportunities. These include The Ohio State University, Capital University, Ohio Wesleyan University, Otterbein College, Ohio Dominican College, Franklin University, Columbus State Community College and DeVry Institute of Technology. The Delaware County Joint Vocational School District offers evening courses and adult education courses in 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. A-1

31 According to information supplied by OMAC, the School District contains portions of the assessed valuation of other subdivisions, as shown below: Overlapping Subdivisions Buckeye Valley Local School District Subdivision Subdivision's Assessed Valuation Within the School District 1 School District's Assessed Valuation Within the Subdivision 1 Counties Delaware County 7.18% 93.98% Morrow County Marion County Union County Other Subdivisions Concord Township Scioto Township Radnor Township Brown Township Kingston Township Oxford Township Peru Township Troy Township Village of Ashley Village of Ostrander Thompson Township Westfield Township Marlboro Township Liberty Township Waldo Township Delaware Township Millcreek Township City of Delaware < Delaware Career Center JVSD 9.64 Delaware County Miscellaneous 8.17 Delaware County Health District Miscellaneous 8.17 Delaware County Library Miscellaneous 9.36 Delaware-Morrow Co. Mental Health District Misc Elm Valley Joint Fire District Miscellaneous Fort Morrow Fire District Miscellaneous Kingston-Porter Fire District Miscellaneous Preservation Park District of Delaware Co. Misc Tri Township Fire District Miscellaneous Union County Health District Miscellaneous 0.02 Source: OMAC A 2006 estimate prepared by OMAC indicated that the School District's population was 19, Shares are based on assessed valuation figures; figures may not sum to 100% due to rounding. A-2

32 Map of Geographic Area Buckeye Valley Local School District A-3

33 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 third Thursday 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. School District Officials Buckeye Valley Local School District Expiration of Official Office Current Term Years of Service Rodney H. Boester President December 31, Debra A. Crecelius Vice President December 31, Michael S. Bell Member December 31, Thomas E. Kaelber Member December 31, Thomas L. Sheppard Member December 31, John J. Schiller Superintendent Contract 4 Sandra M. Griscom Treasurer Contract 5 A brief biographical sketch of each official follows: President Rodney H. Boester. Rodney H. Boester is serving his second term as President of the Board, which ends on December 31, Mr. Boester has also served as Vice President, a member of the Finance Committee, and on the Strategic Planning Team. Mr. Boester is a graduate of Brookhaven High School in Columbus, has lived in the School District for 22 years, and been employed with McDonald's for 35 years. He is the owner/operator of five restaurants in Delaware and Sunbury, a member of the Delaware and Sunbury Chambers of Commerce, and an active member of the School District's Athletic Boosters. Two of Mr. Boester 's children have graduated from the School District, and two currently attend School District schools. Vice President Debra A. Crecelius. Debra A. Crecelius is serving her second term on the Board and her current term ends on December 31, Mrs. Crecelius has received her Bachelor of Science from The Ohio State University. Mrs. Crecelius has served the School District in several ways, including on the Facilities Committee, the Strategic Planning Committee, Wellness Committee, Bond Committee, and as a Legislative Liaison for the Ohio School Boards Association. She has helped at various athletic events and has served as both President and Treasurer for the Buckeye Valley North PTO. Mrs. Crecelius has two children, one who is attending School District schools and one that will be attending School District schools in a few years. Board Member Michael S. Bell. Michael S. Bell has served on the Board since 2005 and his current term ends on December 31, Mr. Bell is a Greensburg, Pennsylvania native, and received his Bachelor of Science in Math and Business at the University of Pittsburgh and an MBA in Finance from the Katz School of Business in Pittsburgh. Mr. Bell has been with JP Morgan Chase for 22 years and is currently a First Vice President and Senior Financial Analysis Manager. Mr. Bell has two children attending School District schools. A-4

34 Board Member Thomas E. Kaelber. Thomas E. Kaelbar has served on the Board for five years and his term ends December 31, Mr. Kaelbar is a graduate of the School District, and also received his BS and MS from The Ohio State University. Mr. Kaelbar is retired after teaching in the School District for 31 years. Mr. Kaelbar is active in the community as a member of the Alumni Band and as a member of his church. Mr. Kaelbar has served the School District as a member of the Finance, Facilities, and Policy Committees. Board Member Thomas L. Sheppard. Thomas L. Sheppard has served on the Board for 11 years and his current term ends December 31, Mr. Sheppard received his Bachelor of Arts from Otterbein College and is currently employed with Thomas C. Devore and Associates. Mr. Sheppard is active in youth athletics and is active on committees at his church. Mr. Sheppard has served the School District as a member of the Delaware County Joint Vocational School District Board of Education and as a member of several levy committees. Mr. Sheppard has two children, one who is attending School District schools and the other has graduated from the School District. Superintendent John J. Schiller. John J. Schiller has served as the Superintendent of the School District for four and one-half years. Prior to working for the School District, he was the Superintendent of the Liberty Union-Thurston Local School District in Baltimore, Ohio. He has also worked as a principal, assistant principal, and as a teacher in his career. He received his bachelor's degree from The Ohio State University and his graduate degree from West Virginia University. He is a member of the Buckeye Association of School Administrators, Metropolitan Educational Council where he served on the Purchasing Committee (chair) and Executive Committee and Governing Board (chair). He also is a member of the School Study Council of Ohio (Board of Directors) and Instructional Technology of Central Ohio (Board of Directors). Treasurer Sandra M. Griscom. Sandra Griscom has served as the Treasurer of the School District since August 1, Prior to working as the Treasurer of the School District, she worked as a Treasurer for Northmor Local School District for three years. She has also worked for two and one-half years as an Assistant Treasurer and she worked for over ten years for A-Site Financial Services. Ms. Griscom received her Bachelor of Arts from Bowling Green State University. Ms. Griscom has served as the Ohio Association of School Business Officials Professional Development Director and served on the committee which created the Leadership Academy. School District Employees The School District currently has 155 certificated employees and 100 classified employees. In Fiscal Year 2008, salaries accounted for 55.79% of the School District's operating expenditures, while fringe benefits accounted for 20.53% of the School District's operating expenditures. Certified Staff The teaching or certified staff is represented by the Buckeye Valley Teacher's Association (BVTA) which is affiliated with the Ohio Education Association and the National Education Association. The Board has bargained with the BVTA for over 34 years. In 2008, the Board and the BVTA signed a 2-year agreement effective July 1, The agreement granted the certified staff an annual salary increase of 3% in each year of the contract. The contract also establishes that employees pay ten percent of health insurance costs, with dental and life insurance premiums paid by the School District. These provisions are the same as the prior contract. Vision coverage was added with premiums paid 100% by the employees. Classified Staff Classified staff includes secretarial, clerical, custodial and cafeteria workers, as well as bus drivers and other non-teaching, non-administrative personnel. A-5

35 In 2006 the Board entered into a 3-year agreement effective August 1, 2003 with the O.A.P.S.E Local 236, a group affiliated with the Ohio Association of Public School Employees (O.A.P.S.E.). The Board has bargained with the O.A.P.S.E Local 236 for over 34 years. The settlement granted the classified staff annual salary increases of 3.5% each year for the first two years of the contract, and 3.25% for the final year of the contract. The contract also includes that employees pay 10% of the health care premium costs, 50% of the dental insurance premium costs, and the Board pays 100% of the premiums of the vision coverage. Negotiations on a new contract should begin in the Spring of 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. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-6

36 School District Facilities The School District presently operates the following schools: Group/ Grades Housed Current School District Facilities Buckeye Valley Local School District Enrollment ( ) Capacity Number of Teachers Pupil/ Teacher Ratio Year Building Completed Year(s) of Additions/ Renovations Name of Building Buckeye Valley High School , 1992 Buckeye Valley Middle School n/a Buckeye Valley East Elementary PreK , 1997 Buckeye Valley North Elementary K , 1997 Buckeye Valley West Elementary K , 1997 Total n/a 2,403 2, n/a n/a Source: School District After completion of the Project, the School District will operate the following facilities: School District Facilities Upon Completion of the Project Buckeye Valley Local School District Buildings Group/Grades Housed Capacity Expected Enrollment ( ) Renovated Facilities Buckeye Valley High School Existing Facilities Buckeye Valley Middle School Buckeye Valley East Elementary PreK Buckeye Valley North Elementary K Buckeye Valley West Elementary K Total n/a 2,676 2,375 Source: School District A-7

37 Enrollment The School District does not have open enrollment. The daily average enrollments for past school years, together with projected enrollments for future school years, are shown below. Actual and Projected Enrollment Buckeye Valley Local School District Grade * * Pre-K K Totals 2,237 2,248 2,319 2,299 2,373 2,439 2,412 2,432 Source: Ohio School Facilities Commission The School District Does not serve as a sponsor for a community school established under Revised Code Chapter Educational Program The School District serves approximately 2,400 students in grades K-12. School District buildings include one high school, one middle school and three elementary buildings. School Districtwide services include talented and gifted programs, full special needs services, advanced placement courses at the high school level, and a team-teaching concept at the middle school. Four School District teachers attained National Board Certification. Recent technology upgrades include student computer labs in all buildings and a web-based teacher-parent communication program. The School District teachers continue to revise and update the School District curriculum to match courses of study to the new State educational standards and benchmarks. A-8

38 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, Buckeye Valley Local School District Number of State Indicators Met 28 out of 30 (93.33%) Performance Index Score 97.6 Adequate Yearly Progress Not Met Value-Added Measure - (Below) Designation Source: Ohio Department of Education Effective 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. 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-9

39 State Performance Indicators Buckeye Valley Local School District Performance Indicator State Standard School District Performance Indicator State Standard School District 3 rd Grade Achievement 8 th Grade Achievement 1. Reading 75% 83.8% 15. Reading 75% 86.9% 2. Mathematics Mathematics Science th Grade Achievement 18. Social Studies Reading 75% 88.6% 4. Mathematics Ohio Graduation Test (10 th Grade) 5. Writing Reading 75% 88.8% 20. Mathematics th Grade Achievement 21. Writing Reading 75% 83.3% 22. Science Mathematics Social Studies Science Social Studies Ohio Graduation Test (11 th Grade) 24. Reading 85% 93.5% 6 th Grade Achievement 25. Mathematics Reading 75% 81.9% 26. Writing Mathematics Science Social Studies th Grade Achievement 12. Reading 75% 89.3% 29. Student Attendance Rate 93% 94.9% 13. Mathematics Writing Graduation Rate 1 90% 90.7% 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. 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 Graduation Rate A-10

40 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 AYP, 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 = Continuous 50%-74.9% or 80 to 89.9 and Not Met = 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 93.3% of the State Indicators, scored a PI of 97.6, and did not meet its AYP. The School District's preliminary designation is Effective. 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 Above expected growth for at least 2 consecutive years Excellent with Distinction Excellent and Otherwise no effect on rating Excellent Effective Continuous Improvement Academic Watch Academic Emergency 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 Excellent Effective Effective Continuous Improvement Continuous Improvement Academic Watch Academic Watch Academic Emergency The School District's value added measure was (below) in The School District's final designation for was Effective. National Standardized Test Scores The following table sets forth results for the seniors who graduated from the School District in Standardized Test Scores for Seniors Graduating in 2007 Buckeye Valley Local School District School District School District State of Ohio United States Average ACT Score Mean SAT Score 1,118 1,078 1,017 Sources: ACT, the College Board, and School District A-11

41 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, Buckeye Valley Local School District School District Similar Districts State of Ohio Local Funding 67.30% 52.52% 49.28% State Funding Federal Funding Source: Ohio Department of Education Expenditures by Category, Buckeye Valley Local School District (Dollars per Pupil) School District Similar Districts State of Ohio Instruction $5, $4, $5, Building Operations 2, , , Administration 1, , , Pupil Support 1, , Staff Support Total Spending Per Pupil 1 $9, $8, $9, Source: Ohio Department of Education Teachers' Salaries Teacher Statistics, Buckeye Valley Local School District School District Similar Districts State of Ohio Average teacher salary $51, $52, $54, Teaching experience 0-4 years 18.80% 23.78% 21.19% 4-10 years years K-12 Pupil-Teacher Ratio Source: Ohio Department of Education 1 Figures may not sum to total due to rounding. A-12

42 ECONOMY AND EMPLOYMENT Economic Development The County has experienced exponential growth in the past decade. The County is the fastest growing county in the State with population growth of more than 30% since the 2000 Census, and is recognized as one of the most rapidly growing counties in the nation. The County has the highest median household income in the State and the 18 th highest in the U.S., according to statistics from the United States Census Bureau. Additionally, the Columbus Metropolitan Area, nationally recognized as one of the emerging metropolitan areas of the nation, is among the more economically stable metropolitan areas in the U.S., and one of just a handful of cities in the northeastern quadrant of the nation whose economy and population both grew steadily through the last three decades of the 20th century. A strong residential, commercial and industrial tax base, a very diverse labor force and an unemployment rate below the State and national averages has resulted in strong growth throughout the metropolitan area, as well as in and around the School District. The 1,500,000 square foot Polaris Fashion Place opened in the fall of 2001 and is located in the southern portion of the County. Polaris Fashion Place is the largest anchor-based facility in the area, and includes the 1,200,000 square foot J.P. Morgan Chase office complex. The total value of the completed project is approximately $118 million; however, a new outdoor "Lifestyle Center" shopping area and outparcels surrounding the mall are still being developed. Several stand-alone stores and retail centers are in the process of being constructed in Polaris. Recent openings include a 60,000 square foot retail center anchored by a fitness center; a $16 million, 18-screen cinema development that includes shopping and dining; and the $65 million, 252-room Hilton Columbus at Polaris hotel. Additionally, the Polaris Fashion Place complex includes an $11.8 million privately funded interchange that opened on Interstate Highway 71 in November A second interchange was recently opened north of the main Polaris I- 71 interchange to ease traffic congestion. This second I-71 interchange was constructed by the Ohio Department of Transportation at a cost of $24 million. Over the next 25 years, the total market value of Polaris projects is estimated to reach $1 billion. The Delaware Health Center is OhioHealth's first phase in creating the Delaware Health Village, a health care complex that will eventually include the construction of a new hospital to replace Grady Memorial Hospital. Grady Memorial Hospital is an OhioHealth-owned hospital located outside of the School District in the City of Delaware. In other developments in the area, the Kroger Company completed construction of a distribution facility located in the northern portion of the School District. This facility consists of approximately 758,000 square feet and is located on 165 acres. Kroger transferred approximately 270 employees and created an additional 200 plus new jobs in the facility's first year of existence. Building Permit Values The School District's growth in the past decade is reflected, in part, in the degree of building activity in the School District. Building permit statistics are not available for the School District as such. The following table relating to the issuance of residential building permits (3-family or smaller) by the Villages of Ashley and Ostrander and the Townships of Brown, Concord, Marlboro, Oxford, Radnor, and Scioto from 1999 through 2008 is set forth for informational purposes only. It should not be implied from the inclusion of such data in this APPENDIX A that the School District is representative of the Village and Townships or vice versa. A-13

43 Annual Building Permits Delaware County Political Subdivisions Year Village of Ashley Brown Township Concord Township 1 Marlboro Township Oxford Township Radnor Township Scioto Township n/a Source: Delaware County Regional Planning Commission Labor Force Statistics Labor force statistics specific to the School District are not available. The County 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 vice versa. Source: Year Area Unemployment Rates (annual percentages) Delaware County State of Ohio United States Labor Force (in thousands) Delaware Year County % 4.0% 4.0% Ohio Department of Job and Family Services, Bureau of Labor Market Information 1 100% of the Township is not located within the School District 2 Through October 2008 A-14

44 The following table lists the largest employers in Delaware County. Largest Employers Delaware County Rank Firm Number of Employees Industry 1. JP Morgan Chase 7,601 Financial Services 2. Delaware County 1,050 Government 3. Olentangy Local School District 773 K-12 School System 4. American Showa 769 Manufacturing 5. Wal-Mart 718 Retail 6. Kroger Great Lakes 700 Distribution Center 7. Ohio Health-Grady Hospital 640 Medical 8. Delaware City School District 570 K-12 School System 9. Ohio Wesleyan University 486 University 10 Liebert-Emerson Network 429 Emerson Network 11. Advance Auto Parts 404 Auto Parts Distribution 12. CIGNA 400 Medical/Dental Insurance 13. Liebert 350 Power Supply 14. Meijers 345 Retail 15. PPG Industries, Inc. 340 Manufacturing 16. Accel Inc. 302 Distribution/Assembly 17. AHP 301 Diaper Manufacturer 18. Worthington Cylinder 288 Manufacturing 19. Buckeye Valley Local School District 286 K-12 School System 20. City of Delaware 270 Government 21. Sarcom, Inc. 268 Technology 22. JEG's 264 Auto Parts Manufacturer 23. Volvo 214 Auto Parts Manufacturing and Distribution 24. Luvata 210 Copper Manufacturing 25. Columbus Zoo 210 Zoo and Water Park 26. Greif Brothers 208 Manufacturing Source: Delaware County Economic Development Office [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-15

45 Source: Columbus Business First, December 2008 Largest Employers Columbus Metropolitan Area Rank Firm Number of Employees Industry 1. State of Ohio 24,492 Government 2. Ohio State University 21,107 Education 3. JP Morgan Chase & Co. 14,689 Financial Services 4. Nationwide 11,441 Insurance 5. Federal Government/ US Postal Service 10,762 Government 6. Ohio Health 10,592 Healthcare 7. Honda of America Manufacturing 8,800 Auto Manufacturing 8. Columbus City School District 8,276 Education 9. City of Columbus 8,227 Government 10 Franklin County 6,310 Government 11. Limited Brands Inc. 6,250 Retail 12. Mount Carmel Health System 5,638 Hospital 13. Huntington Bancshares Inc. 4,700 Financial Services 14. American Electric Power 4,384 Electric Power 15. Kroger Co. 4,014 Grocery 16. Nationwide Children's Hospital 3,880 Healthcare 17. Medco Health Solutions Inc. 3,681 Pharmacy 18. Cardinal Health Inc. 3,600 Health Care Products/Services 19. AT&T Ohio 3,000 Telecommunications 20. Battelle 2,500 Technology/Research 21. South-Western City School District 2,479 Education 22. Emerson Network Power/Liebert Corp 2,107 Manufacturing 23. Abbott Nutrition, a Division of Abbott 1,986 Pharmaceutical 24. TS Tech North America 1,956 Auto Parts 25. Alliance Data Systems Corp. 1,913 Credit Card Transaction Services 26. State Farm Insurance 1,864 Insurance 27. Hilliard City School District 1,827 Education 28. NetJets Inc. 1,820 Transportation 29. Dublin City School District 1,786 Education 30. Teleperformance 1,760 Telecommunications 31. National City Corp. 1,700 Financial Services 32. UPS 1,656 Package Delivery Services 33. Dispatch Printing Co. 1,513 Newspaper 34. Ashland Inc. 1,500 Chemical and Plastics Distribution 35. Westerville City School District 1,497 Education 36. Aetna Inc. 1,400 Insurance 37. Big Lots Inc. 1,400 Retail 38. Owens Corning 1,400 Manufacturing 39. CAS-Chemical Abstracts 1,300 Chemical Research 40. Giant Eagle Inc. 1,264 Grocery 41. Fairfield Medical center 1,254 Healthcare 42. Discover Financial Services LLC 1,210 Financial Services 43. Worthington Industries Inc. 1,200 Manufacturing 44. Anchor Hocking Co. 1,200 Manufacturer of Glass Products 45. McGraw-Hill Education 1,200 Textbook Publisher 46. Olentangy Local School District 1,200 Education 47. Licking Memorial Health Systems 1,117 Healthcare 48. Scotts Miracle-Gro Co. 1,100 Manufacturer of Lawn Care Products 49. Worthington City School District 1,090 Education 50. Licking County 1,058 Government A-16

46 SCHOOL DISTRICT PROPERTY TAX BASE Ad Valorem Taxes and Assessed Valuation Overview 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 State Tax Commissioner, and assessment of public utility property and tangible personal property is performed by the State 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. Taxes collected from tangible personal property (other than public utility) in one 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 that ended on or before December 31 of that calendar year, and at the tax rates determined in the 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. Real Property The "assessed valuation" of real property is fixed at 35% of true value and is determined pursuant to rules of the State 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 State 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 State 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 salesassessment ratio over the three-year period. 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. A-17

47 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 25% of its true value. 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 Reimbursement of Lost 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. Within the School District boundaries there is an Enterprise Zone located near the Village of Ashley. There are not any tax abated properties currently within the Enterprise Zone. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-18

48 Assessed Valuation The following table classifies the School District's taxable property according to use: Assessed Valuation (2009 Collection Year) Property Classification Amount Percent of Total Assessed Valuation Real Estate 1 Residential/Agricultural $470,215, % Commercial/Industrial/Mineral 14,362, Public Utility Real 295, Total Real Estate $484,874, % Personal Property 2 General $ 1,189, % Public Utility Personal 11,192, Total Personal $12,382, % Total Assessed Valuation $497,256, % Source: Delaware County Auditor Growth In School District Assessed Valuation Tax Collection Year Assessed Valuation Percent Increase Over Prior Year $345,098, ,814, % ,802, ,497, ,158, ,695, ,256, Source: Delaware 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

49 Name 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 $497,256,253 for collection year Real Estate Taxpayers Largest Taxpayers 2009 Collection Year Type of Business Assessed Valuation Percent of School District's Total Assessed Valuation Scioto Reserve LLC Golf Course $3,217, % City of Columbus Government 2,246, National Lime & Stone Co. Quarry 2,058, DELCA Inc. Real Estate Investment 1,393, John P. McConnell Residential 1,354, Michael and Kristin Coughlin Residential 1,277, The Meadows at Scioto Reserve LLC Real Estate Investment 1,240, Michael Condit Trustee Agriculture 1,116, Perry Acres Inc. Agriculture 1,093, Rhonda L. Hutchinson Agriculture 1,076, John E. Peirsol Agriculture 1,000, Ella Grace Smart Agriculture 992, W A Fearn Trust Co. Agriculture 980, Marble Cliff Limestone Inc. Quarry 975, John and Susan Rodman Residential 917, The Arts Farm Inc. Agriculture 882, Name Public Utility Taxpayers Type of Business Assessed Valuation Percent of School District's Total Assessed Valuation Columbus Southern Power Company Electricity $2,681, % Ohio Edison Co. Electricity 2,598, Consolidated Electric Cooperative Electricity 1,497, American Transmission Systems Inc. Electric transmission 827, Ohio Power Co. Electricity 780, Dayton Power and Light Company Electricity 301, Columbia Gas of Ohio Natural Gas 274, Suburban Natural Gas Company Natural Gas 216, Columbia Gas Transmission Corp. Gas transmission 171, Source: Delaware County Auditor A-20

50 School District 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. School District History of Voted Taxes Buckeye Valley Local School District Election Date Levy or Bond Issue Description Voting For % Voting For Voting Against % Voting Against November 4, 2008 $16,000,000 Bond Issue 5, % 3, % March 4, 2008 $18,500,000 Bond Issue 3, , August 7, 2007 $17,500,000 Bond Issue 1, , May 8, 2007 $17,500,000 Bond Issue 1, , February 2, Mills Emergency Levy 1, , November 3, Mills Emergency Levy 2, , May 5, Mills Emergency Levy 1, , May 2, 1995 $14,000,000 Bond Issue 1, , November 8, 1994 $12,500,000 Bond Issue 2, , November 2, 1993 $14,100,000 Bond Issue 2, , May 4, 1993 $14,100,000 Bond Issue 1, , June 2, % Income Tax 1, , February 4, 1992 $14,100,000 Bond Issue 1, , November 5, 1991 $14,100,000 Bond Issue 1, , May 7, 1991 $14,100,000 Bond Issue 1, , November 6, 1990 $13,000,000 Bond Issue 1, , May 2, Mill Emergency Levy 1, Source: Ohio Municipal Advisory Council It is unclear at this time whether the School District will place any new replacement levies or income taxes on the ballot in the next five years. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-21

51 School District 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). School District Tax Rates Buckeye Valley Local School District Collection Debt Year Operating 1 Retirement Permanent Improvement Total Source: Ohio Department of Taxation The total School District operating millage of mills for collection year 2009 includes voted operating levies of mills, all of which were approved by the School District electorate for a continuing period of time and which do not require a renewal vote. The balance of 4.50 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, 1.50 mills of which is being used for permanent improvements. (See "SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally.") The following table identifies the historical tax collections for the School District: School District Tax Collections Buckeye Valley Local School District Tax Collection Year Assessed Valuation Taxes Levied 2 Taxes Collected 2 (including delinquent taxes) Collection Rate $ 345,098,246 $ 8,277, $ 8,369, % ,814,136 8,591, ,811, ,802,236 8,881, ,029, ,497,006 10,384, ,466, ,157,504 10,579, ,718, ,695,396 11,424, ,698, ,256,253 n/a n/a n/a Source: Delaware County Auditor 1 Includes inside millage and outside (voted) millage 2 Tax collection figures are for Delaware County only, and do not include Morrow, Marion and Union Counties A-22

52 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 ten-mill 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 Reimbursement of Lost Property Tax Revenues" for a discussion of reimbursement by the State for these reductions. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-23

53 Ad Valorem Tax Levies The following table presents certain information concerning the Board's ad valorem tax levies: Year Voted Ad Valorem Tax Levies Buckeye Valley Local School District Current Millage Rates (2009 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 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. 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 and a joint vocational school district ("JVSD") levy. 1 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. A-24

54 Ad Valorem Tax Levies Buckeye Valley Local School District (mills per $1.00 of assessed valuation; 2009 Collection Year) Taxing Authority Effective Rates Location of Property to be Taxed School District County JVSD Township Other 1 Total Residential & Agricultural All Other Village of Ashley Brown Township City of Delaware Concord Township Delaware Township Kingston Township Liberty Township Marlboro Township Oxford Township Radnor Township Scioto Township Village of Ostrander Thompson Township Troy Township Waldo Township Peru Township Westfield Township Millcreek Township Source: Ohio Department of Taxation Reimbursement of Lost Property Tax Revenues The "Property Tax Rollback" and the "Homestead Exemption" each refer to programs whereby the State distributes funds to the taxing districts, including school districts, to cover shortfalls in property tax revenues resulting from (a) a 10% reduction or "rollback" in non-commercial property taxes, (b) a 2-1/2% reduction applicable to owner-occupied housing, and (c) a flat, $25,000 reduction in taxable value applicable to certain elderly or disabled homeowners. These programs are subject to repeal or revision by the State. 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. The State currently reimburses certain taxing districts, including school districts, for tax losses occasioned by this reduction (the "Public Utility Property Tax Loss Reimbursement"). To replace the money lost due to the lower assessment percentages, State consumption taxes were enacted, including a kilowatt-hour tax (KWH tax) on electricity and a thousand cubic foot tax (MCF tax) on natural gas. 1 "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. A-25

55 The basis for the Public Utility Property Tax Loss Reimbursement is the lost tax revenue associated with the reduction in assessment percentages applicable to tangible public utility property. Since August 2002, a State aid offset has been calculated each year. The offset equals the additional State aid that school districts will receive because of the reduced assessment percentages applicable to tangible public utility property. The amount directly reimbursed to school districts is the lost tax revenue less the offset. This method of reimbursement was used through August Currently, a calculation is made to determine if further reimbursement is required. If the State aid increase between fiscal year 2002 and the then-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. If the inflation-adjusted loss is greater than the increase in State aid, full reimbursement is made during the following tax year. No Public Utility Property Tax Loss Reimbursement will be made after The State also reimburses certain tax jurisdictions for tax losses occasioned by the phased elimination 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"). To replace a portion of the lost revenue, a State commercial activity tax is imposed on gross receipts, including receipts of services, in Ohio. The basis for the Tangible Personal Property Tax Loss Reimbursement is the revenue loss caused by the reduction in assessment percentages multiplied by "qualifying fixed-sum levies" or by "qualifying fixed-rate levies," less one-half of one mill in the case of qualifying fixed-sum levies. "Qualifying fixedsum levies" and "qualifying fixed-rate levies" are those levies in effect during tax year 2004, those levies in effect during tax year 2005, and any other levy passed at an election held prior to September 1, The one-half mill that is not reimbursed by the Tangible Personal Property Tax Loss Reimbursement is shifted to real property owners in the tax jurisdiction. With respect to "qualifying fixed-sum levies," tax jurisdictions are reimbursed 100% of the loss (less the one-half mill that is not reimbursed) for tax years 2006 through Beginning in tax year 2011, tax jurisdictions will be reimbursed 100% of the loss of any "qualifying fixed-sum levy" that continues in effect for that tax year (less the one-half mill that is not reimbursed). The Tangible Personal Property Tax Loss Reimbursement continues so long as any "qualifying fixed sum levy" remains in effect. With respect to "qualifying fixed-rate levies," tax jurisdictions are reimbursed 100% of the loss for tax years 2006 through The Tangible Personal Property Tax Loss Reimbursement is reduced for "qualifying fixed-rate levies" between tax years 2011 and 2017 until no further reimbursement is made in tax year 2018 or thereafter. In the case of school districts, the Tangible Personal Property Tax Loss Reimbursement for fixed-rate levy losses are further reduced by the "school aid off-set," if any. The school aid off-set is additional State aid that a school district may receive because of lower valuations resulting from the reduced assessment percentages. Beginning in tax year 2011, if the school aid off-set is greater than the fixed-rate levy loss, no further Tangible Personal Property Tax Loss Reimbursement is made to the School District. A-26

56 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 Reimbursement of Lost 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 Revised Code Chapter 3318 establishes the Ohio School Facilities Commission (the "Commission") to administer the provision of financial assistance to Ohio school districts for the acquisition or construction of classroom facilities in accordance with Chapter 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. 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 1 The Supreme Court of Ohio has declared the School Foundation Program unconstitutional. See "LITIGATION - School Funding Litigation". A-27

57 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. Expedited Local Partnership Program Under the Expedited Local Partnership Program (the "Expedited Program") a school district may enter into an agreement with the Commission under which the school district proceeds with the new construction or major repairs of a separate and discrete portion of the school district's classroom facilities needs through the expenditure of "local resources". "Local resources" are defined broadly as "any moneys generated in any manner" permitted for a school district to raise the school district portion of a school facilities project. In order to be eligible for the Expedited Program, a school district must submit a resolution passed by the school board certifying to the Commission the school district's request to participate in the Expedited Program. Once a school district is approved for the Expedited Program, the Commission conducts an assessment and develops a current master plan for the school district. As with the Facilities Program, the Commission establishes a basic project cost, and subsequently, the state and local share percentages are determined pursuant to Chapter Once the master plan is complete, the school district may proceed with and pay for the discrete portion of the master plan with local resources, and may choose to fund the maintenance obligation that will be ultimately required when that school district qualifies for the Facilities Program. The master plan expenditures, if qualifying, will then count toward the local share of the Facilities Program when the school district becomes eligible for the Facilities Program. When the school district is eligible for the Facilities Program, the Commission will conduct a new assessment of the school district's facilities and may determine that additional facility improvements are required. In some cases, this would require the school district to provide additional local resources to meet its local share percentage, possibly including seeking voter approval for an additional bond issue. See "Future Financings" herein. The School District is not currently participating in the Facilities Program, but is exploring participation in the Expedited Program. No decision has been made regarding participation in this program. A-28

58 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. On June 2, 1992, voters of the School District approved a 1.00% income tax for a continuing period of time effective January 1, 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 Delaware 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 A-29

59 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 indebtedness in excess of the 4% consent or 9% limitation when necessary to fund the Commissionrequired local effort. 1 Revised Code Section (E) permits a school district to incur indebtedness in excess of the 9% direct debt limitation if, based on five-year projections showing annual property value growth of 3% or more, the State Superintendent determines that such school district is a "special needs" district. A school district which has been approved as a special needs district may incur indebtedness in an amount not exceeding an amount equal to the greater of the following: (a) (b) nine percent (9%) of the sum of its tax valuation plus an amount that is the product of multiplying that tax valuation by the percentage by which the tax valuation has increased over the tax valuation on the first day of the sixtieth month preceding the month in which its board determines to submit to the electors the question of issuing the proposed securities; nine percent (9%) of the sum of its tax valuation plus an amount that is the product of multiplying that tax valuation by the percentage, determined by the State Superintendent, by which that tax valuation is projected to increase during the next ten years. In order to become a special needs district, the board of education of a school district must pass a resolution stating that the student population is not adequately served by existing facilities, that insufficient capacity exists within the 9% limit to finance additional facilities, and that special needs classification is required. The Board passed such a resolution on July 15, A detailed application including a history of the extent of growth in the tax valuation of the School District is then submitted to the State Superintendent, who, upon finding that projected growth of the tax valuation during the next five years is likely to exceed 3% per year, may determine that the School District is an approved special needs district. This determination is conclusive. Such a determination was rendered with respect to the School District on August 15, 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 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

60 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. 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 ten-mill limitation, it is necessary to determine the total outstanding debt service requirements within the ten-mill limitation of all the taxing subdivisions overlapping the School District. 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. A-31

61 As of the date of this Official Statement, $15,000,000 of the debt of the School District is in the form of general obligation bond anticipation notes. After issuance of the Bonds, and retirement of the Outstanding Notes to be refunded from the proceeds of the Bonds on June 23, 2009, none of the debt of the School District will be in the form of general obligation bond anticipation notes. 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. School District Debt Currently Outstanding As of April 20, 2009, the School District has the following issues of bonds and notes outstanding (excluding the Outstanding Notes to be refunded by the Bonds): Outstanding Debt Buckeye Valley Local School District Issue Dated Date Final Maturity Balance Outstanding April 20, 2009 School Facilities Construction and Improvement Bonds, Series 1995A January 1, 1995 December 1, 2015 $ 4,545, General Obligation Advance Refunding Bonds October 1, 2004 December 1, ,359, The Bonds April 20, 2009 December 1, ,999, Total $ 24,904, Source: School District [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-32

62 Debt Service Requirements The following schedule presents the School District's actual debt service requirements (excluding the Outstanding Notes to be refunded by the Bonds): Debt Service Requirements Buckeye Valley Local School District Calendar Prior Obligations The Bonds Year Principal Interest Principal Interest Total Debt Service 2009 $605, $474, $635, $406, $2,120, , , , , ,096, , , , , ,101, , , , , ,097, , , , , ,101, , , , , ,095, , , , , ,102, , , , , ,103, , , , , ,103, , , , , ,107, , , , , ,098, ,010, , , , ,095, , , ,045, , , ,044, , , ,043, , , ,040, , , ,042, , , ,041, , , ,044, , , ,044, , , ,043, , , ,040, , , ,044, , , ,040, , , ,045, , , ,042, , , ,042, , , ,044, Total $8,904, $3,813, $15,999, $13,194, $41,913, Source: 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

63 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 any payments to be made on or after April 20, 2009 and excluding debt payable primarily from enterprise revenues) is as follows: Overlapping Units Overlapping Debt Buckeye Valley Local School District Estimated Outstanding Debt 1 Percent Applicable to School District Estimated Amount of Overlapping Debt Delaware County $31,305, % $2,247,699 Marion County 900, Morrow County 5,435, ,705 Union County 5,445, ,089 Village of Ostrander 131, ,400 Liberty Township 5,524, ,735 Radnor Township 162, ,000 Scioto Township 1,350, ,254,420 Delaware County Library 345, ,292 Kingston-Porter Fire District 40, ,016 Total $50,638,317 $4,079,256 Source: OMAC The following table shows the per capita debt of the residents in the School District based upon the 2006 OMAC estimate of 19,470 people residing in the School District, the above overlapping indebtedness figures and the School District debt shown above, including the Bonds: School District Debt, per capita $1, Overlapping Debt, per capita Total Debt, per capita $1, Source: OMAC and School District calculations [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 1 Excluding special assessment and self-supporting debt. A-34

64 Debt Capacity Analysis The following table provides an analysis of the School District's debt capacity as of April 20, 2009, excluding the outstanding Notes to be refunded by the Bonds. The School District's tax valuation is calculated in accordance with R.C (PP) and is based on Collection Year 2008 data provided by the Department. Debt Capacity Buckeye Valley Local School District A. Tax Valuation $465,622, B. Total Debt, including the Bonds but excluding the Outstanding Notes 24,904, C. Exempt Debt 0.00 D. Total non-exempt debt (B minus C) 24,904, E. F. 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) 465, G. Debt Leeway within 1/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (E minus F) 465, H. 9/10 of 1% direct Debt Limitation (Section (G) debt) 4,190, I. Total Revised Code Section (G) debt 0.00 J. Debt Leeway within 9/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (H minus I) 4,190, K. 9% direct debt limitation 41,906, L. Debt Leeway within 9% direct debt limitation (K minus D) 1 17,001, Debt leeway is determined without reference to applicable moneys in the School District's Bond Retirement Fund. A-35

65 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 one lease obligation through the Ohio Association of School Business Officials Pool, under which the School District is expected to pay $67, for lease payments in 2009 and $52, in Future Financings The School District anticipates asking voters for authority to issue bonds to provide funds for the construction and improvement of its elementary school buildings in November 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. After a public hearing, 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 A-36

66 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 the basis of generally accepted accounting principles ("GAAP"). 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. The most recent audit of the School District's financial statements by the State Auditor was completed through the fiscal year ending June 30, 2008 and was reviewed by the Board's administrative staff on December 16, 2008, during the post-audit conference. The Auditor did not make any management recommendations, require any adjustments, or make any findings for recovery. No bringdown 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, 2008 are attached hereto as APPENDIX B. Governmental Accounting Standards Board ("GASB") pronouncements and Financial Accounting Standards Board pronouncements are the principal sources used to determine the accounting principles employed. 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 nonmajor 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 A-37

67 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 February 17, 2009, 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 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 a 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".) 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 A-38

68 Other Funds Ohio school districts are required to establish the following funds as indicated: Fund Source and Amount of Balance Purpose Textbook and Instructional Materials Fund 1 Capital and Maintenance Fund 2 3% of operating revenues 2 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 3% of general fund revenues 4 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 3 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. 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 Bonds), 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 1 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. 2 A different percentage requirement may be set by the State Auditor. 3 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. 4 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

69 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 a maximum amount of $61,240,908. In addition, the School District maintains liability coverage with no deductible and a limit of $4,000,000 in aggregate. The School District also carries insurance coverage for sexual misconduct, with limits of $2,000,000 per occurrence and $4,000,000 aggregate per year. 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 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-40

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71 APPENDIX B BASIC FINANCIAL STATEMENTS BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO for the fiscal year ended June 30, 2008 B-1

72 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO BASIC FINANCIAL STATEMENTS (AUDITED) FOR THE FISCAL YEAR ENDED JUNE 30, 2008 SANDRA GRISCOM, TREASURER B-2

73 Board of Education Buckeye Valley Local School District 679 Coover Road Delaware, Ohio We have reviewed the Independent Auditor s Report of the Buckeye Valley Local School District, Delaware County, prepared by Julian & Grube, Inc., for the audit period July 1, 2007 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 Buckeye Valley Local School District is responsible for compliance with these laws and regulations. Mary Taylor, CPA Auditor of State January 30, E. Broad St. / Fifth Floor / Columbus, OH Telephone: (614) (800) Fax: (614) B-3

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75 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO TABLE OF CONTENTS Independent Auditor s Report Management s Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 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 and Actual (Non-GAAP Budgetary Basis) - General Fund Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Fund Notes to the Basic Financial Statements Supplementary Data: Schedule of Receipts and Expenditures of Federal Awards 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 Its Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A Schedule of Findings OMB Circular A B-5

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77 Independent Auditor s Report Board of Education Buckeye Valley Local School District 679 Coover Road Delaware, OH We have audited the accompanying financial statements of the governmental activities, its major fund, and the aggregate remaining fund information of Buckeye Valley Local School District, Delaware County, Ohio, as of and for the fiscal year ended June 30, 2008, which collectively comprise Buckeye Valley Local School District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Buckeye Valley Local School 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 the Comptroller General of the United States Government Auditing Standards. 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, its major fund, and the aggregate remaining fund information of Buckeye Valley Local School District, as of June 30, 2008, and the respective changes in financial position and the respective budgetary comparison for the General Fund for the fiscal 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 16, 2008, on our consideration of Buckeye Valley Local School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 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. B-7

78 Independent Auditor s Report Buckeye Valley Local School District Page Two Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Buckeye Valley Local School District s basic financial statements. The accompanying schedule of receipts and 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 not a required part of the basic financial statements. The schedule of receipts and expenditures of federal awards 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. Julian & Grube, Inc. December 16, 2008 B-8

79 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The management s discussion and analysis of the Buckeye Valley Local School District s (the District ) financial performance provides an overall review of the District s financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the District s financial performance as a whole; readers should also review the basic financial statements and the notes to the basic financial statements to enhance their understanding of the District s financial performance. Financial Highlights Key financial highlights for fiscal year 2008 are as follows: In total, net assets of governmental activities increased $1,346,282 which represents an 11.13% increase from 2007 s restated net assets (see Note 3.B.). General revenues accounted for $21,886,849 in revenue or 87.30% of all revenues. Program specific revenues in the form of charges for services and sales, operating grants and contributions and capital grants and contributions accounted for $3,184,783 or 12.70% of total revenues of $25,071,632. The District had $23,725,350 in expenses related to governmental activities; $3,184,783 of these expenses were offset by program specific charges for services, operating grants or contributions. General revenues supporting governmental activities (primarily taxes and unrestricted grants and entitlements) were adequate to provide for these programs. The District s major governmental fund is the general fund. The general fund had $20,988,791 in revenues and other financing sources and $20,620,009 in expenditures and other financing uses. The general fund s fund balance increased $368,782 from $4,227,261 to $4,596,043. Using these Basic Financial Statements This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the 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 District, presenting both an aggregate view of the District s finances and a longer-term 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 District s most significant funds with all other nonmajor funds presented in total in one column. The District s major governmental fund is the general fund. Reporting the 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 District to provide programs and activities, the view of the District as a whole looks at all financial transactions and asks the question, How did we do financially during 2008? The statement of net assets and the statement of activities answer this question. These statements include all assets, liabilities, revenues and expenses using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting will take into account all of the current year s revenues and expenses regardless of when cash is received or paid. 3 B-9

80 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 These two statements report the District s net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the District as a whole, the financial position of the District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the District s property tax base, current property tax laws in Ohio restricting revenue growth, facility conditions, required educational programs and other factors. In the statement of net assets and the statement of activities, the governmental activities include the District s programs and services, including instruction, support services, operation and maintenance of plant, pupil transportation, extracurricular activities, and food service operations. The District s statement of net assets and statement of activities can be found on pages of this report. Reporting the District s Most Significant Funds Fund Financial Statements The analysis of the District s major governmental funds begins on page 8. Fund financial reports provide detailed information about the District s major funds. The District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the District s most significant funds. The District s major governmental fund is the general fund. Governmental Funds Most of the District s activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds 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 financial statements provide a detailed short-term view of the 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 (reported in the statement of net assets and the statement of activities) and governmental funds is reconciled in the basic financial statements. The basic governmental fund financial statements can be found on pages of this report. Reporting the District s Fiduciary Responsibilities The District is the trustee, or fiduciary, for scholarship programs. This activity is presented as a private- purpose trust fund. The District also acts in a trustee capacity as an agent for individuals, private organizations, other governmental units and/or other funds. These activities are reported in an agency fund. The District s fiduciary activities are reported in separate statements of fiduciary net assets and changes in fiduciary net assets on pages 20 and 21. These activities are excluded from the District s other financial statements because the assets cannot be utilized by the District to finance its operations. Notes to the Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. These notes to the basic financial statements can be found on pages of this report. 4 B-10

81 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The District as a Whole The statement of net assets provides the perspective of the District as a whole. The table below provides a summary of the District s net assets at June 30, 2008 and June 30, The District s net assets have been restated as detailed in Note 3.B. to the financial statements. Net Assets Restated Governmental Governmental Activities Activities Assets Current and other assets $ 17,878,775 $ 17,140,805 Capital assets, net 18,016,364 18,245,901 Total assets 35,895,139 35,386,706 Liabilities Current liabilities 10,806,510 11,138,718 Long-term liabilities 11,648,101 12,153,742 Total liabilities 22,454,611 23,292,460 Net Assets Invested in capital assets, net of related debt 8,261,989 7,866,030 Restricted 1,742,282 1,132,614 Unrestricted 3,436,257 3,095,602 Total net assets $ 13,440,528 $ 12,094,246 Over time, net assets can serve as a useful indicator of a government s financial position. At June 30, 2008, the District s assets exceeded liabilities by $13,440,528. At year-end, capital assets represented 50.19% of total assets. Capital assets include land, land improvements, buildings and improvements, furniture and equipment, vehicles and infrastructure. Capital assets, net of related debt to acquire the assets at June 30, 2008, were $8,261,989. These capital assets are used to provide services to the students and are not available for future spending. Although the District s investment in capital assets is reported net of related debt, it should be noted that the resources to repay the debt must be provided from other sources, since capital assets may not be used to liquidate these liabilities. A portion of the District s net assets, $1,742,282, represents resources that are subject to external restriction on how they may be used. Of the restricted net assets, $531,432 is restricted for debt service and $981,550 is restricted for capital projects. The remaining balance of unrestricted net assets is $3,436, B-11

82 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The graph below shows the District s assets, liabilities and net assets at June 30, 2008 and June 30, Certain 2007 balances have been restated due to a prior period adjustment described in Note 3.B. to the financial statements. Governmental Activities $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- $35,895,139 $35,386,706 $22,454,611 $23,292,460 $13,440,528 $12,094, (restated) Net Assets Liabilities Assets The table below shows the change in net assets for fiscal years 2008 and Certain 2007 balances have been restated due to a prior period adjustment described in Note 3.B. to the financial statements. Change in Net Assets Restated Governmental Governmental Activities Activities Revenues Program revenues: Charges for services and sales $ 1,717,768 $ 1,652,313 Operating grants and contributions 1,434,711 1,374,422 Capital grants and contributions 32,304 59,754 General revenues: Property taxes 10,611,831 8,611,371 Income taxes 4,656,605 4,559,907 Grants and entitlements 6,290,417 6,066,602 Investment earnings 279, ,582 Other 48, ,043 Total revenues 25,071,632 22,798,994 6 B-12

83 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Change in Net Assets Restated Governmental Governmental Activities Activities Expenses Program expenses: Instruction: Regular $ 10,494,954 $ 10,342,249 Special 2,149,842 1,778,159 Vocational 449, ,791 Other 1,890 - Support services: Pupil 1,791,083 1,824,326 Instructional staff 550, ,219 Board of education 206, ,641 Administration 1,671,088 1,590,551 Fiscal 649, ,410 Operations and maintenance 2,211,150 2,234,590 Pupil transportation 1,573,120 1,461,315 Central 34,341 34,412 Operations of non-instructional services: Other non-instructional services 2,900 1,349 Food service operations 808, ,229 Extracurricular activities 534, ,887 Interest and fiscal charges 595, ,031 Total expenses 23,725,350 22,754,159 Change in net assets 1,346,282 44,835 Net assets at beginning of year (restated) 12,094,246 12,049,411 Net assets at end of year $ 13,440,528 $ 12,094,246 Governmental Activities Net assets of the District s governmental activities increased $1,346,282. Total governmental expenses of $23,725,350 were offset by program revenues of $3,184,783 and general revenues of $21,886,849. Program revenues supported 13.42% of the total governmental expenses. The primary sources of revenue for governmental activities are derived from property taxes, income taxes and grants and entitlements. These revenue sources account for 85.99% of total governmental revenue. 7 B-13

84 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The graph below presents the District s governmental activities revenue and expenses for fiscal years 2008 and Governmental Activities - Revenues and Expenses $25,500,000 $25,000,000 $24,500,000 $24,000,000 $23,500,000 $23,000,000 $22,500,000 $22,000,000 $21,500,000 $25,071,632 $23,725,350 $22,798,994 $22,754,159 Fiscal Year 2008 Fiscal Year 2007 Revenues Expenses The statement of activities shows the cost of program services and the charges for services and grants offsetting those services. The following table shows, for governmental activities, 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 grants and entitlements. Governmental Activities Total Cost of Net Cost of Total Cost of Net Cost of Services Services Services Services Program expenses Instruction: Regular $ 10,494,954 $ 9,605,703 $ 10,342,249 $ 9,630,923 Special 2,149,842 1,624,326 1,778, ,526 Vocational 449, , , ,879 Other 1,890 1, Support services: Pupil 1,791,083 1,252,598 1,824,326 1,811,177 Instructional staff 550, , , ,219 Board of education 206, , , ,641 Administration 1,671,088 1,654,924 1,590,551 1,590,551 Fiscal 649, , , ,410 Operations and maintenance 2,211,150 2,208,084 2,234,590 2,204,127 Pupil transportation 1,573,120 1,504,746 1,461,315 1,425,689 Central 34,341 26,710 34,412 34,412 Operations of non-instructional services: Other non-instructional services 2, ,349 - Food service operations 808,930 85, ,229 (236,302) Extracurricular activities 534, , , ,387 Interest and fiscal charges 595, , , ,031 Total $ 23,725,350 $ 20,540,567 $ 22,754,159 $ 19,667,670 The dependence upon tax and other general revenues for governmental activities is apparent, 88.42% of instruction activities are supported through taxes and other general revenues. For all governmental activities, general revenue support is 86.58%. The District s taxpayers, as a whole, are by far the primary support for District students. 8 B-14

85 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The graph below presents the District s governmental activities revenue for fiscal years 2008 and Governmental Activities - General and Program Revenues $30,000,000 $20,000,000 $10,000,000 $- $21,886,849 $19,712,505 $3,184,783 $3,086,489 Fiscal Year 2008 Fiscal Year 2007 General Revenues Program Revenues The District s Funds The District s governmental funds (as presented on the balance sheet on page 15) reported a combined fund balance of $6,329,815, which is higher than last year s total of $5,322,710. The schedule below indicates the fund balance and the total change in fund balance as of June 30, 2008 and Fund Balance Fund Balance June 30, 2008 June 30, 2007 Change Percentage Change General $ 4,596,043 $ 4,227,261 $ 368, % Other Governmental 1,733,772 1,095, , % Total $ 6,329,815 $ 5,322,710 $ 1,007, % The increase in other governmental funds is mainly due to a $500,000 transfer from the general fund to the permanent improvement fund (a nonmajor governmental fund) and $50,000 to food service fund (a nonmajor governmental fund). General Fund During fiscal year 2008, the District s general fund balance increased $368, B-15

86 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The table that follows assists in illustrating the financial activities of the general fund Increase/ Amount Amount (Decrease) Percentage Change Revenues and Other financing sources Taxes $ 13,774,557 $ 11,755,836 $ 2,018, % Tuition 531, ,266 (51,026) (8.76) % Earnings on investments 244, ,847 (51,936) (17.50) % Intergovernmental 6,284,720 6,226,310 58, % Other revenues 134, ,861 28, % Capital lease transactions 18,934 66,037 (47,103) (71.33) % Total $ 20,988,791 $ 19,033,157 $ 1,955, % Expenditures and Other financing uses Instruction $ 11,816,579 $ 11,203,175 $ 613, % Support services 7,867,578 7,482, , % Extracurricular activities 293, ,664 28, % Non-instructional 708 1,349 (641) (47.52) % Capital outlay 18,934-18, % Debt service 72,597 68,090 4, % Transfers out 550,000 2, ,133 19, % Total $ 20,620,009 $ 19,022,226 $ 1,597, % Overall revenues and other financing sources of the general fund increased $1,955,634 or 10.27%. The most significant increase was in the area of taxes. Taxes consist of property tax and income tax revenue. Property taxes increased $1,615,486 from fiscal year This increase is primarily due to an increase of $266,000 in property taxes available for advance at fiscal year end that are booked as revenue. Property tax revenues in fiscal year 2007 were lower due to the net effect of these advance entries which lowered property tax revenues by $1,300,000. Overall expenditures and other financing uses of the general fund increased $1,597,783 or 8.40%. The most significant increases were in the areas of instruction, support services and transfers out. Instruction and support service expenditures increased $613,404 and $385,497, respectively. These increases can primarily be attributed to scheduled contract increases for certified and non-certified employees. Transfers out increased $547,133 due to a transfer of $50,000 to the food service fund (a nonmajor governmental fund) and a transfer of $500,000 to the permanent improvement fund (a nonmajor governmental fund). General Fund Budgeting Highlights The 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. During the course of fiscal year 2008, the District amended its general fund budget several times. For the general fund, final budgeted revenues and other financing sources of $19,534,977 were $121,047 lower than the original budgeted amounts. Actual revenues and other financing sources of $20,774,215 were $1,239,238 higher than final budgeted amounts. 10 B-16

87 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 General fund actual expenditures plus other financing uses of $20,825,975 were $81,065 lower than the final appropriations (appropriated expenditures plus other financing uses) of $20,907,040. Final appropriations were $615,712 higher than original appropriations of $20,291,328. Capital Assets and Debt Administration Capital Assets During fiscal year 2008, the District restated capital assets due to a reappraisal, see Note 3.B for details. At the end of fiscal year 2008, the District had $18,016,364 invested in land, land improvements, buildings and improvements, furniture and equipment, vehicles and infrastructure. This entire amount is reported in governmental activities. The table that follows shows June 30, 2008 balances compared to June 30, 2007: Capital Assets at June 30 (Net of Depreciation) Governmental Activities Restated Land $ 498,673 $ 498,673 Land improvements 1,152,730 1,205,520 Buildings and improvements 14,389,435 14,682,492 Furniture and equipment 918, ,897 Vehicles 964, ,316 Infrastructure 93,269 96,003 Total $ 18,016,364 $ 18,245,901 The decrease in capital assets of $229,537 is primarily attributable to depreciation expense of $607,133 exceeding capital outlays of $377,596. See Note 9 to the basic financial statements for detail on the District s capital assets. Debt Administration At June 30, 2008 the District had $9,885,608 in general obligation bonds, loans and capital leases outstanding. The general obligation bond issues are comprised of current issue bonds and capital appreciation bonds. Of this total, $683,327 is due within one year and $9,202,281 is due within greater than one year. 11 B-17

88 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The table that follows summarizes the bonds, loans and capital leases outstanding. Outstanding Debt, at Year End Governmental Governmental Activities Activities General obligation bonds $ 5,055,000 $ 5,535,000 Refunding bonds - current interest ,210,008 4,265,008 Refund bonds - capital appreciation , ,495 Paving project loan 113, ,000 Capital leases 171, ,869 Total $ 9,885,608 $ 10,471,372 At June 30, 2008, the District s overall legal debt margin was $33,526,583 with an unvoted debt margin of $471,858. See Note 14 to the basic financial statements for detail on the District s debt administration. Current Financial Related Activities A Strategic Planning Committee, made up of board members, administrators, staff, and community members developed a mission statement for the District. Four sub-committees were formed under this Strategic Planning: Student Achievement Committee, Finance Committee, Facilities Committee, and Communications Committee. While all committees meet regularly, the emphasis for the past year has been on trying to pass a Bond Issue for renovations to the High School. The District put a $17,500,000 bond issue on the May 2007 and August 2007 ballot; the levy failed on both attempts. The District then put an $18,500,000 bond issue on the ballot for the March 4, 2008 election. That Bond Issue failed by 11 votes. The District continued to survey the community and to get input. It was determined that the High School should be the main focus, with studies of the elementary schools to follow. A Facilities Improvement Timeline was developed. A Bond Issue for $16,000,000 for renovations and improvements to the High School was passed on November 4, At this time development of the plan for the high school has begun. The timeline indicates that the District would be back on the ballot in two years for a bond issue to address the elementary schools. The District has applied to the OSFC for possible agreement on a master facilities plan through the local expedited partnership program. At this time, the District is waiting for the report from the OSFC. Contacting the District s Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have questions about this report or need additional financial information contact Ms. Sandra Griscom, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio B-18

89 BASIC FINANCIAL STATEMENTS B-19

90 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF NET ASSETS JUNE 30, 2008 Governmental Activities Assets: Equity in pooled cash and cash equivalents... $ 5,123,396 Receivables: Property taxes ,698,646 Income taxes ,853,478 Accounts ,429 Accrued interest ,163 Intergovernmental ,778 Prepayments ,654 Materials and supplies inventory ,036 Inventory held for resale ,311 Loans receivable ,750 Unamortized bond issuance costs ,134 Capital assets: Land ,673 Depreciable capital assets, net ,517,691 Total capital assets ,016,364 Total assets ,895,139 Liabilities: Accounts payable ,562 Accrued wages and benefits ,636,358 Pension obligation payable ,575 Intergovernmental payable ,074 Unearned revenue ,467,577 Accrued interest payable ,364 Long-term liabilities: Due within one year ,341 Due in more than one year ,679,760 Total liabilities ,454,611 Net Assets: Invested in capital assets, net of related debt ,261,989 Restricted for: Debt service ,432 Capital projects ,550 Locally funded programs ,732 State funded programs ,446 Federally funded programs ,393 Student activities ,518 School farm ,129 Early childhood care ,855 Other purposes ,227 Unrestricted ,436,257 Total net assets $ 13,440,528 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 13 B-20

91 Governmental activities: Instruction: Regular ,494,954 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Net (Expense) Revenue and Changes in Program Revenues Net Assets Charges for Operating Services Grants and Capital Grants Governmental Expenses and Sales Contributions and Contributions Activities $ $ 849,168 $ 23,847 $ 16,236 $ (9,605,703) Special ,149,842 67, ,499 - (1,624,326) Vocational ,425 4,879 96,597 - (347,949) Other , (1,890) Support services: Pupil ,791,083 32, ,384 - (1,252,598) Instructional staff ,427 16,063 53,100 - (481,264) Board of education , (206,425) Administration ,671,088 1,104 15,060 - (1,654,924) Fiscal , (649,961) Operations and maintenance.... 2,211,150 2, (2,208,084) Pupil transportation ,573,120 3,721 48,585 16,068 (1,504,746) Central ,341-7,631 - (26,710) Operation of non-instructional services: Other non-instructional services... 2,900 2, (595) Food service operations , , ,090 - (85,123) Extracurricular activities , ,813 6,732 - (294,660) Interest and fiscal charges , (595,609) Totals $ 23,725,350 $ 1,717,768 $ 1,434,711 $ 32,304 (20,540,567) General Revenues: Property taxes levied for: General purposes ,990,471 Debt service ,945 Capital projects ,415 Income taxes levied for: General purposes ,656,605 Grants and entitlements not restricted to specific programs ,290,417 Investment earnings ,611 Miscellaneous ,385 Total general revenues ,886,849 Change in net assets ,346,282 Net assets at beginning of year (restated)... 12,094,246 Net assets at end of year $ 13,440,528 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 14 B-21

92 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 Other Total Governmental Governmental General Funds Funds Assets: Equity in pooled cash and cash equivalents $ 3,522,072 $ 1,601,324 $ 5,123,396 Receivables: Property taxes ,067,439 1,631,207 10,698,646 Income taxes ,853,478-1,853,478 Accounts ,429-32,429 Accrued interest ,163-13,163 Intergovernmental ,778 44,778 Interfund loans ,961-11,961 Prepayments ,654-2,654 Materials and supplies inventory ,036-15,036 Inventory held for resale ,311 3,311 Loans receivable ,750-2,750 Total assets $ 14,520,982 $ 3,280,620 $ 17,801,602 Liabilities: Accounts payable $ 108,488 $ 34,074 $ 142,562 Accrued wages and benefits ,572,609 63,749 1,636,358 Compensated absences payable ,783 6, ,887 Pension obligation payable ,070 62, ,575 Intergovernmental payable ,504 2,570 61,074 Interfund loan payable ,961 11,961 Deferred revenue ,852 76, ,793 Unearned revenue ,178,633 1,288,944 8,467,577 Total liabilities ,924,939 1,546,848 11,471,787 Fund Balances: Reserved for encumbrances ,041 90, ,235 Reserved for materials and supplies inventory ,036 3,311 18,347 Reserved for property tax unavailable for appropriation ,463, ,307 1,728,568 Reserved for prepayments ,654-2,654 Unreserved, undesignated, reported in: General fund ,808,051-2,808,051 Special revenue funds , ,222 Debt service fund , ,131 Capital projects funds , ,607 Total fund balances ,596,043 1,733,772 6,329,815 Total liabilities and fund balances $ 14,520,982 $ 3,280,620 $ 17,801,602 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 15 B-22

93 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET ASSETS OF GOVERNMENTAL ACTIVITIES JUNE 30, 2008 Total governmental fund balances $ 6,329,815 Amounts reported for governmental activities on the statement of net assets are different because: Capital assets used in governmental activities are not financial 18,016,364 resources and therefore are not reported in the funds. Other long-term assets are not available to pay for currentperiod expenditures and therefore are deferred in the funds. Property taxes receivable $ 502,364 Accounts receivable 32,429 Total 534,793 Unamortized premiums on bond issuance are not recognized in the funds. (373,130) Unamortized bond issuance costs are not recognized in the funds. 89,134 Unamortized deferred charges on refundings are not recognized in the funds. 283,993 Accrued interest payable is not due and payable in the current period and therefore is not reported in the funds. (43,364) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Compensated absences payable (1,511,469) General obligation bonds (9,601,236) Paving loan (113,000) Capital lease obligations (171,372) Total (11,397,077) Net assets of governmental activities $ 13,440,528 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 16 B-23

94 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Other Total Governmental Governmental General Funds Funds Revenues: From local sources: Property taxes $ 8,842,446 $ 1,597,037 $ 10,439,483 Income taxes ,932,111-4,932,111 Tuition , , ,242 Charges for services , ,281 Earnings on investments ,911 35, ,428 Extracurricular , , ,797 Classroom materials and fees , , ,190 Other local revenues ,912 58, ,802 Intergovernmental - state ,284, ,618 6,564,338 Intergovernmental - federal ,056,743 1,056,743 Total revenues ,969,857 4,201,558 25,171,415 Expenditures: Current: Instruction: Regular ,600, ,528 10,364,789 Special ,857, ,558 2,197,395 Vocational , , ,764 Other ,890-1,890 Support services: Pupil ,239, ,686 1,774,558 Instructional staff ,118 62, ,158 Board of education , ,425 Administration ,633,046 16,107 1,649,153 Fiscal ,623 46, ,911 Operations and maintenance ,047,467 87,952 2,135,419 Pupil transportation ,664,333 34,212 1,698,545 Central ,694 7,647 34,341 Operation of non-instructional services: Other non-instructional services ,192 2,900 Food service operations , ,323 Extracurricular activities , , ,210 Facilities acquisition and construction ,143 31,143 Capital outlay ,934-18,934 Debt service: Principal retirement , , ,431 Interest and fiscal charges , , ,955 Total expenditures ,070,009 4,113,235 24,183,244 Excess of revenues over expenditures ,848 88, ,171 Other financing sources (uses): Transfers in , ,000 Transfers (out) (550,000) - (550,000) Capital lease transaction ,934-18,934 Total other financing sources (uses)..... (531,066) 550,000 18,934 Net change in fund balances , ,323 1,007,105 Fund balances at beginning of year... 4,227,261 1,095,449 5,322,710 Fund balances at end of year $ 4,596,043 $ 1,733,772 $ 6,329,815 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 17 B-24

95 Net change in fund balances - total governmental funds $ 1,007,105 Amounts reported for governmental activities in the statement of activities are different because: BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO 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, 2008 Government funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Capital asset additions $ 377,596 Current year depreciation (607,133) Total (229,537) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 172,348 Income taxes (275,506) Classroom materials and fees 3,375 Total (99,783) Repayment of bond and capital lease obligations is an expenditure in the governmental funds, but the repayment reduces long-term liabilities on the statement of net assets. Principal payments during the year were: Bonds 535,000 Capital leases 49,431 Paving loan 60,000 Total 644,431 Capital lease transactions are recorded as an other financing source in the funds; however, in the statement of activities, they are not reported as revenues as they increase the liabilities on the statement of net assets. (18,934) In the statement of activities, interest is accrued on outstanding bonds, whereas in governmental funds, an interest expenditure is reported when due. The following items resulted in additional interest being reported in the statement of activities: Decrease in accrued interest payable 2,080 Accreted interest on "capital appreciation" bonds (39,733) Amortization of bond issue costs (1,111) Amortization of bond premiums 4,648 Amortization of deferred charges on refundings (3,538) Total (37,654) Some expenses reported in the statement of activities, including compensated absences, do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. 80,654 Change in net assets of governmental activities $ 1,346,282 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 18 B-25

96 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Variance with Budgeted Amounts Final Budget Positive Original Final Actual (Negative) Revenues: From local sources: Property taxes $ 8,109,721 $ 8,059,683 $ 8,570,463 $ 510,780 Income taxes ,690,830 4,661,887 4,957, ,446 Tuition , , ,276 31,663 Earnings on investments , , ,838 14,592 Extracurricular ,667 29,483 31,352 1,869 Classroom materials and fees ,414 48,116 51,165 3,049 Other local revenues ,026 57,668 61,323 3,655 Intergovernmental - State ,946,858 5,910,164 6,284, ,556 Total revenues ,617,907 19,496,860 20,732,470 1,235,610 Expenditures: Current: Instruction: Regular ,779,381 9,655,266 9,622,652 32,614 Special ,647,327 1,825,414 1,825, Vocational , , ,308 1,450 Other ,000 2,000 1, Support Services: Pupil ,228,446 1,230,478 1,229, Instructional staff , , ,880 2,519 Board of education , , ,014 2,794 Administration ,691,012 1,672,260 1,668,205 4,055 Fiscal , , ,816 1,177 Operations and maintenance ,235,907 2,269,792 2,250,568 19,224 Pupil transportation ,841,627 1,749,442 1,722,328 27,114 Central ,795 28,795 27,126 1,669 Other non-instructional services ,730 1, ,215 Extracurricular activities , , ,775 1,130 Total expenditures ,291,328 20,357,040 20,261,264 95,776 Excess (deficiency) of revenues over (under) expenditures (673,421) (860,180) 471,206 1,331,386 Other financing sources (uses): Refund of prior year expenditure ,495 6,495 Transfers (out) (550,000) (550,000) - Advances in ,117 38,117 35,250 (2,867) Advances (out) (14,711) (14,711) Total other financing sources (uses) ,117 (511,883) (522,966) (11,083) Net change in fund balance (635,304) (1,372,063) (51,760) 1,320,303 Fund balance at beginning of year ,787,873 2,787,873 2,787,873 - Prior year encumbrances appropriated.. 422, , ,908 - Fund balance at end of year $ 2,575,477 $ 1,838,718 $ 3,159,021 $ 1,320,303 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 19 B-26

97 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008 Private-Purpose Trust Scholarship Agency Assets: Equity in pooled cash and cash equivalents $ 53,047 $ 104,760 Total assets ,047 $ 104,760 Liabilities: Accounts payable $ 6,020 Loans payable ,750 Undistributed assets ,757 Due to students ,233 Total liabilities $ 104,760 Net Assets: Held in trust for scholarships ,047 Endowments ,000 Total net assets $ 53,047 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 20 B-27

98 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Private-Purpose Trust Scholarship Additions: Interest $ 2,312 Gifts and contributions Total additions ,912 Deductions: Scholarships awarded ,337 Change in net assets (1,425) Net assets at beginning of year ,472 Net assets at end of year $ 53,047 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 21 B-28

99 NOTE 1 - DESCRIPTION OF THE DISTRICT BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Buckeye Valley Local District (the District ) is organized under Article VI, Sections 2 and 3 of the Constitution of the State of Ohio. The District operates under a locally-elected Board form of government consisting of five members elected at-large for staggered four year terms. The District provides educational services as authorized by State and federal guidelines. The District was established in The District serves an area of approximately one hundred ninety-six square miles and is located in Delaware, Marion, Morrow and Union Counties. The District is the 226 th largest in the State of Ohio (among 896 school districts and community schools) in terms of enrollment. It is staffed by 122 classified employees, 169 certified teaching personnel and 11 administrative employees who provide services to 2,256 students and other community members. The District currently operates three elementary schools, a junior high school, a high school, an administration building and a bus garage. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (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 District also applies Financial Accounting Standards Board (FASB) Statements and Interpretations issued on or before November 30, 1989, to its governmental activity provided they do not conflict with or contradict GASB pronouncements. The District s significant accounting policies are described below. A. Reporting Entity The reporting entity has been defined in accordance with GASB Statement No. 14, The Financial Reporting Entity as amended by GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. When applying GASB Statement No. 14, management has considered all potential component units. Component units are legally separate organizations for which the District is financially accountable. The District is financially accountable for an organization if the District appoints a voting majority of the organization s governing board and (1) the District is able to significantly influence the programs or services performed or provided by the organization; or (2) the District is legally entitled to or can otherwise access the organization s resources; or (3) the District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to the organization; or (4) the District is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the District in that the District approves the debt, the issuance of debt, or the levying of taxes. Based upon the application of these criteria, the District does not have any component units. The basic financial statements of the reporting entity include only those of the District (the primary government). 22 B-29

100 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) The following organizations are described due to their relationship to the District: JOINTLY GOVERNED ORGANIZATIONS Tri-Rivers Educational Computer Association The District is a participant in the Tri-Rivers Educational Computer Association (TRECA), which is a computer consortium. TRECA is an association of public Districts within the boundaries of Delaware, Knox, Marion, Morrow, Muskingum, and Wyandot 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 Districts. The governing board of TRECA consists of one representative from each county elected by majority vote of all charter member Districts within each county, one representative from the city Districts, and the superintendent from Tri-Rivers Joint Vocational School. During fiscal year 2008, the District paid $155,000 to TRECA for various services. Financial information can be obtained from the Tri-Rivers Educational Computer Association, 100 Executive Drive, Marion, Ohio Delaware Joint Vocational School The Delaware Joint Vocational School is a distinct political subdivision of the State of Ohio which provides vocational education. The JVS operates under the direction of a Board consisting of one representative from each of the ten participating District s Boards of Education. The Board possesses it own budgeting and taxing authority. The degree of control exercised by the District is limited to its representation on the Board. Financial information can be obtained from the Delaware Joint Vocational School, 4565 Columbus Pike Road, Delaware, Ohio Central Ohio Regional Professional Development Center The Central Ohio Regional Professional Development Center (Center) is a jointly governed organization among the Districts in Delaware, Licking, Franklin, Madison, Pickaway, and Union Counties. The Center was formed to advance the State Board of Education s mission that all students can learn by creating a high performance system of education. The Center s purpose is to provide longterm ongoing meaningful professional development for all educators and school support personnel. The Center is governed by a twenty-two member Board made up of representatives from the participating Districts, the business community, and three institutions of higher learning. The degree of control exercised by any participating District is limited to it representation on the Board. Financial information can be obtained from the Southwestern City District, 2975 Kingston Avenue, Grove City, Ohio Metropolitan Educational Council The Metropolitan Educational Council (MEC) is a purchasing cooperative made up of one hundred forty-two Districts, libraries, and related agencies in twenty-seven counties. The purpose of the MEC is to obtain prices for quality merchandise and services commonly used by the participants. The Governing Board of the MEC consists of one representative from each participant. All participants must pay all fees, charges, or other assessments as established by the MEC. Financial information can be obtained from the Metropolitan Educational Council, 2100 Citygate Drive, Columbus, Ohio B-30

101 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) PUBLIC ENTITY RISK POOLS Ohio School Plan The District participates in the Ohio School Plan (Plan), an insurance purchasing pool established under Section of the Ohio Revised Code. The Plan is an unincorporated nonprofit association of its members which enables the participants to provide for a formalized joint insurance purchasing program for maintaining adequate insurance protection and provides risk management programs and other administrative services. The Plan s business and affairs are conducted by a fifteen member board consisting of superintendents, treasurers, the president of Harcum-Schuett Insurance Agency, Inc., and a member of the Hylant Group, Inc. The Hylant Group, Inc. is the Plan s administrator and is responsible for processing claims. Harcum-Schuett Insurance Agency serves as the sales and marketing representative which establishes agreements between the Plan and its members. Financial information can be obtained from Harcum-Schuett Insurance Agency, 246 East Sycamore Street, Columbus, Ohio Ohio School Boards Association Workers Compensation Group Rating Plan The District participates in a group rating plan for worker s compensation as established under Section of the Ohio Revised Code. The Ohio School Boards Association Workers Compensation Group Rating Plan (GRP) was established through the Ohio School Boards Association (OSBA) as an insurance purchasing pool. The GRP s business and affairs are conducted by a three member Board of Directors consisting of the President, the President-Elect, and the Immediate Past President of the OSBA. The Executive Director of the OSBA, or his designee, serves as coordinator of the GRP. Each year, the participants pay an enrollment fee to the GRP to cover the costs of administering the program. Champaign, Delaware, Marion, Union School Employee Welfare Benefit Association Trust The Champaign, Delaware, Marion, Union School Employee Welfare Benefit Association Trust (Trust) is a public entity shared risk pool consisting of seven Districts and the Champaign County and Delaware/Union County Educational Service Centers. The Trust is organized as a Voluntary Employee Benefit association under Section 501 (c) (9) of the Internal Revenue Code and provides medical, dental, and life insurance benefits to the employees of the participants. Each participant s superintendent is appointed to an Administrative Committee which advises the Trustee, Huntington Bank, concerning aspects of the administration of the Trust. Each participant decides which plans offered by the Administrative Committee will be extended to its employees. Participation in the Trust is by written application subject to acceptance by the Administrative Committee and payment of the monthly premiums. Financial information can be obtained from the North Union Local District, State Route 739, Richwood, Ohio, B. Basis of Presentation The District s basic financial statements consist of government-wide financial 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. 24 B-31

102 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) Government-Wide Financial Statements - The statement of net assets and the statement of activities display information about the District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. These statements usually distinguish between those activities of the District that are governmental activities (primarily supported by taxes and intergovernmental revenues) and those that are considered business-type activities (primarily supported by fees and charges). However, the District has no business-type activities. The statement of net assets presents the financial condition of the governmental activities of the 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 District s governmental activities. 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 and grants, contributions, and interest that are restricted to meeting the operational or capital requirements of a particular program. Revenues which are not classified as program revenues are presented as general revenues of the District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District. Fund Financial Statements - During the fiscal year, the District segregates transactions related to certain District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the District at this more detailed level. The focus of governmental fund financial statements is on major funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single column. Fiduciary funds are reported by type. C. Fund Accounting The 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 funds of the District are divided into two categories, governmental and fiduciary. GOVERNMENTAL FUNDS Governmental funds are those through which most governmental functions of the District 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 District s only major fund is the general Fund. General Fund - The general fund 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 District for any purpose provided it is expended or transferred according to the general laws of Ohio. The other governmental funds of the District account for grants and other resources whose use is restricted to a particular purpose. 25 B-32

103 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) FIDUCIARY FUNDS 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 District under a trust agreement for individuals, private organizations, or other governments and are not available to support the District s own programs. The District s private purpose trust funds account for programs that provide college scholarships to students after graduation. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The District s agency funds account for various staff-related and student-managed activities. D. Measurement Focus Government-Wide Financial Statements - The government-wide financial statements are prepared using a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of the District are included on the statement of net assets. The statement of activities presents increases (e.g., revenues) and decreases (e.g., 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 are generally included on the balance sheet. The statement of revenues, expenditures, and changes in fund balances reflects 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 fund financial statements for governmental funds. The private purpose trust funds are accounted for using a flow of economic resources measurement focus. E. 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. Governmental funds use the modified accrual basis of accounting; fiduciary funds use the accrual basis of accounting. Differences in the accrual and 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 Nonexchange 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 the modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means 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 District, available means expected to be received within sixty days of fiscal year end. 26 B-33

104 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) Nonexchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, income taxes, grants, entitlements, and donations. On the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from income taxes is recognized in the fiscal year in which the income is earned. 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 District must provide local resources to be used for a specified purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. On the modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized. Under the modified accrual basis, the following revenue sources are considered both measurable and available at fiscal year end: property taxes available as an advance, income taxes, grants, interest, tuition, student fees, and charges for services. Unearned Revenue and Deferred Revenue - Unearned revenue and deferred revenue arise 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, 2008, but which were levied to finance fiscal year 2009 operations, and other revenues received in advance of the fiscal year for which they are intended to finance, have been recorded as unearned revenue. Grants and entitlements received before the eligibility requirements are met and delinquent property taxes due at June 30, 2008 are recorded as deferred revenue. On governmental fund financial statements, receivables that will not be collected within the available period have been reported as deferred revenue. Expenses/Expenditures - On the accrual basis, 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. Allocations of cost, such as depreciation and amortization, are not recognized in governmental funds. F. Budgetary Process The District is required by State statute to adopt an annual appropriated cash basis budget for all funds, except agency funds. The specific timetable is as follows: 1. Prior to January 15, the Superintendent and Treasurer submit to the Board of Education a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing for all funds. Public hearings are publicized and conducted to obtain taxpayers comments. The express purpose of this budget document is to reflect the need for existing (or increased) tax rates. 2. By no later than January 20, the board-adopted budget is filed with the Delaware County Budget Commission for tax rate determination. 27 B-34

105 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) 3. Prior to April 1, the Board of Education accepts, by formal resolution, the tax rates as determined by the Budget Commission and receives the Commission s Certificate of Estimated Resources which states the projected revenue of each fund. Prior to June 30, the District must revise its budget so that total contemplated expenditures from any fund during the ensuing year will not exceed the amount stated in the Certificate of Estimated Resources. The revised budget then serves as a basis for the appropriation measure. On or about July 1, the Certificate is amended to include any unencumbered balances from the preceding year as reported by the District Treasurer. The Certificate may be further amended during the year if projected increases or decreases in revenue are identified by the District Treasurer. The amounts reported in the budgetary statement reflect the amounts set forth in the original and final Amended Certificates issued for fiscal year By July 1, the annual Appropriation Resolution is legally enacted by the Board of Education at the function level of expenditures for the general fund and fund level for all other funds, which is the legal level of budgetary control. Budgetary allocations at the object level within the general fund and at the function and object level for all other funds are made by the District Treasurer. State statute permits a temporary appropriation to be effective until no later than October 1 of each year. Resolution appropriations by fund must be within the estimated resources as certified by the County Budget Commission, and the total of expenditures may not exceed the appropriation total. 5. Any revisions that alter the total of any fund appropriation or function level of the general fund must be approved by the Board of Education. 6. Formal budgetary integration is employed as a management control device during the year for all funds consistent with the general obligation bond indenture and other statutory provisions. All funds completed the year within the amount of their legally authorized cash basis appropriation. 7. Appropriation amounts are as originally adopted, or as amended by the Board of Education through the year by supplemental appropriations which either reallocated or increased the original appropriated amounts. All supplemental appropriations were legally enacted by the Board during fiscal year All amounts reported in the budgetary statement reflect the original appropriations and the final appropriations, including all modifications legally enacted by the Board. 8. Unencumbered appropriations lapse at year-end. Encumbered appropriations are carried forward to the succeeding fiscal year and need not be reappropriated. Expenditures may not legally exceed budgeted appropriations at the fund level. G. Cash and Investments To improve cash management, cash received by the District is pooled. Monies for all funds are maintained in this pool. Individual fund integrity is maintained through District records. Interest in the pool is presented as equity in pooled cash and cash equivalents. 28 B-35

106 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) During fiscal year 2008, investments included a repurchase agreement and The State Treasurer's investment pool of Ohio (STAR Ohio). STAR Ohio is an investment pool, managed by the State Treasurer s Office, which allows governments within the State to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of Investments in STAR Ohio are valued at STAR Ohio s shares price, which is the price the investment could be sold for on June 30, Following Ohio statutes, 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 2008 was $244,911, which includes $48,951 assigned from other District funds. Investments of the District s cash management pool and investments with an original maturity of three months or less at the time they are purchased by the District are presented on the financial statements as cash equivalents. Investments with an initial maturity of more than three months that were not purchased from the pool are reported as investments. H. Prepaid Items Payments made to vendors for services that will benefit periods beyond June 30, 2008, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of purchase and an expenditure/expense is reported in the year in which services are consumed. I. Inventory On government-wide and fund financial statements, purchased inventories are presented at the lower of cost or market and donated commodities are presented at their entitlement value. Inventories are recorded on a first-in, first-out basis and are expensed when used. Inventories are accounted for using the consumption method. Inventory consists of expendable supplies held for consumption, donated food and purchased food. J. Capital Assets All of the District s capital assets are general capital assets generally resulting from expenditures in governmental funds. These assets are reported in the governmental activities column on the government-wide statement of net assets, but are not reported on the fund financial statements. All capital assets are capitalized at cost and updated for additions and deductions during the fiscal year. Donated capital assets are recorded at their fair market value on the date donated. The District maintains a capitalization threshold of two thousand five hundred dollars. Improvements are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset s life are not capitalized. 29 B-36

107 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) All capital assets, except land, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Description Governmental Activities Estimated Lives K. Interfund Balances Land improvements years Buildings and improvements years Furniture and equipment 3-50 years Vehicles years Infrastructure 50 years On fund financial statements, receivables and payables resulting from short-term interfund loans or interfund services provided and used are classified as interfund receivables/payables or loan receivables/payables. Interfund balances within governmental activities are eliminated on the statement of net assets. L. Compensated Absences The District reports compensated absences in accordance with the provisions of GASB No. 16, Accounting for Compensated Absences. Vacation benefits are accrued as a liability as the benefits are earned if the employee s rights to receive compensation are attributable to services already rendered and it is probable that the District will compensate the employees for the benefits through paid time off or some other means. Sick leave benefits are accrued as a liability using the vesting method. A liability for sick leave is based on the sick leave accumulated at the balance sheet date by those employees who are currently eligible to receive termination (severance) payments, as well as those employees expected to become eligible in the future. For purposes of establishing a liability for this future severance eligibility, all employees with ten years of service at any age were included. The entire compensated absence liability is reported on the government-wide financial statements. For governmental fund financial statements, compensated absences are recognized as liabilities and expenditures as payments come due each period upon the occurrence of employee resignations and retirements. M. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities, and long-term obligations are reported on the government-wide financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, compensated absences that are paid from governmental funds are reported as liabilities on the fund financial statements only to the extent that they are due for payment during the current fiscal year. Bonds, long-term loans, and capital leases are recognized as a liability on the fund financial statements when due. 30 B-37

108 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) N. Unamortized Bond Issuance Costs/Bond Premium and Discount/Accounting Gain or Loss On government-wide financial statements, issuance costs are deferred and amortized over the term of the bonds using the straight-line method. Unamortized issuance costs are recorded as a separate line item on the statement of net assets. Bond premiums are deferred and amortized over the term of the bonds using the straight-line method, which approximates the effective interest method. Bond premiums are presented as an addition to the face amount of the bonds. For advance refundings resulting in the defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized as a component of interest expense. This accounting gain or loss is amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter, and is presented as an addition to or reduction of the face amount of the new debt. On the governmental fund financial statements, issuance costs and bond premiums are recognized in the current period. A reconciliation between the bonds face value and the amount reported on the statement of net assets is presented in Note 14.A. O. 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 balance of any borrowing 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 or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. Net assets restricted for other purposes include resources restricted for the recycling fund (a nonmajor governmental fund). The District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. P. Fund Balance Reserves The District reserves those portions of fund balance 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. Unreserved fund balance indicates that portion which is available for appropriation in future periods. Fund balance reserves have been established for property taxes unavailable for appropriation, materials and supplies, prepayments and encumbrances. The reserve for property taxes represents taxes recognized as revenue under generally accepted accounting principles, but not available for appropriation under State statute. 31 B-38

109 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) Q. Interfund Transactions Transfers within governmental activities are eliminated on the government-wide financial statements. Internal allocations of overhead expenses from one function to another or within the same function are eliminated on the statement of activities. Payments for interfund services provided and used are not eliminated. Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on the basic financial statements. Transfers between governmental funds are eliminated for reporting on the government-wide financial statements. R. Estimates The preparation of 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. S. Extraordinary and Special Items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Board of Education and that are either unusual in nature or infrequent in occurrence. Neither type of transaction occurred during fiscal year NOTE 3 - ACCOUNTABILITY AND COMPLIANCE A. Change in Accounting Principles For fiscal year 2008, the District has implemented GASB Statement No. 45, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues and GASB Statement No. 50, Pension Disclosures. GASB Statement No. 45 establishes uniform standards of financial reporting for other postemployment benefits and increases the usefulness and improves the faithfulness of representations in the financial reports. The implementation of GASB Statement No. 45 did not have an effect on the financial statements of the District; however, certain disclosures related to postemployment benefits (see Note 12) have been modified to conform to the new reporting requirements. GASB Statement No. 48 establishes criteria to ascertain whether certain transactions should be regarded as sales or as collateralized borrowings, as well as disclosure requirements for future revenues that are pledged and sold. The implementation of GASB Statement No. 48 did not have an effect on the financial statements of the District. 32 B-39

110 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 3 - ACCOUNTABILITY AND COMPLIANCE - (Continued) GASB Statement No. 50 establishes standards that more closely align the financial reporting requirements for pensions with those of other postemployment benefits. The implementation of GASB Statement No. 50 did not have an effect on the financial statements of the District. B. Restatement of Net Assets The District s net assets have been restated to reflect a reappraisal of the District s capital assets. The reappraisal of the District s capital assets had the following effect on net assets as previously reported by the governmental activities: Governmental Activities Net assets, June 30, 2007 $ 11,706,163 Adjustment for capital assets reappraisal 388,083 Restated net assets, June 30, 2007 $ 12,094,246 See Note 9 for the effect of the change on capital assets balances as previously reported by the District at June 30, C. Deficit Fund Balances Fund balances at June 30, 2008 included the following individual fund deficits: Deficit Nonmajor Funds EMIS $ 16 Miscellaneous State Grants 5 Title VI-B 32 Title I 13,701 Title VI 10 Drug free programs 8 The general fund is liable for any deficits in these funds and provides transfers when cash is required, not when accruals occur. The deficit fund balances in these funds resulted from adjustments for accrued liabilities. NOTE 4 - DEPOSITS AND INVESTMENTS State statutes classify monies held by the 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 District treasury, in commercial accounts payable or withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts. 33 B-40

111 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) Inactive deposits 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 deposits must be evidenced by time certificates of deposit maturing not more than one year from the date of deposit or by savings or deposit accounts including passbook accounts. Interim monies may 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; 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 items (1) and (2) above 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 banker s acceptance 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 classifications by at least two nationally recognized rating agencies. Protection of the 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. 34 B-41

112 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) 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. An investment must mature within five years from the date of purchase unless matched to a specific obligation or debt of the District, and must be purchased with the expectation that it will be held to maturity. Investments may only be made through specified dealers and institutions. Payment for investments may be made only upon delivery of the securities representing the investments to the Treasurer or, if the securities are not represented by a certificate, upon receipt of confirmation of transfer from the custodian. A. Cash on Hand At fiscal year-end, the District had $3,450 in undeposited cash on hand which is included on the financial statements of the District as part of equity in pooled cash and cash equivalents. B. Deposits with Financial Institutions At June 30, 2008, the carrying amount of all District deposits was $(216,046), exclusive of the $260,089 repurchase agreement included in investments below. The negative carrying amount of deposits is due to the sweeping of monies into overnight repurchase agreements which are reported as investments. Based on the criteria described in GASB Statement No. 40, Deposits and Investment Risk Disclosures, as of June 30, 2008, all of the District s bank balance of $81,262 was covered by the Federal Deposit Insurance Corporation. C. Investments As of June 30, 2008, the District had the following investments and maturities: Investment Maturities 6 months or Investment type Fair Value less Repurchase agreement $ 260,089 $ 260,089 STAR Ohio 5,233,710 5,233,710 Total $ 5,493,799 $ 5,493, B-42

113 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising interest rates and according to State law, the District s investment policy limits investment portfolio maturities to five years or less. Credit Risk: The federal agency securities that underlie the District s repurchase agreement were rated AAA and Aaa by Standard & Poor s and Moody s Investor Services, respectively. Standard & Poor s has assigned STAR Ohio an AAAm money market rating. Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Of the District s $260,089 investment in repurchase agreements, the entire balance is collateralized by underlying securities that are held by the investment s counterparty, not in the name of the District. Ohio law requires the market value of the securities subject to repurchase agreements must exceed the principal value of securities subject to a repurchase agreement by 2%. The District has no investment policy dealing with investment custodial risk beyond the requirement in State statute that prohibits payment for investments prior to the delivery of the securities representing such investments to the treasurer or qualified trustee. Concentration of Credit Risk: The District places no limit on the amount that may be invested in any one issuer. The following table includes the percentage of each investment type held by the District at June 30, 2008: Investment type Fair Value % to Total Repurchase agreement $ 260, STAR Ohio 5,233, Total $ 5,493, D. Reconciliation of Cash and Investments to the Statement of Net Assets The following is a reconciliation of cash and investments as reported in the note above to cash and investments as reported on the statement of net assets as of June 30, 2008: Cash and investments per note Carrying amount of deposits $ (216,046) Investments 5,493,799 Cash on hand 3,450 Total $ 5,281,203 Cash and investments per statement of net assets Governmental activities $ 5,123,396 Private-purpose trust fund 53,047 Agency fund 104,760 Total $ 5,281, B-43

114 NOTE 5 - INTERFUND TRANSACTIONS BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 A. Interfund loans receivable/payable consisted of the following at June 30, 2008, as reported on the fund statement: Receivable Fund Payable Fund Amount General Nonmajor governmental funds $ 11,961 The interfund loans were necessitated to cover costs in specific funds where revenues were not received by June 30. These interfund loans will be repaid once the anticipated revenues are received. Interfund balances between governmental funds are eliminated on the government-wide financial statements; therefore, no internal balances are reported on the statement of net assets. B. Interfund transfers for the year ended June 30, 2008, consisted of the following, as reported on the fund statements: Amount Transfers from general fund to: Nonmajor governmental funds $ 550,000 Transfers are used to move revenues from the fund that statute or budget required to collect them to the fund that statute or budget requires to expend them and to use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. All transfers were made in compliance with Ohio Revised Code Sections , and Interfund transfers between governmental funds are eliminated on the government-wide financial statements. C. Loans between governmental funds and agency funds are reported a loans receivable/payable on the financial statements. The District had the following loans outstanding at fiscal year-end: Loan From Loan To Amount General Agency $ 2,750 This loan is expected to be repaid in the subsequent year as resources become available in the agency fund. NOTE 6 - PROPERTY TAXES Property taxes are levied and assessed on a calendar year basis while the District fiscal year runs from July through June. First half tax collections are received by the District in the second half of the fiscal year. Second half tax distributions occur in the first half of the following fiscal year. 37 B-44

115 NOTE 6 - PROPERTY TAXES - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Property taxes include amounts levied against all real, public utility and tangible personal property (used in business) located in the District. Real property tax revenue received in calendar year 2008 represents collections of calendar year 2007 taxes. Real property taxes received in calendar year 2008 were levied after April 1, 2007, on the assessed value listed as of January 1, 2007, the lien date. Assessed values for real property taxes are established by State law at thirty-five percent of appraised market value. Real property taxes are payable annually or semi-annually. If paid annually, payment is due December 31; if paid semi-annually, 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 revenue received in calendar year 2008 represents collections of calendar year 2007 taxes. Public utility real and tangible personal property taxes received in calendar year 2008 became a lien December 31, 2006, were levied after April 1, 2007 and are collected in 2008 with real property taxes. Public utility real property is assessed at thirty-five percent of true value; public utility tangible personal property currently is assessed at varying percentages of true value. Tangible personal property tax revenue received during calendar year 2008 (other than public utility property) represents the collection of 2008 taxes. Tangible personal property taxes received in calendar year 2008 were levied after April 1, 2007, on the value as of December 31, Tangible personal property tax is being phased out. For 2007, tangible personal property was assessed at 12.50% for property, including inventory. This percentage was reduced to 6.25% for 2008 and will be reduced to zero for Payments by multi-county taxpayers are due September 20. Single county taxpayers may pay annually or semi-annually. If paid annually, payment is due April 30; if paid semi-annually, 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 District prior to June 30. House Bill No. 66 was signed into law on June 30, House Bill No. 66 phases out the tax on tangible personal property of general businesses, telephone and telecommunications companies, and railroads. The tax on general business and railroad property will be eliminated by calendar year 2009, and the tax on telephone and telecommunications property will be eliminated by calendar year The tax is phased out by reducing the assessment rate on the property each year. The bill replaces the revenue lost by the District due to the phasing out of the tax. In calendar years , the District will be fully reimbursed for the lost revenue. In calendar years , the reimbursements will be phased out. The District receives property taxes from Delaware, Marion, Morrow, and Union Counties. The County Auditors periodically advance to the District its portion of the taxes collected. Second half real property tax payments collected by the counties by June 30, 2008, are available to finance fiscal year 2008 operations. The amount available to be advanced can vary based on the date the tax bills are sent. Accrued property taxes receivable represents the late tax settlements, real property, public utility property, and tangible personal property taxes which were measurable as of June 30, 2008, and for which there was an enforceable legal claim. Although total property tax collections for the next fiscal year are measurable, only the late tax settlements and the amount of real property taxes available as an advance at June 30 were levied to finance current fiscal year operations and are reflected 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 unearned revenue. 38 B-45

116 NOTE 6 - PROPERTY TAXES - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The amount available as an advance at June 30, 2008, was $1,463,261, in the general fund, $156,276 in the debt service fund (a nonmajor governmental fund), and $109,031 in the permanent improvement fund (a nonmajor governmental fund). These amounts have been recorded as revenue. The amount that was available as an advance at June 30, 2007, was $1,196,712 in the general fund, $137,314 in the debt service fund (a nonmajor governmental fund), and $89,551 in the permanent improvement fund (a nonmajor governmental fund). Collectible delinquent property taxes have been recorded as a receivable and revenue on a full accrual basis. On a modified accrual basis, the revenue has been deferred. The assessed values upon which fiscal year 2008 taxes were collected are: 2007 Second 2008 First Half Collections Half Collections Amount Percent Amount Percent Agricultural/residential and other real estate $ 447,706, $ 461,535, Public utility personal 14,659, ,568, Tangible personal property 5,792, ,590, Total $ 468,158, % $ 476,695, % Tax rate per $1,000 of assessed valuation $32.80 $35.85 NOTE 7 - RECEIVABLES Receivables at June 30, 2008, consisted of accounts (student fees and billings for user charged services), accrued interest, intergovernmental, income taxes, and property taxes. 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 collected within one year. Property taxes, although ultimately collectible, include some portion of delinquencies that will not be collected within one year. A summary of the principal items of intergovernmental receivables follows: Governmental Activities Property taxes $ 10,698,646 Income taxes 1,853,478 Accounts 32,429 Accrued interest 13,163 Intergovernmental 44,778 Total receivables $ 12,642, B-46

117 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 8 - INCOME TAX The District levies a voted tax of 1 percent for general operations on the income of residents and of estates. The tax was effective on January 1, 1993, and is for a continuing period. 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 District after withholding amounts for administrative fees and estimated refunds. Income tax revenue is credited to the general fund. NOTE 9 - CAPITAL ASSETS Capital assets of the governmental activities have been restated due to a reappraisal of the District s capital assets. The reappraisal had the following effect on the governmental activities capital asset balances as previously reported: Restated Balance Balance June 30, 2007 Adjustment June 30, 2007 Capital assets, not being depreciated: Land $ 498,673 $ - $ 498,673 Total capital assets, not being depreciated 498, ,673 Capital assets, being depreciated: Land improvements 1,503,564-1,503,564 Buildings and improvements 18,686,282 (4,018) 18,682,264 Furniture and equipment 2,337,613 (434,975) 1,902,638 Vehicles 1,956,961-1,956,961 Infrastructure 154, ,668 Total capital assets, being depreciated 24,639,088 (438,993) 24,200,095 Less: accumulated depreciation Land improvements (243,417) (54,627) (298,044) Buildings and improvements (4,322,761) 322,989 (3,999,772) Furniture and equipment (1,527,174) 557,433 (969,741) Vehicles (1,116,397) (10,248) (1,126,645) Infrastructure (70,194) 11,529 (58,665) Total accumulated depreciation (7,279,943) 827,076 (6,452,867) Total capital assets, being depreciated 17,359, ,083 17,747,228 Governmental activities capital assets, net $ 17,857,818 $ 388,083 $ 18,245, B-47

118 NOTE 9 - CAPITAL ASSETS - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Restated Balance Balance July 1, 2007 Additions Deductions June 30, 2008 Governmental activities: Capital assets, not being depreciated: Land $ 498,673 $ - $ - $ 498,673 Total capital assets, not being depreciated 498, ,673 Capital assets, being depreciated: Land improvements 1,503, ,503,564 Building and improvements 18,682, ,682,264 Furniture and equipment 1,902, ,308-2,008,946 Vehicles 1,956, ,288 (114,410) 2,113,839 Infrastructure 154, ,668 0 Total capital assets, being depreciated 24,200, ,596 (114,410) 24,463,281 Less: accumulated depreciation: Land improvements (298,044) (52,790) - (350,834) Building and improvements (3,999,772) (293,057) - (4,292,829) Furniture and equipment (969,741) (121,180) - (1,090,921) Vehicles (1,126,645) (137,372) 114,410 (1,149,607) Infrastructure (58,665) (2,734) - (61,399) Total accumulated depreciation (6,452,867) (607,133) 114,410 (6,945,590) Depreciable capital assets, net 17,747,228 (229,537) - 17,517,691 Governmental activities capital assets, net $ 18,245,901 $ 0 (229,537) $ - $ 18,016,364 Depreciation expense was charged to governmental functions as follows: Instruction: Regular $ 243,937 Special 15,382 Vocational 5,697 Support services: Pupil 10,915 Instructional staff 42,961 Administration 9,225 Fiscal 658 Operations and maintenance 30,957 Pupil transportation 140,143 Extracurricular activities 51,995 Food service operations 55,263 Total depreciation expense $ 607, B-48

119 NOTE 10 - RISK MANAGEMENT BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During fiscal year 2008, the District contracted for the following insurance coverage. Coverage provided by the Ohio School Plan is as follows: Automobile Liability $2,000,000 Uninsured Motorist 1,000,000 Buildings and Contents/Boiler and Machinery 63,599,931 General District Liability Per Occurrence 1,000,000 Total Per Year 3,000,000 Excess Liability 1,000,000 Settled claims have not exceeded this commercial coverage in any of the past three years, and there has been no significant reduction in insurance coverage from the prior fiscal year. For fiscal year 2008 the District participated in the Ohio School Plan (Plan), an insurance purchasing pool. Each participant enters into an individual agreement with the Plan for insurance coverage and pays annual premiums to the Plan based on the types and limits of coverage and deductibles selected by the participant. For fiscal year 2008, the District participated in the Ohio School Boards Association Workers Compensation Group Rating Plan (GRP), an insurance purchasing pool. The intent of the GRP is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the GRP. The workers compensation experience of the participants is calculated as one experience and a common premium rate is applied to all participants 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. Participation in the GRP is limited to participants that can meet the GRP s selection criteria. The firm of Gates McDonald & Co. provides administrative, cost control, and actuarial services to the GRP. The District participated in the Champaign, Delaware, Marion, Union School Employee Welfare Benefit Association Trust (Trust), a public entity shared risk pool consisting of eight Districts and the Champaign County and Delaware/Union County Educational Service Centers. The District pays monthly premiums to the Trust for employee medical, dental, and life insurance benefits. The Trust is responsible for the management and operations of the program. Upon withdrawal from the Trust, a participant is responsible for the payment of all Trust liabilities to its employees, dependents, and designated beneficiaries accruing as a result of withdrawal. 42 B-49

120 NOTE 11 - PENSION PLANS BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 A. School Employees Retirement System Plan Description - The District contributes to the School Employees Retirement System (SERS), a cost-sharing, multiple-employer defined benefit 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 It is also posted on the SERS Ohio website, under Forms and Publications. Funding Policy - Plan members are required to contribute 10 percent of their annual covered salary and the District is required to contribute at an actuarially determined rate. The current District rate is 14 percent of annual covered payroll. A portion of the District s contribution is used to fund pension obligations with the remainder being used to fund health care benefits. For fiscal year 2008, 9.16 percent of annual covered salary was the portion used to fund pension obligations. The contribution requirements of plan members and employers are established and may be amended by the SERS Retirement Board up to a statutory maximum amount of 10 percent for plan members and 14 percent for employers. Chapter 3309 of the Ohio Revised Code provides statutory authority for member and employer contributions. The District s required contributions for pension obligations to SERS for the fiscal years ended June 30, 2008, 2007 and 2006 were $243,912, $249,181 and $223,610, respectively; percent has been contributed for fiscal year 2008 and 100 percent for fiscal years 2007 and B. State Teachers Retirement System of Ohio Plan Description - The 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. 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. 43 B-50

121 NOTE 11 - PENSION PLANS - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 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 fiscal year 2008, plan members were required to contribute 10 percent of their annual covered salaries. The 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 District s required contributions for pension obligations to STRS Ohio for the fiscal years ended June 30, 2008, 2007 and 2006 were $1,167,842, $1,064,634 and $1,024,005, respectively; percent has been contributed for fiscal year 2008 and 100 percent for fiscal years 2007 and Contributions to the DC and Combined Plans for fiscal year 2008 were $22,818 made by the District and $46,562 made by the plan members. C. Social Security System Effective July 1, 1991, all employees not otherwise covered by the SERS/STRS Ohio have an option to choose Social Security or the SERS/STRS Ohio. As of June 30, 2008, certain members of the Board of Education have elected Social Security. The District s liability is 6.2 percent of wages paid. NOTE 12 - POSTEMPLOYMENT BENEFITS A. School Employees Retirement System Plan Description - The District participates in two cost-sharing, multiple employer postemployment benefit plans administered by the School Employees Retirement System (SERS) for non-certificated retirees and their beneficiaries, a Health Care Plan and a Medicare Part B Plan. The Health Care Plan includes hospitalization and physicians' fees through several types of plans including HMO s, PPO s and traditional indemnity plans as well as a prescription drug program. The Medicare Part B Plan reimburses Medicare Part B premiums paid by eligible retirees and beneficiaries up to a statutory limit. Benefit provisions and the obligations to contribute are established by the System based on authority granted by State statute. 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 Funding Policy - State statute permits SERS to fund the health care benefits through employer contributions. Each year, after the allocation for statutorily required benefits, the Retirement Board allocates the remainder of the employer contribution of 14 percent of covered payroll to the Health Care Fund. The Health Care Fund was established and is administered in accordance with Internal Revenue Code Section 401h. For 2008, 4.18 percent of covered payroll was allocated to health care. In addition, employers pay a surcharge for employees earning less than an actuarially determined amount; for 2008, this amount was $35, B-51

122 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 12 - POSTEMPLOYMENT BENEFITS - (Continued) Active employee members do not contribute to the Health Care Plan. Retirees and their beneficiaries are required to pay a health care premium that varies depending on the plan selected, the number of qualified years of service, Medicare eligibility and retirement status. The District s contributions for health care for the fiscal years ended June 30, 2008, 2007, and 2006 were $150,892, $132,564 and $112,400, respectively; percent has been contributed for fiscal year 2008 and 100 percent for fiscal years 2007 and The Retirement Board, acting with advice of the actuary, allocates a portion of the employer contribution to the Medicare B Fund. For fiscal year 2008, this actuarially required allocation was 0.66 percent of covered payroll. The District s contributions for Medicare Part B for the fiscal years ended June 30, 2008, 2007, and 2006 were $17,574, $16,944 and $17,797, respectively; percent has been contributed for fiscal year 2008 and 100 percent for fiscal years 2007 and B. State Teachers Retirement System of Ohio Plan Description - The District contributes to the cost sharing, multiple employer defined benefit Health Plan (the 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) 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 2008, STRS Ohio allocated employer contributions equal to 1 percent of covered payroll to the Health Care Stabilization Fund. The District s contributions for health care for the fiscal years ended June 30, 2008, 2007, and 2006 were $89,834, $84,174 and $80,227, respectively; percent has been contributed for fiscal year 2008 and 100 percent for fiscal years 2007 and NOTE 13 - 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 year, depending upon length of service. Accumulated unused vacation time is paid to classified employees upon termination of employment. Teachers do not earn vacation time. Teachers, administrators, and classified employees earn sick leave at a rate of one and one-fourth days per month. Sick leave may be accumulated to a maximum of two hundred forty-five days for all employees. Upon retirement, payment is made for one-fourth of their accrued, but unused sick leave credit. In addition, sick leave in excess of one hundred twenty days is calculated on a basis of the total accumulated sick leave days up to and including two hundred thirty days multiplied by.357 for classified employees, and up to and including two hundred thirty days multiplied by.333 for certified employees. 45 B-52

123 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 13 - OTHER EMPLOYEE BENEFITS - (Continued) B. Health Care Benefits The District offers medical, dental, and life insurance benefits to employees through the Champaign, Delaware, Marion, Union School Employee Welfare Benefit Association Trust. Depending on the plan chosen, the employees share the cost of the monthly premium with the Board. The premium varies with employee depending on the terms of the union contract. NOTE 14 - LONG-TERM OBLIGATIONS A. Changes in the District s long-term obligations during fiscal year 2008 were as follows: General Obligation Bonds: Balance Balance Amount Outstanding Outstanding Due in June 30, 2007 Additions Deletions June 30, 2008 One Year School Building Bonds FY 1996 Term Bonds % $ 5,535,000 $ - $ (480,000) $ 5,055,000 $ 510,000 Refunding School Building Bonds FY 2005 Serial Bonds 2-4% 4,265,008 - (55,000) 4,210,008 55,000 Refunding School Building Bonds Capital appreciation bonds 14.24% 204, ,992 - Refunding School Building Bonds Accreted interest capital appreciation bonds 91,503 39, ,236 - Total, general obligation bonds 10,096,503 39,733 (535,000) 9,601, ,000 Other Long-term Obligations: Paving project loan FY % 173,000 - (60,000) 113,000 63,000 Capital lease obligations 201,869 18,934 (49,431) 171,372 55,327 Compensated absences 1,592, ,310 (164,077) 1,673, ,014 Total, other long-term obligations 1,966, ,244 (273,508) 1,957, ,341 Total, all governmental activities long-term liabilities $ 12,063,495 $ 303,977 $ (808,508) 11,558,964 $ 968,341 Add: unamortized premium 373,130 Less: Deferred charges on refunding (283,993) Total on statement of net assets $ 11,648, B-53

124 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 14 - LONG-TERM OBLIGATIONS - (Continued) Compensated Absences: Compensated absences will be paid from the general fund and the food services fund (a nonmajor governmental fund). Capital Leases: Capital Lease will be paid from the general fund. See Note 15 for details. B. FY 1996 School Building Bonds - On December 1, 1995, the District issued $14,000,000 in voted general obligation bonds for improving and constructing school buildings and facilities. The bonds were issued for a twenty-five year period, with final maturity in fiscal year Interest payments on the current interest bonds are due on June 1 and December 1 of each year. The interest rates on the bonds range from 5.00% to 6.85%. The bonds are being retired through the bond retirement fund (a nonmajor governmental fund). C. FY 2005 Refunding School Building Bonds - On October 1, 2004, the District issued bonds, in the amount of $4,650,000, to partially refund bonds previously issued in fiscal year 1996, in the amount of $4,650,000, for improving and constructing school buildings and facilities. The refunding bond issue included serial and capital appreciation bonds, in the amount of $4,445,008 and $204,992, respectively. The bonds were issued for a sixteen year period, with final maturity during fiscal year Interest payments on the current interest bonds are due on June 1 and December 1 of each year. The bonds are being retired through the bond retirement fund (a nonmajor governmental fund). The serial bonds are subject to prior redemption on or after December 1, 2014, by and at the sole option of the District, either in whole on any date or in part on any interest payment date, and in integral multiples of $5,000, at 100 percent of the principal amount redeemed plus accrued interest to the redemption date. The capital appreciation bonds are not subject to prior redemption. The capital appreciation bonds will mature in fiscal years 2015 through The accreted value at maturity for the capital appreciation bonds is $1,050,000. Total accreted interest of $131,236 has been included on the statement of net assets. D. FY 2005 Paving Project Loan - On August 5, 2004, the District obtained a loan, in the amount of $290,000 to pave a parking lot at the high school. The loan has an interest rate of 3.65 percent. The loan will be paid over a five year period, with final maturity in fiscal year The loan is being retired from the Permanent Improvement capital projects fund. 47 B-54

125 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 14 - LONG-TERM OBLIGATIONS - (Continued) E. Principal and interest requirements to retire general long-term obligations outstanding at June 30, 2008, were as follows: Fiscal Year Current Interest Bonds - Series 2005 Capital Appreciation Bonds - Series 2005 Ending June 30, Principal Interest Total Principal Interest Total 2009 $ 55,000 $ 164,046 $ 219,046 $ - $ - $ , , , , , , , , , , , , , ,842 1,722, , ,008 1,050, ,935, ,500 3,113, Total $ 4,210,008 $ 1,728,086 $ 5,938,094 $ 204,992 $ 845,008 $ 1,050,000 Fiscal Year Paving Project Loan School Building Bonds - Series 1996 Ending June 30, Principal Interest Total Principal Interest Total 2009 $ 63,000 $ 4,280 $ 67,280 $ 510,000 $ 328,800 $ 838, ,000 2,124 52, , , , , , , , , , , , , ,195, ,385 2,427,385 Total $ 113,000 $ 6,404 $ 119,404 $ 5,055,000 $ 1,495,868 $ 6,550,868 F. Legal Debt Margin The Ohio Revised Code provides that voted net general obligation debt of the District shall never exceed 9% of the total assessed valuation of the District. The code further provides that unvoted indebtedness shall not exceed 1/10 of 1% of the property valuation of the District. The code additionally states that unvoted indebtedness related to energy conservation debt shall not exceed 9/10 of 1% of the property valuation of the District. The assessed valuation used in determining the District s legal debt margin has been modified by House Bill 530 which became effective March 30, In accordance with House Bill 530, the assessed valuation used in the District s legal debt margin calculation excluded tangible personal property used in business, telephone or telegraph property, interexchange telecommunications company property, and personal property owned or leased by a railroad company and used in railroad operations. The effects of these debt limitations at June 30, 2008, are a voted debt margin of $33,526,583 (including available funds of $529,407) and an unvoted debt margin of $471, B-55

126 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 NOTE 15 - CAPITAL LEASES - LESSEE DISCLOSURE The District has entered into capitalized leases for copier 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. The new capital lease is reflected in the accounts capital outlay and capital lease transactions in the fund which will be making the lease payment. Capital lease payments have been reclassified and are reflected as debt service expenditures in the financial statements for the governmental funds. These expenditures are reported as function expenditures on the budgetary statements. Principal payments in fiscal year 2008 were $49,431 and were paid from the general fund. Governmental Activities Equipment under capital lease $ 281,093 Less: accumulated depreciation (121,180) Total June 30, 2008 $ 159,913 The following is a schedule of the future minimum lease payments required under the capital leases and the present value of the minimum lease payments as of June 30, Fiscal Year Ending June 30, Amount 2009 $ 72, , , , Total minimum lease payments 202,453 Less: amount representing interest (31,081) Total $ 171,372 NOTE 16 - DONOR RESTRICTED ENDOWMENTS The District s private purpose trust funds include donor restricted endowments. Endowments, in the amount of $25,000, represent the principal portion. The amount of net appreciation in donor restricted investments that is available for expenditures by the District is $28,047 and is included as held in trust for scholarships. State law permits the District to appropriate, for purposes consistent with the endowment s intent, net appreciation, realized and unrealized, unless the endowment terms specify otherwise. The endowments indicate that the interest should be used to provide scholarships each year. 49 B-56

127 NOTE 17 - BUDGETARY BASIS OF ACCOUNTING BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 While the District is reporting financial position, results of operations and changes in fund balance on the basis of generally accepted accounting principles (GAAP basis), 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 balance - 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 that: 1. Revenues and other financing sources are recorded when received in cash (budget basis) as opposed to when susceptible to accrual (GAAP basis); 2. Expenditures and other financing uses are recorded when paid in cash (budget basis) as opposed to when the liability is incurred (GAAP basis); 3. Encumbrances are treated as expenditures (budget basis) rather than as a reservation of fund balance (GAAP basis); and 4. Advances-In and Advances-Out are operating transactions (budget basis) as opposed to balance sheet transactions (GAAP basis). The following table summarizes the adjustments necessary to reconcile the GAAP basis statement to the budgetary basis statement on a fund type basis for the general fund. Net Change in Fund Balance General Fund Budget basis $ (51,760) Net adjustment for revenue accruals 237,387 Net adjustment for expenditure accruals (171,714) Net adjustment for other financing sources/(uses) (8,100) Adjustment for encumbrances 362,969 GAAP basis $ 368,782 NOTE 18 - SET ASIDES The 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 the end of the fiscal year or offset by similarly restricted resources received during the fiscal year must be held in cash at fiscal year end. These amounts must be carried forward and used for the same purposes in future years. 50 B-57

128 NOTE 18 - SET ASIDES - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The following cash basis information identifies the changes in the fund balance reserves for textbooks/instructional materials and capital improvements during fiscal year Textbooks/ Instructional Materials Capital Improvements Set-aside balance as of June 30, 2007 $ (431,401) $ - Current year set-aside requirement 340, ,339 Current year off-set credits - (628,111) Qualifying disbursements (369,769) - Total $ (460,831) $ (287,772) Balance carried forward to FY 2009 $ (431,401) $ - The District had qualifying expenditures during the fiscal year that reduced the textbooks set aside amount below zero. This amount may be used to reduce the set aside requirement in future fiscal years; however, the negative amount may not be carried forward for the capital improvements set-aside. NOTE 19 - CONTINGENCIES A. Grants The 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 District at June 30, B. Litigation The District is a party to legal proceedings seeking damages or injunctive relief generally incidental to its operations and pending projects. The District Board of Education is of the opinion that the ultimate disposition of various claims and legal proceedings will not have a material effect, if any, on the financial condition of the District. 51 B-58

129 SUPPLEMENTARY DATA B-59

130 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT SCHEDULE OF RECEIPTS AND EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 (A) (B) (B) FEDERAL GRANTOR/ PASS-THROUGH CASH CASH SUB GRANTOR/ CFDA GRANT FEDERAL FEDERAL PROGRAM TITLE NUMBER NUMBER RECEIPTS DISBURSEMENTS U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH THE OHIO DEPARTMENT OF EDUCATION (C) Food Donation $ 31,759 $ 31,759 Total Food Donation 31,759 31,759 Nutrition Cluster: (D) (E) School Breakfast Program ,412 2,412 (D) (E) School Breakfast Program ,162 22,162 Total School Breakfast Program 24,574 24,574 (D) (E) National School Lunch Program ,347 19,347 (D) (E) National School Lunch Program , ,953 Total National School Lunch Program 150, ,300 (D) (E) Special Milk Program for Children (D) (E) Special Milk Program for Children ,864 3,864 Total Special Milk Program for Children 4,286 4,286 Total Nutrition Cluster 179, ,160 Total U.S. Department of Agriculture 210, ,919 U.S. DEPARTMENT OF EDUCATION PASSED THROUGH THE OHIO DEPARTMENT OF EDUCATION (G) Title I Grants to Local Educational Agencies ,171 30,206 (G) Title I Grants to Local Educational Agencies , ,468 Total Title I Grants to Local Educational Agencies 263, ,674 Special Education Cluster: (F) Special Education_Grants to States ,204 (F) Special Education_Grants to States , ,693 Total Special Education_Grants to States 538, ,897 (F) Special Education_Preschool Grants ,406 5,406 Total Special Education_Preschool Grants 5,406 5,406 Total Special Education Cluster 544, ,303 Safe and Drug-Free Schools and Communities_State Grants ,712 6,712 Total Safe and Drug-Free Schools and Communities_State Grants 6,712 6,712 State Grants for Innovative Programs ,111 5,014 Total State Grants for Innovative Programs 3,111 5,014 Education Technology State Grants ,442 2,452 Total Education Technology State Grants 2,442 2,452 Improving Teacher Quality State Grants ,293 34,711 Total Improving Teacher Quality State Grants 39,293 34,711 Total U.S. Department of Education 859, ,866 -Continued 53 B-60

131 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT SCHEDULE OF RECEIPTS AND EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 (A) (B) (B) FEDERAL GRANTOR/ PASS-THROUGH CASH CASH SUB GRANTOR/ CFDA GRANT FEDERAL FEDERAL PROGRAM TITLE NUMBER NUMBER RECEIPTS DISBURSEMENTS U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES PASSED THROUGH THE OHIO DEPARTMENT OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES Temporary Assistance for Needy Families N/A $ 12,000 $ 12,000 Total Temporary Assistance for Needy Families 12,000 12,000 Total U.S. Department of Health and Human Services 12,000 12,000 Total Federal Financial Assistance $ 1,082,112 $ 1,093,785 (A) OAKS did not assign pass-through numbers for fiscal year (B) (C) (D) (E) (F) (G) This schedule was prepared on the cash basis of accounting. The Food Donation Program is a non-cash, in kind, federal grant. Commodities are reported at the entitlement value. Included as part of "Nutrition Grant Cluster" in determining major programs. Commingled with state and local revenue from sales of lunches; assumed expenditures were made on a first-in, first-out basis. Included as part of "Special Education Grant Cluster" in determining major programs. The District generally must spend Federal assistance within 15 months of receipt (funds must be obligated by June 30th and spent by September 30th). However, with Ohio Department of Education ("ODE")'s approval, a District can transfer unspent Federal assistance to the succeeding year, thus allowing the District a total of 27 months to spend the assistance. Schools can document this by using special cost centers for each year's activity, and transferring the amounts ODE approves between the cost centers. During fiscal year 2008, the ODE authorized the following transfers: Program Title CFDA Grant Year Transfers Out Transfers In Title I Grants to Local Educational Agencies $ 9,718 Title I Grants to Local Educational Agencies $ 9,718 Total $ 9,718 $ 9, B-61

132 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 Buckeye Valley Local School District 679 Coover Road Delaware, OH We have audited the financial statements of the governmental activities, its major fund, and the aggregate remaining fund information of Buckeye Valley Local School District, Delaware County, Ohio, as of and for the fiscal year ended June 30, 2008, which collectively comprise Buckeye Valley Local School District s basic financial statements and have issued our report thereon dated December 16, 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 Buckeye Valley Local School 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 Buckeye Valley Local School District s internal control over financial reporting. Accordingly we do not express an opinion on the effectiveness of Buckeye Valley Local School District s internal control over financial reporting. 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 Buckeye Valley Local School 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 Buckeye Valley Local School District s financial statements that is more than inconsequential will not be prevented or detected by Buckeye Valley Local School District s internal control. 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 Buckeye Valley Local School District s internal control. 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 or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 54 B-62

133 Board of Education Buckeye Valley Local School District Compliance and Other Matters As part of obtaining reasonable assurance about whether Buckeye Valley Local School District s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted a certain matter that we reported to the management of Buckeye Valley Local School District in a separate letter dated December 16, This report is intended solely for the information and use of the management and Board of Education of Buckeye Valley Local School District 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. Julian & Grube, Inc. December 16, B-63

134 Report on Compliance With Requirements Applicable to Its Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 Board of Education Buckeye Valley Local School District 679 Coover Road Delaware, OH Compliance We have audited the compliance of Buckeye Valley Local School District, Delaware County, Ohio, 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 its major federal program for the fiscal year ended June 30, Buckeye Valley Local School District s major federal program is 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 its major federal program is the responsibility of Buckeye Valley Local School District s management. Our responsibility is to express an opinion on Buckeye Valley Local School 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, Audit 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 Buckeye Valley Local School District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Buckeye Valley Local School District s compliance with those requirements. In our opinion, Buckeye Valley Local School District complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the fiscal year ended June 30, Internal Control Over Compliance The management of Buckeye Valley Local School District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Buckeye Valley Local School 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 Buckeye Valley Local School District s internal control over compliance. 56 B-64

135 Board of Education Buckeye Valley Local School District A control deficiency in Buckeye Valley Local School District 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 Buckeye Valley Local School District 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 Buckeye Valley Local School District 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 Buckeye Valley Local School District 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 for the information and use of management and Board of Education of Buckeye Valley Local School District 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. Julian & Grube, Inc. December 16, B-65

136 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO SCHEDULE OF FINDINGS OMB CIRCULAR A JUNE 30, SUMMARY OF AUDITOR S RESULTS (d)(1)(i) Type of Financial Statement Opinion Unqualified (d)(1)(ii) Were there any material control weaknesses reported at the financial statement level (GAGAS)? No (d)(1)(ii) Were there any other significant deficiencies in internal control reported at the financial statement level (GAGAS)? (d)(1)(iii) Was there any reported material noncompliance at the financial statement level (GAGAS)? No No (d)(1)(iv) (d)(1)(iv) (d)(1)(v) (d)(1)(vi) Were there any material internal control weaknesses reported for major federal programs? Were there any significant deficiencies in internal control reported for major federal programs? Type of Major Program s Compliance Opinion Are there any reportable findings under.510? No No Unqualified No (d)(1)(vii) Major Program (listed): Special Education Cluster: Special Education Grants to States - CFDA # and Special Education Preschool Grants - CFDA # (d)(1)(viii) Dollar Threshold: Type A/B Programs Type A: >$300,000 Type B: all others (d)(1)(ix) Low Risk Auditee? No None 2. FINDINGS RELATED TO THE BASIC FINANCIAL STATEMENTS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS None 3. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS 58 B-66

137 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY CLERK S CERTIFICATION This is a true and correct copy of the report which is required to be filed in the Office of the Auditor of State pursuant to Section , Revised Code, and which is filed in Columbus, Ohio. CLERK OF THE BUREAU CERTIFIED FEBRUARY 12, E. Broad St. / Fourth Floor / Columbus, OH Telephone: (614) (800) Fax: (614) B-67

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139 APPENDIX C FIVE-YEAR PROJECTION OF OPERATIONAL REVENUES AND EXPENDITURES BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION AND UNION COUNTIES, OHIO Following is a summary of a five-year financial projection prepared by the Treasurer of the School District through June 30, 2013, in compliance with Revised Code Section (see discussion in APPENDIX A under "FINANCES OF THE SCHOOL DISTRICT Five-Year Projection"). The projection is based upon certain assumptions required to be made in accordance with rules promulgated by the Department, including the assumption that no revenues from future voterapproved tax levies will be available. A complete version of the projection may be obtained from the Treasurer's office or from the Department. Readers of this Official Statement are cautioned that actual circumstances may differ from the assumptions required to be used in preparation of this projection. As a result, the actual future financial situation of the School District may be materially different from that stated in this projection, and investors are cautioned not to place undue reliance on such forward-looking statements. C-1

140 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEARS ENDED JUNE 30, 2005, 2006 AND 2007 ACTUAL; FORECASTED FISCAL YEARS ENDING JUNE 30, 2008 THROUGH 2012 FORECAST DATE: FEBRUARY 17, 2009 Line Number Fiscal Year 2006 Actual Fiscal Year 2007 Actual Fiscal Year 2008 Actual Average Annual Change Fiscal Year 2009 Forecasted Fiscal Year 2010 Forecasted Fiscal Year 2011 Forecasted Fiscal Year 2012 Forecasted Fiscal Year 2013 Forecasted Revenues General Property Tax (Real Estate) $7,377,522 $8,303,707 $8,326, % $8,691,381 $8,952,122 $9,220,686 $9,681,720 $10,165, Tangible Personal Property Tax 356, , , % 126,172 45,000 25,000 10,000 10, Income Tax 3,853,214 4,248,955 4,957, % 4,796,526 4,844,492 5,086,716 5,341,052 5,608, Unrestricted Grants-in-Aid (All 3100's except 3130) 4,896,340 4,994,846 4,887, % 4,910,445 4,910,445 4,910,445 4,910,445 4,910, Restricted Grants-in-Aid (All 3200's) 38,492 50,327 32, % 42,740 28,000 28,000 28,000 28, Property Tax Allocation (3130) 941,789 1,168,708 1,364, % 1,507,527 1,719,915 1,787,164 1,876,523 1,970, All Other Revenues except 1931,1933,1940,1950,5100, , , , % 863, , , , , Total Revenues 18,258,960 20,005,020 20,727, % 20,937,801 21,419,974 21,988,012 22,787,740 23,642,705 Other Financing Sources Proceeds from Sale of Notes (1940) % State Emergency Loans and Advancements (Approved-1950) % Operating Transfers-In (5100) % Advances-In (5200) 3,698 6,320 38, % 14, All Other Financing Sources (1931, 1933, 5300) 117,990 4,394 6, % 12,830 6,000 6,000 6,000 6, Total Other Financing Sources 121,688 10,714 44, % 27,542 6,000 6,000 6,000 6, Total Revenues and Other Financing Sources 18,380,648 20,015,734 20,772, % 20,965,343 21,425,974 21,994,012 22,793,740 23,648,705 Expenditures Personal Services 9,779,983 10,303,160 10,945, % 11,570,365 12,264,587 13,000,462 13,780,490 14,607, Employees' Retirement/Insurance Benefits 3,488,816 3,587,123 4,027, % 4,110,980 4,583,739 4,881,682 5,198,991 5,536, Purchased Services 2,089,800 2,319,496 2,454, % 2,645,984 2,804,743 2,973,028 3,151,409 3,340, Supplies and Materials 923,370 1,165,557 1,005, % 1,105,277 1,150,000 1,175,000 1,200,000 1,225, Capital Outlay 226, , , % 32,020 16,000 14,000 14,000 14, Intergovernmental (7600 and 7700 functions) % Debt Service: Principal-All (History Only) % Principal-Notes % Principal-State Loans % Principal-State Advancements % Principal-HB 264 Loans % Principal-Other % Interest and Fiscal Charges % Other Objects 1,131,094 1,184,509 1,187, % 1,280,183 1,356,994 1,438,414 1,524,718 1,616, Total Expenditures 17,639,846 18,841,775 19,896, % 20,744,809 22,176,063 23,482,585 24,869,609 26,339,940 C-2

141 Line Number Other Financing Uses Fiscal Year 2006 Actual Fiscal Year 2007 Actual Operating Transfers-Out , % Advances-Out 6,320 32,617 14, % All Other Financing Uses 30, % Total Other Financing Uses 37,065 32, , % Total Expenditures and Other Financing Uses 17,676,911 18,874,392 20,461, % 20,744,809 22,176,063 23,482,585 24,869,609 26,339,940 Fiscal Year 2008 Actual Average Annual Change Fiscal Year 2009 Forecasted Fiscal Year 2010 Forecasted Fiscal Year 2011 Forecasted Fiscal Year 2012 Forecasted Fiscal Year 2013 Forecasted Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses 703,737 1,141, , % 220,535 (750,089) (1,488,573) (2,075,869) (2,691,235) Cash Balance July 1 - Excluding Proposed Renewal/ Replacement and New Levies 1,355,121 2,058,858 3,200, % 3,511,024 3,731,559 2,981,470 1,492,897 (582,971) Cash Balance June 30 2,058,858 3,200,200 3,511, % 3,731,559 2,981,470 1,492,897 (582,971) (3,274,207) Estimated Encumbrances June , , , % 400, , , , ,000 Reservation of Fund Balance Textbooks and Instructional Materials % Capital Improvements % Budget Reserve % DPIA % Debt Service % Property Tax Advances % Bus Purchases % Subtotal % Fund Balance June 30 for Certification of Appropriations 1,637,101 2,777,852 3,148, % 3,331,559 2,581,470 1,092,897 (982,971) (3,674,207) Revenue from Replacement/Renewal Levies Income Tax - Renewal % Property Tax - Renewal or Replacement % Cumulative Balance of Replacement/Renewal Levies % Fund Balance June 30 for Certification of Contracts, Salary Schedules and Other Obligations 1,637,101 2,777,852 3,148, % 3,331,559 2,581,470 1,092,897 (982,971) (3,674,207) Revenue from New Levies Income Tax - New 0.00% Property Tax - New 0.00% Cumulative Balance of New Levies % Revenue from Future State Advancements 0.00% Unreserved Fund Balance June 30 $1,637,101 $2,777,852 $3,148, % $3,331,559 $2,581,470 $1,092,897 ($982,971) ($3,674,207) See accompanying summary of significant forecast assumptions and accounting policies. Includes: General Fund, Emergency Levy Fund, DPIA Fund, Textbook Fund and any portion of Debt Service Fund related to General Fund debt. C-3

142 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL FEBRUARY 17, 2009 The following assumptions were used in projecting revenue and expenditures for General Fund from Fiscal Year 2009 through REVENUES Lines Real Estate 2008 was a biennial update year for our two biggest counties, Delaware and Morrow. Our valuation did increase by about 4.3%. For fiscal year 2009, I have used the amount that our county auditor has estimated we will collect. For fiscal years 2010 and 2011 a 3% increase has been estimated per the advisement of our county auditor. 5% has been estimated for fiscal years 2012 and 2013 as 2011 will be a reappraisal year. It is hoped that the economy rebounds by then and values do increase. Line Tangible Personal Property Tangible Personal Property taxes represent approximately 1.17% of the district's total revenue in the General Fund. Due to recent legislation, this tax is being completely phased out. For the current fiscal year, 2009, I put in the amount that the county auditor has estimated. This line item is lowered each year as the tax is being phased out. Line Income Tax The 1% income tax represents approximately 23.8% of the district's total revenue in the General Fund. Although fiscal year 2008 saw an increase of over 16% over fiscal year 2007, it is known that this amount represented not just new income, but delinquencies from previous years. The Ohio Department of Taxation provided to Ohio districts the amount of the 2008 collections that were delinquencies from previous years. This amount has been subtracted off of the 2008 figure before estimating subsequent years. Furthermore, according to the Ohio Department of Taxation, the expectation is that fiscal year 2009 will not be any higher than a 1% increase over fiscal year Wage growth has slowed considerably. I have estimated a 1% increase for fiscal years 2009 and I have estimated a 5% increase in fiscal years as the ODT has indicated they expect that by FY2011 withholding receipts will return to pre-recession trend level. Line Unrestricted Grants-in-Aid This is our State Foundation. The district is a "guarantee" district as opposed to a formula district, which means that we receive at least what we received in the previous fiscal year, regardless of how the formula calculates out. Even with HB66 doing away with the 1998 guarantee, the amounts are being made up in the transitional aid guarantee. The amount for 2009 is the same as we received in 2008 and is based on the biennial state budget. Due to the uncertainty of legislation actions I have left this amount flat throughout the years on the forecast. Line Restricted Grants-in-Aid This line represents out Career Tech money and our Bus Purchase allowance that we receive from the state. The district received $32, in Bus Purchase money in fiscal year Surprisingly, this is about twice as much as we received in Career Tech money can vary depending on enrollment of programs in the district. The projection has been left flat across the forecast for this line item. C-4

143 Line Property Tax Allocation This is our rollback and homestead, and tangible personal property tax loss reimbursements from the state. Because the rollback and homestead amounts mirror the real estate amounts, I have projected the same percentage increases in this line that I did in the real estate line and then added in the Tangible Personal Property Tax loss reimbursements that we will be receiving. This line continues to increase each year of the forecast as more money is collected from the state for these tax loss reimbursements. Line All Other Revenues This figure includes open enrollment payments, SF14 tuition, fees, rentals, interest and all other revenue. While this line has been growing due to good interest rates, the 2009 projection is a decrease from Interest rates are also going down at this time. Conservative increases have been projected throughout the rest of the years on the forecast. EXPENDITURES Line Personal Services Personal Services (Salaries) represent 53.5% of the total expenditures of the school district. The district completed negotiations with the BVTA (Buckeye Valley Teachers' Association) in August, Base salary increases were given in the amount of 3% effective August 1, 2008 and 3% effective August 1, The district completed negotiations with the OAPSE union in Spring, Base salary increases were given in the amount of 3.5% effective August 1, 2006; 3.5% effective August 1, 2007; and 3.25% effective August 1, In taking the above information into consideration, the current fiscal year (2009) amount came directly from appropriations. The rest of the years on the forecast on based on historical trends; taking into account several retirees in Line 3.02 Employees' Retirement/Insurance Benefits Fringe Benefits include mandatory retirement and medicare contributions, workers' compensation premiums, health, dental, life and vision insurance, tuition reimbursement and unemployment. The district is a member of the CDMU consortium for health/prescription and dental insurance. The CDMU consortium had an increase of just under 7% in premiums for this current year (beginning Sept 1, 2008). Dental insurance premiums are also through the CDMU and saw an approximate 3-4% increase, depending on the plan. Fringe benefits are tied to wages in the areas of retirement contributions and medicare, but not directly so with health insurance premiums. The CDMU recently approved a premium holiday for the month of March, 2009, which will save the district approximately $193,000. The amount estimated for fiscal year 2009 was adjusted accordingly; the years following show a 6.5% increase. Line 3.03 Purchased Services The purchased services line includes copier leases and charges, repairs, mileage and meeting expenses, utilities, postage, legal expenditures, community school charges and property and fleet insurance. This line also includes community school payments which is a growing expense for the district right now. This line is estimated to grow by about 6% each year. C-5

144 Line 3.04 Supplies and Materials This line item normally increases each year but for fiscal year 2008 it actually decreased due to the district not doing a bulk textbook purchase. The district is purchasing all textbooks from the Permanent Improvement fund starting with FY2009. The line continues to rise slightly each year to account for inflation. Line 3.05 Capital Outlay Capital Outlay expenses are low for the district because the 1.5 mill permanent improvement dollars pay for equipment purchases in most cases. The only Capital Outlay from the general fund that is projected is the bus purchase allowance that we receive from the state. Line 4.30 Other Objects Other Objects include the contract the district has with the Delaware/Union county Educational Service Center, GAAP preparation, audit expenses, auditor and treasurer fees, election expenses and liability insurance. This item will see increases that mirror the real estate collections due to the fees. This line item has been increased for fiscal year 2009 due to decreased IDEA federal grant money that can be used to offset the contract with the ESC. This line then increases by 6% each year. C-6

145 APPENDIX D FORM OF APPROVING LEGAL OPINION OF BRICKER & ECKLER LLP Fifth Third Securities, Inc. Columbus, Ohio Assured Guaranty Corp. New York, New York We have acted as bond counsel to the Buckeye Valley Local School District, Delaware, Morrow, Marion and Union Counties, Ohio (the "School District") in connection with the issuance by the School District of its $15,999,994 School Facilities Construction and Improvement Bonds, Series 2009 dated April 20, 2009 (the "Bonds"). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to render this opinion. Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been duly authorized and executed by the School District, and are valid and binding general obligations of the School District. 2. The Bonds are secured by the pledge of the full faith and credit of the School District for the payment thereof and by the pledge of the School District to levy ad valorem taxes outside the ten mill limitation of Article XII, Section 2 of the Constitution of the State of Ohio, upon all property on the general tax lists and duplicates of the School District, in an amount sufficient to pay the principal of and interest on the Bonds when due, which taxes are unlimited as to rate and amount. 3. The interest on the Bonds is excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations, such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the School District comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The School District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. D- 1

146 4. The Bonds, the interest on the Bonds and the transfer, and any profit made on the sale or other disposition, of the Bonds are exempt from taxes levied by the State of Ohio 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 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 Ohio Revised Code Chapter 5725; and (iv) the tax on shares of and capital employed by dealers in intangibles pursuant to Ohio Revised Code Section The School District has designated the Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code. Although we have participated in the preparation of portions of the Official Statement dated April 6, 2009, relating to the Bonds, we have not been engaged to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement) and we express no opinion and make no representation relating thereto (excepting only the matters set forth as our opinion in the Official Statement). Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. Please be advised that the rights of the holders of the Bonds and the enforceability thereof are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. We bring to your attention the fact that our legal opinions are an expression of our professional judgment and are not a guarantee of a result. D- 2

147 APPENDIX E $15,999,994 Buckeye Valley Local School District Delaware, Morrow, Marion and Union Counties, Ohio School Facilities Construction and Improvement Bonds, Series 2009 Dated April 20, 2009 SAMPLE CLOSING CERTIFICATE To Fifth Third Securities, Inc.: It is my understanding that, in considering whether to purchase the above-captioned obligations, you have relied on the Official Statement for such obligations dated April 6, 2009 (the "Official Statement"), which Official Statement was prepared and executed by and for the Buckeye Valley Local School District, Delaware, Morrow, Marion and Union Counties, Ohio (the "School District") under the direction of the Board of Education. In connection with your reliance as stated above, I hereby certify that: 1. I have reviewed the Official Statement and have made such investigation and inquiries as I deemed necessary in the circumstances; 2. The statements and information contained in the Official Statement are correct and complete in all material respects, and they do not omit any statement or information necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading or incomplete in any material respect; and 3. To the best of my knowledge, since the date of the Official Statement, nothing has occurred which has caused, or which might reasonably be expected to cause, a material adverse change in the condition or prospects of the School District. Date: April 20, 2009 Treasurer Buckeye Valley Local School District Delaware, Morrow, Marion and Union Counties, Ohio E-1

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149 APPENDIX F $15,999,994 Buckeye Valley Local School District Delaware, Morrow, Marion and Union Counties, Ohio School Facilities Construction and Improvement Bonds, Series 2009 Dated April 20, 2009 SAMPLE CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Treasurer of the Buckeye Valley Local School District, Delaware, Morrow, Marion and Union Counties, Ohio (the "School District") pursuant to the November 18, 2008 resolution of the Board of Education of the School District authorizing the issuance and sale of the above-captioned obligations (the "Obligations"). The School District covenants and agrees as follows: Section 1. Definitions. The following capitalized terms shall have the following meanings: "Annual Report" means any annual report provided by the School District referred to in the Official Statement and any appendix therein. "Central Post Office" shall mean the arrangement for use in the dissemination of information to Repositories, which arrangement the SEC has stated to be consistent with its Rule 15c2-12. Currently, the following is the Central Post Office (see for updates): DisclosureUSA c/o Municipal Advisory Council of Texas P.O. Box Austin, Texas Fax: (512) Internet: "Listed Events" shall mean any of the events listed in Section 5 of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board, located at: th Street, NW, Suite 400 Washington, D.C Phone: (202) Fax: (202) Internet: www:msrb.org "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. As of the date hereof, the following are National Repositories (see internet address for updates): F-1

150 Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey Phone: (609) Fax: (609) Internet: DPC Data Inc. One Executive Drive Fort Lee, New Jersey Phone: (201) Fax: (201) Internet: Interactive Data Pricing and Reference Data, Inc. Attn: NRMSIR 100 William Street, 15th Floor New York, New York Phone: (212) ; (800) Fax: (212) Internet: Standard & Poor's Securities Evaluations, Inc. 55 Water Street- 45th Floor New York, NY Phone: (212) Fax: (212) Internet: "Official Statement" shall mean the Official Statement prepared in connection with the sale of the Obligations. "Participating Underwriter" shall mean any of the original underwriters of the Obligations required to comply with the Rule in connection with the offering of the Obligations. "Repositories" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the United States Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of Ohio as a state repository for the purpose of the Rule. Currently, the State Repository for Ohio is: F-2

151 Ohio Municipal Advisory Council (OMAC) 9321 Ravenna Road, Unit K Twinsburg, OH Phone: (800) ; (330) Fax: (330) sid_filing@ohiomac.com Internet: "Tax-Exempt Status" shall mean that interest on the Obligations is excluded from gross income for federal income tax purposes, whether or not such item is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax. Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the School District for the benefit of the holders and beneficial owners of the Obligations and in order to assist the Participating Underwriter in complying with the Rule. Section 3. Provision of Annual Reports. (a) (b) The School District shall, not later than December 1 of each year, commencing December 1, 2009, provide to each National Repository and each State Repository an Annual Report for the fiscal year of the School District ended June 30 of such year, which Annual Report shall be consistent with the requirements of Section 4 of this Disclosure Certificate. The School District shall furnish an Annual Report to any person requesting the same. Requests for Annual Reports shall be made to: Sandra M. Griscom, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio 43015, Telephone: (740) If the School District fails to provide an Annual Report to the Repositories by the date set forth in subsection (a) of this Section 3, the School District shall send in a timely manner to (i) each National Repository or the MSRB and (ii) each State Repository notice of such failure, which shall include a statement as to the date by which the School District anticipates that the Annual Report will be provided to the repositories. Section 4. Contents of the Annual Report. (a) The Annual Report shall contain or incorporate by reference the following: (1) Basic Financial Statements of the School District. (2) Five-Year Projection of the School District. (3) Fiscal year data for the table entitled "School District History of Voted Taxes" contained in the Official Statement under the caption "SCHOOL DISTRICT PROPERTY TAX BASE School District History of Voted Taxes." (4) Fiscal year data for the table entitled "School District Tax Collections" contained in the Official Statement under the caption "SCHOOL DISTRICT PROPERTY TAX BASE School District Tax Rates and Collections." All or any of the items listed above may be included by specific reference from other documents which have previously been provided to each National Repository and to each State Repository or to the Securities and Exchange Commission. If the document is a F-3

152 final official statement, it must be available from the MSRB. If this School District prepares a Comprehensive Annual Financial Report ("CAFR") that includes each of the items listed above, the School District may designate the CAFR as the Annual Report. (b) The Basic Financial Statements of the School District to be included in the Annual Report shall be initially prepared in accordance with generally accepted accounting principles and shall be accompanied by a report of the State Auditor, or, if applicable, the independent certified public accountants who audited the financial statements; provided, however, if such report is not available to the School District at the time of providing the Annual Report to each repository as provided in Section 3 of this Disclosure Certificate, the School District will provide such report to each repository as provided in Section 3 of this Disclosure Certificate as soon as it is available. Section 5. Reporting of Significant Events. The School District shall provide in a timely manner to (i) each National Repository or the MSRB and (ii) each State Repository notice of any of the following events with respect to the Obligations, if material: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events affecting the Tax-Exempt Status of the Obligations; Modifications to rights of holders of the Obligations; Calls for redemption of the Obligations, other than calls pursuant to the mandatory sinking fund provisions of the Obligations, if any; Defeasances; Release, substitution or sale of property securing repayment of the Obligations; and Rating changes. Section 6. Means of Reporting Information. The School District shall provide information to each National Repository or the MSRB and each State Repository by: (a) (b) (c) Electronic mail; Facsimile transmission; or First class mail, postage prepaid. The School District is authorized to transmit information to the Repositories or the MSRB by whatever means are mutually acceptable to the School District and the Repositories or the MSRB, as applicable. The School District may provide the information through the use of the Central Post Office. Section 7. Termination of Reporting Obligation. The School District's obligation under this Disclosure Certificate shall terminate upon the defeasance, redemption or payment in full of all of the Obligations. F-4

153 Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the School District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if the School District has received an opinion of counsel knowledgeable in federal securities laws to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the School District from disseminating any other information (using the means of dissemination set forth in this Disclosure Certificate or any other means of communication) or including any other information in any Annual Report or providing notice of occurrence of events, in addition to that which is required by this Disclosure Certificate. If the School District chooses to include any information in an Annual Report or provide notice of occurrence of events which are not Listed Events in addition to that which is specifically required by this Disclosure Certificate, the School District shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default; Remedies. Failure of the School District to perform any of its undertakings contained in this Disclosure Certificate shall not constitute an event of default with respect to the Obligations. The exclusive remedy for any such failure shall be enforcement of the School District's obligations to so perform by actions or proceedings taken in accordance with Revised Code Section (B)(4)(b) or Section (C)(1). Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the School District, the Participating Underwriter and the holders of the Obligations, and shall create no rights in any other person or entity. Section 12. Amendments to Rule. Beginning July 1, 2009 (or such other date as the SEC may, from time to time, designate as the "Effective Date" for the amendments to the Rule as described in SEC release number ), the School District shall make all filings required under this Agreement to the MSRB in the manner prescribed by the MSRB and shall no longer be required to make any such filings with any other Repositories. Date: April 20, 2009 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MORROW, MARION, AND UNION COUNTIES, OHIO By: Title: Treasurer F-5

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155 G-1 APPENDIX G