Comprehensive Annual Financial Report

Transcription

1 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2004 Proposed New Elementary ~ Lakeland Northwest Architectural Company Proposed New Elementary ~ Lea Hill Bassetti Architects Building the Future Auburn School District No th Street NE, Auburn, WA 98002

2 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2004 Proposed New Elementary ~ Lakeland Northwest Architectural Company Proposed New Elementary ~ Lea Hill Bassetti Architects Building the Future Auburn School District No th Street NE, Auburn, WA Prepared by Business Services Toni Lally, CPA, Executive Director of Business

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

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

5 Auburn School District No. 408 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2004 I. INTRODUCTORY SECTION TABLE OF CONTENTS Schedule No. Page No. Table of Contents i Directory of Officials iii Organizational Chart v Letter of Transmittal 1 Certificate of Excellence in Financial Reporting 7 II. FINANCIAL SECTION Independent Auditor's Report 8 Management's Discussion and Analysis 9 Basic Financial Statements Government-Wide Financial Statements Statement of Net Assets 1 19 Statement of Activities 2 20 Governmental Fund Financial Statements Fund Balance Sheets-Governmental Funds 3 21 Reconciliation: Balance Sheet/Statement of Net Assets 3A 22 Statement of Revenues, Expenditures, and Changes in Fund Balances 4 23 Reconciliation: Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities 4A 24 Fiduciary Fund Financial Statements Statement of Net Assets 5 25 Statement of Changes in Net Assets 6 26 Notes to the Financial Statements 27 (An integral part of the financial statements) Required Supplementary Information Budgetary Comparison Schedule - General Fund A-1 47 Budgetary Comparison Schedule - Special Revenue Fund (Associated Student Body) A-2 48 Supplemental Data Governmental Funds General Fund Comparative Balance Sheets B-1 49 Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual B-2 50 Schedule of Revenues - Budget and Actual B-3 51 Schedule of Expenditures by Program - Budget and Actual B-4 53 Special Revenue Fund (Associated Student Body) Comparative Balance Sheets C-1 55 Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual C-2 56 Debt Service Fund (Bond Fund) Comparative Balance Sheets D-1 57 Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual D-2 58 Capital Projects Fund Comparative Balance Sheets E-1 59 Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual E i-

6 Auburn School District No. 408 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2004 TABLE OF CONTENTS Schedule No. Page No. Transportation Vehicle Fund Comparative Balance Sheets F-1 61 Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual F-2 62 Fiduciary Fund Private Purpose Trust Statement of Fiduciary Net Assets G-1 63 Statement of Changes in Fiduciary Net Assets G-2 64 Long-Term Debt Statement of Changes in Long-Term Debt H-1 65 Outstanding General Obligation Indebtedness H-2 66 Capital Assets Schedule of Capital Assets by Location I-1 67 Statement of Changes in Capital Assets I-2 68 Schedule of Capital Assets by Function and Activity I-3 69 Bond Amortization Summary Amortization Schedule for All Outstanding Bonds Bond Premium, Discount, Refunding Adjustment J-1 70 Amortization Schedule Bond Premium and Refunding Adjustment-1992-B Bonds J-2 72 Amortization Schedule Bond Discount and Refunding Adjustment-1993 Bonds J-3 73 Amortization Schedule Bond Premium-1997 Bonds J-4 74 Amortization Schedule Bond Premium and Refunding Adjustment-1998 Bonds J-5 75 Amortization Schedule Bond Premium-2003 Bonds J-6 76 Amortization Schedule Bond Premium and Refunding Adjustment-2004 Bonds J-7 77 Amortization Schedule Bond Premium-2004 Bonds J-8 78 III. STATISTICAL SECTION Table No. Page No. District-Wide Expenses by Function 1 79 General School System Expenditures by Function-Fund Level-Last Ten Fiscal Years 2 80 District-Wide Revenues by Source 3 81 General School System Revenues by Source-Fund Level-Last Ten Fiscal Years 4 82 Property Tax Levies and Collections-Fund Level-Last Ten Years 5 83 Assessed and Estimated Actual Value of Taxable Property- Property Tax Rates per $1,000 of Assessed Value-Direct and Overlapping Taxing Authorities-Last Ten Years 6 84 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita-Last Ten Fiscal Years 7 85 Computation of Legal Debt Margin 8 86 Statement of Direct and Overlapping Bonded Debt 9 87 Ratio of Annual Debt Service for General Bonded Debt to Total General Fund Expenditures-Last Ten Fiscal Years Demographic Statistics-Last Ten Years Property Value and Construction-Last Ten Years Principal Taxpayers Miscellaneous Statistics ii-

7 Auburn School District No. 408 Directory of Officials ~ August 31, 2004 School Board: Janice Nelson, President Ray Vefik, Vice President Carol Helgerson Craig Schumaker Dr. Therald Leonard Term and First Elected: 4-Year Term, First Elected Year Term, First Elected Year Term, First Elected Year Term, First Elected Year Term, First Elected Term Expires: November 2005 November 2007 November 2007 November 2007 November 2005 Administrative Staff: Linda S. Cowan...Superintendent Dr. Kip Herren...Deputy Superintendent of School Programs Michael Newman...Associate Superintendent of Business and Operations Tim Cummings...Assistant Superintendent of Human Resources Gordon O Dell...Executive Director of K-12 Student Learning Dr. Marilyn Holm...Executive Director of Student Support Services Principals: Elementary Schools: Diane Collier...Alpac John Sander...Chinook Greg Brown...Dick Scobee Anne Gayman...Evergreen Heights Middle Schools: Dennis Grad...Cascade Louanne Decker...Mt. Baker Paul Douglas...Olympic Sally Colburn...Rainier Robin Logan...Gildo Rey Linda Scarvie...Hazelwood Ryan Foster...Ilalko Mike Weibel...Lake View High Schools: Paul Harvey...Auburn Bruce Phillips...Auburn Riverside Brad Sprague...West Auburn Donna Dussault-Walker...Lea Hill Debra Gary...Pioneer Tim Carstens...Terminal Park Eric Daniel...Washington Comprehensive Annual Financial Report Contributing Staff: Toni Lally, CPA, Executive Director of Business Tracy Steffenson, Senior Accountant Debra Bodkins, Accountant Andrea Hollister, District Publications Tech, Layout and Design Building the Future -iii-

8 Auburn School District No. 408 Board of Directors and Superintendent Janice Nelson, First Elected or Appointed: May 1997 ~ District 3 Janice Nelson has a focus of finding opportunities to include all people. She spends many hours building relationships with community organizations and events such as the Soroptomists, Auburn Chamber of Commerce, Uniquely Auburn committee (of which she is co-chair), Auburn Downtown Association, City of Auburn s Parks and Recreation department, Reaching Out Fair, and Summer Youth Information Fair. Partnerships and collaborative efforts are such an important part of this community, says Ms. Nelson. Ms. Nelson has lived in Auburn since 1992 and her daughter attends Auburn schools. She is a community employment specialist for Trillium, an employment service for people with developmental disabilities. Ray Vefik, First Elected or Appointed: June 1998 ~ District 1 Ray Vefik has extensive years of experience as a volunteer and supporter of Auburn schools. He served as PTA president of Dick Scobee Elementary in and as president of the Auburn Council of PTAs, He was an integral part of the district s attendance area committee which was formed in 1990 and proceeded to serve on several more attendance area committees until Mr. Vefik also served on the Auburn School District s Ad Hoc Committee in 1994 and chaired the renovations sub-committee. Mr. Vefik and his family have lived in Auburn since 1985 and his son attended and graduated from Auburn schools. Mr. Vefik is a project manager/architect for Kaplan McLaughlin Diaz (KMD) in Seattle. Carol Helgerson, First Elected or Appointed: June 2002 ~ District 2 Carol Helgerson has lived in Auburn for over 16 years with her husband, Doug. They have two children. The older of the two is a 2004 graduate of Auburn High School and is currently attending Washington State University. Ms. Helgerson's daughter is a freshman at Auburn High School. Ms. Helgerson holds a bachelor degree from Washington State University and has worked in the community college system for 10 years. In her current position with conference services at Highline Community College, she is involved with special events, policy, and budgetary decisions. Ms. Helgerson is an active volunteer for the Washington Chapter of the Juvenile Diabetes Foundation. Craig Schumaker, First Elected or Appointed: November 1999 ~ District 4 Craig Schumaker brings strong leadership and teamwork skills to the Auburn School Board of Directors. Mr. Schumaker believes the school board has to anticipate changes in educational requirements as well as future needs such as increased classroom space and up-to-date resources. We have to ensure that students, teachers, and staff have the appropriate resources for a quality education. Mr. Schumaker works for the Federal Aviation Administration and he currently is an air traffic operations supervisor. He is a Navy veteran and has retired from the Washington Army National Guard with over 25 years of active and reserve service. His family has lived in Auburn for over 20 years and he has two sons, who have both attended Auburn schools. Dr. Therald Leonard, First Elected or Appointed: April 1975 ~ District 5 Dr. Therald Leonard moved his family to Auburn and started his dental practice in His long legacy of serving the communities of Auburn, Algona, and Pacific began that same year. In 1975, Dr. Leonard served as chairman on Auburn School District s first citizens ad hoc committee. The committee had an extensive charge to study district facilities and to make recommendations to the school board. Their final recommendation was to remodel Auburn High School, including the stadium as well as to build a Performing Arts Center. He has served the longest period of any Auburn School District director, 28 years. He lauds the district for its consistency in providing quality educational programs and maintaining all of the schools in the best possible condition. Linda Cowan, Superintendent of Auburn Schools Linda Cowan has enjoyed working in the field of education for 38 years, 28 of those years being dedicated to the Auburn School District. She has been a teacher, a principal, held multiple central office positions, and, currently, is superintendent of Auburn schools. Linda is active in various civic organizations and has received many awards and honors, including Woman of Distinction Award and Citizen-of-the-Year from the Auburn Area Chamber of Commerce. She served as president of the Auburn Rotary Club in She loves to travel, read, and play bridge. Linda s first love, however, is to the Auburn School District and its students. She can be seen on a daily basis in the school buildings attending student programs and events, reading to students, and encouraging students in their various endeavors. -iv-

9 AUBURN SCHOOL DISTRICT NO. 408 ORGANIZATIONAL CHART August 31, 2004 BOARD OF DIRECTORS SUPERINTENDENT Associate Deputy Assistant Superintendent Superintendent Superintendent Executive Director Executive Director Director of School Law of Capital Projects K-12 Student Learning and Employee Relations Coordinator Director of Elementary Director of of Capital Projects Student Learning Human Resources Executive Director of Business Services Supervisor of Payroll Supervisor of Purchasing Director of Maintenance and Operations Director of Transportation Executive Director of Information Services Supervisor of Child Nutrition Services Director of ESEA and Assessment Coordinator of Career Education and Technology Executive Director of Student Learning Director of Secondary Learning Assistant Director of Native American Education Coordinator of Performing Arts Programs Executive Director of Student Support Services Assistant Director of Student Support Services Principals -v-

10 AUBURN SCHOOL DISTRICT AVENUE TO EXCELLENCE February 4, 2005 Board of Directors Auburn School District No Fourth Street Northeast Auburn, Washington Dear Board Members: We are pleased to present to you the Comprehensive Annual Financial Report (CAFR) for Auburn School District No. 408 for the fiscal year ended August 31, This report presents complete information about the district s financial position at year-end and financial activities during We feel that the report illustrates the efforts of the administration to attain the financial goals established by the Board. Business Services staff prepared this report. The accuracy of the data presented, including all disclosures and the completeness and fairness of the presentation, are the responsibility of the management of the district. We believe the information, as presented, is accurate in all material aspects. The data presented in this report is presented in a manner designed to set forth fairly, in all material respects, the financial position and results of operations of the district as measured and reported by the financial activity of its various funds. All disclosures necessary to enable the reader to gain an adequate understanding of the district s financial affairs have been included. To facilitate readability, the Comprehensive Annual Financial Report is presented in three sections as described below: The Introductory Section includes a table of contents, directory of officials, school district organizational chart, certificate of excellence in financial reporting and this transmittal letter. The Financial Section includes our independent auditor s report as well as management s discussion and analysis of the performance of the district for the fiscal period. The financial section also includes government-wide financial statements, governmental fund financial statements, fiduciary fund financial statements, the notes to the financial statements, required supplementary information and supplemental data. The Statistical Section includes comparative and trend tables and schedules intended to provide additional information based on data from the financial history of the district for the past ten years, including debt, and demographic statistics. Information in this section is unaudited. 915 Fourth Street Northeast Auburn, WA (253)

11 REPORTING ENTITY This report includes all funds and account groups of the district, an independent reporting entity. Unaffiliated with the City of Auburn or other government jurisdictions, the district provides public education to pre-school through twelfth grade students. The public education provided includes a strong academic program of basic education, a comprehensive education for special education students, including preschool, a career and technical education program at the secondary level, a special program for academically gifted students, and alternative programs for those students requiring individualized learning opportunities. ECONOMIC CONDITION AND OUTLOOK OF LOCAL ECONOMY Located 25 miles south of Seattle and 10 miles northeast of Tacoma, Auburn is enjoying an increasingly diversified economy made possible by its location, its greatest economic asset. Near two major ports, two excellent rail hubs and the intersection of two major state highways, Auburn has attracted successful regional warehouse and distribution facilities, a regional medical center, entertainment facilities such as casinos and an amphitheater, a regional shopping mall and federal agencies such as the Federal Aviation Administration (FAA), the Social Security Administration and Region 10 of the U.S. General Services Administration (GSA). As the district s largest employer, the Boeing Fabrication Division continues to shrink its footprint in Auburn. Other businesses such as Zones, Inc. and Safeway have stepped in to utilize prime vacant warehouse and office space. Boeing s ongoing consolidation efforts are creating opportunities for major employers to take advantage of Auburn s location and economical commercial lease rates. Although Boeing has reduced its size in Auburn, long range company plans call for redefining Auburn as an emergent manufacturing center of excellence the place Boeing turns to when it needs complex machining or specialized parts. As evidence of these plans, Boeing completed its layoffs earlier in the year and has added 200 employees in the last two months. A bright spot in the local economy continues to be the economically successful ventures of the Muckleshoot Indian Tribe. As the second largest employer in the district, the tribe operates a casino generating $2 million dollars a day in revenue, a bingo hall, an amphitheater for large outdoor concerts by big name entertainers such as Cher, small shopping malls and smoke shops. Lack of casino parking became such an issue that the tribe just finished constructing a seven story $20 million parking garage for casino patrons. The tribe contributes almost $500,000 a year to the district for educational programs for Native American students. With a large stock of affordable housing as well as large new residential developments, Auburn continues to be a popular choice for young families. Conveniently located between Seattle and Tacoma as well as being close to several large employers such as Weyerhaeuser, the SuperMall and other large Boeing plants, Auburn residents enjoy short commutes and have time to participate in school and community activities. MAJOR INITIATIVES Auburn Mountainview High School is currently under construction on Auburn s Lea Hill. It is scheduled to open, September Financed by the issuance of $54,000,000 in general obligation bonds, it will be the fourth high school for the district. Despite concerns about the economy, on February 4, 2003, 68.3% of Auburn voters chose to alleviate overcrowding at the 915 Fourth Street Northeast Auburn, WA (253)

12 district s other high schools, among the largest in the state. With the completion of this high school, the vision of three decades of citizen ad hoc committees will be realized. The committees envisioned elementary schools with enrollment of 475 to 600 students; middle schools with enrollment of 650 to 800 students and four year high schools with enrollment of 1,500 to 1,800 students. Successful partnership with local community members in the planning process during the last three decades, wisely led the board to create the fourth Ad Hoc Advisory Committee of Citizens in October, During the year long process, the committee will study and develop recommendations in the following four areas: The need for new facilities and renovations of existing facilities for the next ten years The district s instructional technology program The district s role in childhood fitness and nutrition Community use of district facilities and equipment. As part of their study, the Ad Hoc Advisory Committee of Citizens will need to consider that the property located on the southern boundary of the district will have an estimated 3,400 new housing units valued at $600 million by the year The new homes are expected to generate an enrollment increase of approximately 1,400 students who will need new school facilities within a few short years. These new schools will require bond issues because current impact fees on the construction of new residential units will be insufficient to cover the costs. Currently, voters are being asked to pass a $32.65 million bond issue for an elementary school in this area as well as a new elementary school on the rapidly growing northern boundary of the district. As the committee studies the district s instructional technology program, it will review the progress the district has made upgrading computer equipment and technology infrastructure with the funds from the $13 million six-year capital levy passed in The goal of providing one computer for every four students is becoming a reality in our schools. These resources also provided a new student management software system that allows teachers and administrators access to data to enhance student achievement. Currently voters are being asked to approve a $12 million six-year instructional technology levy to replace the 1998 levy which is expiring in Auburn School District voters approved an educational programs and operations levy by a majority of 63.84% and a bus levy by a majority of 64.53% on February 3, The educational programs and operations levy will provide funds for those programs under funded by the state s basic education allocations. The bus levy will replace aging buses and add additional buses to transport students to the new Auburn Mountainview High School. In calendar year 2005, the educational programs levy will be $18.2 million and the bus levy will be $760,000; in calendar year 2006, the educational programs levy will be $19.1 million and the bus levy will be $1,340,000. Since the district advance refunded the 1997 bonds on January 26, 2004, the tax rate for 2005 and 2006 for these levies will be less than the rate for If voters approve the new bond issue and instructional technology levy, the 2005 and 2006 tax rates are projected to be $5.35 per $1,000 of assessed valuation or the same as the 2004 tax rate. Budgetary Control BUDGETARY AND INTERNAL CONTROL STRUCTURE 915 Fourth Street Northeast Auburn, WA (253)

13 Budgetary control is maintained at the fund level that is the legal level of budgetary control. The district records encumbrances when a commitment is made for the acquisition of goods or services in order to facilitate effective budgetary control. Encumbered amounts lapse at the end of the fiscal year. However, they are generally reappropriated as a part of the following annual budget. Internal Control Structure The district s administration is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the district are protected from loss, theft or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by administration. Accounting System The district s accounting records reflect generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board on governmental accounting in its Codification of Government Accounting and Financial Reporting Standards, June 30, 2002, and subsequent statements and interpretations. The district s accounting records for general governmental operations are maintained on a modified accrual basis as prescribed by the Washington State School Accounting Manual, September 1, 1993 edition, as revised. CASH MANAGEMENT Cash temporarily idle during the year was invested in the King County Investment Pool. The pool invests in long-term notes, certificates of deposit, banker's acceptances and repurchase agreements. The district's deposit and investment activities are defined by State law (RCW ). Deposits can only be made with institutions which have been approved by the Public Deposit Protection Commission and which have segregated eligible collateral having a value of not less than their maximum liability. All investments held by the district, during the year and on August 31, 2004, are classified in the category of lowest credit risk as defined by the Governmental Accounting Standards Board. Average maturity of investments in the King County Investment Pool was 2.48 years enabling the pool to earn a greater return than any single district could with shorter-term liquidity requirements. District participation in the pool was approximately 1.89% of total pool assets of $3.3 billion. Rates on investments declined during the year from a high of 2.86% at the beginning of the fiscal year to a low of 2.21% at the end of the year in August As shown in the following table, compared to the prior year, investment earnings increased in the General, Special Revenue and Capital Projects funds because balances in these funds were high enough to offset the decline in rates. In particular, balances in the Capital Projects Fund from the prior year bond sale remained invested while awaiting disbursement to the contractor on the high school construction project. This was not the case for the Debt Service and Transportation Vehicle funds where balances were not high enough to offset declining rates. Revenue from the state to replace school buses was 30% less than the prior year in the Transportation Vehicle Fund. 915 Fourth Street Northeast Auburn, WA (253)

14 Investment Earnings Increase Increase Fund Decrease Decrease General 186, ,003 37, % Special Revenue 22,541 21,269 1, % Debt Service 100, ,342 (1,044) -1.03% Capital Projects 657, , , % Transportation Vehicle 6,297 15,714 (9,417) % Private Purpose Trust 8,999 7,973 1, % Total 981, , , % See the Notes to the Financial Statements for additional information. RISK MANAGEMENT For liability and property losses, the district participates in the Washington Schools Risk Management Pool administered by Puget Sound Educational Service District No Working with the Pool, the District has established risk control techniques to reduce possible losses to property owned by the District. In addition, Pool participation has reduced the carrying cost of insurance primarily due to the greater buying power of the Pool as well as the practice of using large deductible amounts. Should losses occur, the portion of the uninsured loss is not expected to significantly impact the financial position of the district. For industrial insurance for all district employees, the district participates in the Workers Compensation Trust administered by Puget Sound Educational Service District No The Trust has been successful in lowering the cost of claims through an aggressive employee safety program and an effective claim management process. INDEPENDENT AUDIT State statutes require an annual audit of all state school districts by the Office of the State Auditor. The scope of the audit concentrated on four areas: (1) internal controls; (2) grant compliance; (3) financial statements; and (4) generally accepted accounting principles. This requirement has been complied with and the independent auditor s opinion has been included in this report. The district is also required to undergo an annual single audit in conformity with federal law. The auditor s report related to the single audit, including the schedule of federal financial assistance, and reports on the internal control structure and compliance with applicable laws and regulations will be published in a separate report. Copies may be obtained from The Office of the State Auditor Legislative Building, PO Box Olympia, Washington Fourth Street Northeast Auburn, WA (253)

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16 915 Fourth Street Northeast Auburn, WA (253)

17 Financial Section Building the Future Independent Auditor s Opinion Management s Discussions and Analysis Government-Wide Financial Statements Governmental Fund Financial Statements Fiduciary Fund Financial Statements Notes to the Financial Statements Required Supplementary Information Supplemental Data

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19 MANAGEMENT S DISCUSSION AND ANALYSIS As management of Auburn School District No. 408, we offer readers of the district s comprehensive annual financial report (CAFR) this narrative overview and analysis of the financial activities of the district for the fiscal year ended August 31, FINANCIAL HIGHLIGHTS The district s net assets of governmental activities as of August 31, 2004 were $121.5 million. During the year, the district had revenues that were $11.7 million higher than the $108.9 million in expenses incurred for all governmental activities, resulting in a corresponding increase in the district s net assets. The general fund expenditures exceeded revenues by $368,367. On February 3, 2004, Auburn voters approved the educational programs levies for 2005 and 2006 by 63.84% and the bus levies by 64.53%. The levies for calendar year 2005 will be $18.2 million and $760,000 and for 2006, $19.1 million and $1,340,000 respectively. The district advance refunded the 1997 series bonds on January 26, The total net savings were $1.5 million. On August 9, 2004, the district sold $18 million bonds which was the second and final sale of the $54 million bond issue approved by the voters in February Proceeds are being used to complete Auburn Mountainview High School, scheduled to open in September OVERVIEW OF THE FINANCIAL STATEMENTS This report consists of three parts: an introductory section, a financial section, and a statistical section. The financial section includes the independent auditor s report, management s discussion and analysis, the basic financial statements and related notes to the financial statements. The basic financial statements consist of a series of statements that present different financial views of the district: The first two statements are district-wide financial statements that provide both shortterm and long-term information about the district s overall financial status and activities. For district activities, these statements tell how these services were financed in the short term as well as what remains for future spending. All of the remaining statements are fund financial statements that report district operations in more detail by providing information about the district s most significant funds. Information is also provided about activities for which the district acts solely as a trustee for the benefit of those outside of the government

20 DISTRICT-WIDE FINANCIAL STATEMENTS The district-wide financial statements are designed to provide a broad overview of district finances, similar to a private-sector business. The statement of net assets presents information on all of the assets and liabilities of the district. The difference between the two is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the district is improving or deteriorating. The statement of activities presents information showing how the district s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying financial event takes place, regardless of when the cash is actually received or disbursed. Thus, revenues and expenses are reported in this statement for some items that will result in cash receipts or disbursements in future fiscal periods. Earned but unused vacation leave and uncollected taxes are examples of these types of items. FUND FINANCIAL STATEMENTS A fund is a group of related accounts used to maintain control over resources segregated for specific activities or objectives. The district uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All district funds can be divided into two categories: governmental funds and fiduciary funds. GOVERNMENTAL FUNDS Governmental funds account for essentially the same functions reported as governmental activities in the district-wide financial statements. However, unlike these statements, governmental fund financial statements focus on how money flows into and out of the funds and the balances left at year-end that are available to spend. These funds use an accounting method called modified accrual accounting which measures cash and all other financial assets that can easily be converted to cash. Such information may be useful in evaluating the district s ability to finance the district s educational programs and support operations in the near future. Because the focus of governmental funds is narrower than that of the district-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the district-wide financial statements. By doing so, readers may better understand the long-term impact of the district s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balance for the General Fund, Associated Student Body (ASB) Fund, Capital Projects Fund, Transportation Vehicle Fund and the Debt Service Fund, all of which are considered major funds. FIDUCIARY FUNDS The district is the trustee or fiduciary, for individuals, private organizations and other governments for scholarships and other specific purposes. All of the district's fiduciary activities are reported in a separate statement of fiduciary net assets and changes in fiduciary net assets

21 under the fiduciary financial statement section. These activities are excluded from the district's other financial statements because the district cannot use these assets to finance its operations. The district is responsible for ensuring that the assets reported in these funds are used for their intended purposes. DISTRICT-WIDE FINANCIAL ANALYSIS STATEMENT OF NET ASSETS Net assets may serve as a useful indicator of the district s financial position. Auburn School District s assets exceed liabilities by $121,456,650 at the end of the fiscal year, August 31, A large portion (47.4%) of net assets is the investment in capital assets such as land, buildings and equipment less any related outstanding debt used to acquire those assets. The district continues to build and modernize various schools to meet student needs. These assets are not available for future spending. Resources to repay this debt come from property tax levies. Another 47.6% of the net assets are subject to restrictions on how they may be used. The balance of net assets can be used to finance normal district operations without constraints established by debt practices, enabling legislation, or other legal requirements. Condensed Statement of Net Assets as of August 31, 2004 and 2003 Governmental Activities Current and other assets $ 81,400,518 $ 78,528,346 Capital assets 175,931, ,336,253 Total assets 257,332, ,864,599 Other liabilities 6,693,809 6,956,187 Long-term debt outstanding 129,181, ,113,498 Total liabilities 135,875, ,069,685 Net assets Invested in capital assets, net of related debt 62,621,344 52,051,597 Restricted 55,324,350 52,293,388 Unrestricted 3,510,956 5,449,929 Total Net Assets $ 121,456,650 $ 109,794,914 STATEMENT OF ACTIVITIES Governmental activities improved the district s overall financial position, increasing the district s net assets by $ 11,661,

22 Revenues Changes in Net Assets Governmental Activities For the Fiscal Years Ended August 31, 2004 and 2003 Program Revenues Charges for services $ 4,320,810 $ 4,179,036 Operating grants and contributions 19,947,656 19,228,885 Capital grants and contributions 7,621,845 1,961,995 General revenues Property taxes for levies for educational programs 17,328,159 17,119,687 Property taxes for levies for debt service 14,070,114 12,357,961 Property taxes for levies for technology equipment 2,419,182 2,498,520 Unallocated state apportionment and other 53,947,687 52,493,877 Interest and investment earnings 950, ,068 Total revenues 120,605, ,648,029 Expenses Regular instruction 58,513,045 56,468,409 Special instruction 7,247,797 6,758,195 Vocational instruction 5,303,815 5,376,015 Compensatory education 7,629,317 7,827,551 Other instructional programs 919,938 1,030,121 Community services 293, ,390 Support services 12,324,744 11,611,994 Child nutrition services 3,031,509 3,017,129 Pupil transportation services 4,712,158 4,196,284 Extracurricular activities (ASB) 2,007,567 1,791,093 Interest on long-term debt 6,960,305 5,421,957 Total Expenses 108,944, ,778,138 Increase (decrease) in Net Assets 11,661,736 6,869,891 Beginning Net Assets 109,794, ,925,023 Ending Net Assets $ 121,456,650 $ 109,794,914 FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS GOVERNMENTAL FUNDS The focus of the district s governmental funds is to provide information on short-term cash inflows, outflows, and balances of spendable resources. Such information is useful in assessing the district s financing requirements. GENERAL FUND The General Fund is the major operating fund of the district, providing the majority of the resources for educational programs and support operations

23 GENERAL FUND REVENUES Revenues for the General Fund totaled $ 93,538,478 in the fiscal year ending August 31, 2004, This was $2,909,221 or 3.11% more than the prior year. Revenue Source Increase Amount Increase Percent Local Taxes & Non-taxes $ 20,305,962 $ 19,474,912 $ 831, % State Revenues 65,048,689 63,780,148 1,268, % Federal Revenues 7,533,537 6,691, , % Other Revenues 650, ,894 (32,604) -5.01% Totals $ 93,538,478 $ 90,629,257 $ 2,909, % The increase of $831,050 in local taxes and other local sources was primarily due to the increase in the special property tax levies approved by the voters. Calendar year 2004 levy was $17,500,000 compared to the 2003 levy of $16,848,580 and the 2002 levy of $15,700,000. Larger state revenues of $1,268,541 were the result of increased student enrollment over the prior year. Since state revenues are calculated on a per student basis, more students generate more revenue for all state educational programs as well as increased funding for special education, I 728 student achievement programs, and transportation. Almost half of the increase in federal revenues of $842,234, or $402,453, was provided by Federal Individuals with Disabilities (IDEA) legislation for special education. Title I legislation increased funding by $237,899, the Federal No Child Left Behind (NCLB) act provided $103,945 in new dollars to improve student achievement and the USDA free and reduced breakfast and lunch programs generated an additional $175,164. These increases were offset by a decrease of $108,855 in Medicaid Administrative Match funds caused by federal administrative changes in the application of the allocation formulas. Other revenues decreased 5.01% or $32,604. The 5.5 % increase in funds from Dieringer School District, a neighboring school district that sends high school students to Auburn because it does not have a high school, was offset by a decrease in grants from King County. A King County grant of $56,000 in 2003 for improvements to the district swimming pool was not replicated in Revenue Sources 7.39% Federal Sources.75% Other 21.49% Local Sources 70.37% State Sources GENERAL FUND EXPENDITURES Expenditures in the General Fund totaled $93,906,845 for the fiscal year. This represents an increase of $4,569,255 or 4.87% over the prior year

24 GENERAL FUND EXPENDITURES Increase (Decrease) Amount Increase (Decrease) Percent Current Regular Instruction $ 54,074,433 $ 50,738,718 $ 3,335, % Special Education 6,966,441 6,415, , % Vocational Instruction 4,985,802 4,952,534 33, % Compensatory Education 7,255,260 7,401,506 (146,246) -2.02% Other Instructional Programs 854, ,683 (134,254) % Community Services 292, ,741 16, % Support Services 11,947,104 11,412, , % Child Nutrition Services 2,970,835 2,800, , % Pupil Transportation Services 4,141,889 3,701, , % Capital Outlay Equipment 418, ,386 (232,219) % Totals $ 93,906,845 $ 89,337,590 $ 4,569, % The largest increase of $3,335,715 in regular instruction as well as increases of $170,319 in child nutrition services and $440,691 in pupil transportation services were primarily due to increased student enrollment requiring additional teachers, cooks, bus drivers and other staff. Additional expenditures of $550,518 in special education reflect increased federal funding enabling more services to be provided to special needs children. Of the increase of $534,719 in support service expenditures, $244,077 was for increased insurance costs. Also included in support service expenditure increases were additional costs of $105,489 for utilities, $122,115 for information technology services and $75,172 for building security. The decrease of $146,246 in compensatory education programs was the result of an elimination of a state grant that was offset by increases in several other grants. The loss of $686,467 for the elimination of the alternative routes to teacher certification grant was partially offset by increases of $258,212 for Title I, $112,370 for NCLB, and $95,960 for the State Learning Assistance Program (LAP). The decrease of $134,254 in other instructional programs was due to the elimination of two state programs that was offset by an increase in a local educational program. The two state programs were the flexible education fund which resulted in a loss of $209,453 and the state traffic safety funds for driver training which amounted to a reduction of $57,668. However the Muckleshoot Indian Tribe increased funds for Indian educational program by $120,789 to a total of $483, % Support Services.75% Capital Outlay % Transportation % Nutrition 0.31 % Community Services Expenditure Uses % Instruction

25 SPECIAL REVENUE FUND The Special Revenue Fund, like the General Fund, is considered a major fund for fiscal year reporting purposes. Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. In the state of Washington, the only fund designated as a special revenue fund is the Associated Student Body (ASB). This fund is financed, in part, by the establishment and collection of fees from students and non-students as a condition of their attendance at any optional noncredit extracurricular event of the district. Increase (Decrease) Beginning Fund Balance $ 1,073,943 $ 1,074,014 $ (71) Revenues 1,876,791 1,786,305 90,486 Expenditures (1,994,743) (1,786,376) (208,367) Ending Fund Balance $ 955,991 $ 1,073,943 $ (117,952) DEBT SERVICE FUND Also a major fund for fiscal year , the Debt Service Fund is used to account for the payment of principal, interest, and related expenditures related to the redemption of outstanding bonds. The Debt Service Fund is financed from voter-approved levies sufficient to meet the annual payments of principal, interest and other expenditures related to the redemption of the bonds. The district s fiscal agent, the Bank of New York, makes principal and interest payments on behalf of the district. Increase (Decrease) Beginning Fund Balance $ 7,177,361 $ 4,973,019 $ 2,204,342 Revenue 13,078,315 12,459, ,012 Expenditure (14,108,263) (12,200,086) (1,908,177) Bond Premium and Other Revenue 771,294 1,945,125 (1,173,831) Ending Fund Balance $ 6,918,707 $ 7,177,361 $ (258,654) CAPITAL PROJECTS FUND The Capital Projects Fund is also a major fund for the fiscal reporting period. Capital projects funds account for financial resources to be used for the acquisition or construction of major capital facilities. Increase (Decrease) Beginning Fund Balance $ 41,192,445 $ 6,385,042 $ 34,807,403 Revenues 5,560,729 4,506,732 1,053,997 Expenditures (26,505,522) (5,699,329) (20,806,193) Sale of Bonds 22,800,000 36,000,000 (13,200,000) Ending Fund Balance $ 43,047,652 $ 41,192,445 $ 1,855,207 During the fiscal year, Capital Projects Fund expenditures of $24,275,574 for the new high school were financed primarily from the sale of $54 million in voted unlimited general obligation bonds. $36 million of these bonds were sold in 2003 and the remaining $18 million in In addition, the district received $4.8 million in bond proceeds from neighboring Dieringer School District. These bonds are the liability of Dieringer School District for the construction of the new high school. Since this district does not have a high school and sends its students to Auburn School District for high school, it is legally obligated to fund a portion of the construction of Auburn Mountainview High School

26 Capital Projects Fund expenditures of $189,712 for new portables to alleviate overcrowding at district schools and $523,695 for site preparation and design work for a new elementary school were financed from impact fees from developers. Other expenditures for new computers and other instructional technology equipment of $1,174,043 were financed by the fifth and sixth years of a six year special tax levy approved by the voters in The remaining revenues from the lease of surplus real property and investment earnings were used to fund other building improvements of $342,228. TRANSPORTATION VEHICLE FUND The Transportation Vehicle Fund is also a major fund for fiscal reporting purposes. The Transportation Vehicle Fund is used to account for the state reimbursement for depreciation of approved pupil transportation equipment and for the purchase and major repair of such equipment. In addition to state funds, the Transportation Vehicle Fund can be financed from the proceeds of special tax levies and interest earnings. Increase (Decrease) Beginning Fund Balance $ 23,639 $ 78,514 $ (54,875) Revenues 339, ,656 (154,681) Expenditures (1,501) (549,531) 548,030 Sale of Surplus Buses 32,065-32,065 Ending Fund Balance $ 394,178 $ 23,639 $ 370,539 FIDUCIARY FUNDS Fiduciary funds are not reported in the district-wide financial statements. Fiduciary funds are reported in the Fiduciary Statement of Net Assets and Statement of Changes in Fiduciary Net Assets. These activities are excluded from the district s other financial statements because the district cannot use these assets to finance its operations. Trust and agency funds account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include Private Purpose Trust Funds. PRIVATE PURPOSE TRUST FUND The Private Purpose Trust Fund was created to act as a custodian for funds, such as scholarships, held for the benefit of private individuals and organizations. These funds are not used for the benefit of the district. The district does not budget for the Private Purpose Trust Fund. During the fiscal reporting period, the Private-Purpose Trust Fund received donations of $151,856, earned $8,999 on investments and incurred disbursements of $98,871. Net assets at the end of the year totaled $492,681. MAJOR FUND BUDGETARY HIGHLIGHTS Appropriations are a prerequisite to expenditures in the governmental funds. Appropriations lapse at the end of the fiscal year. The original fiscal year budget adopted by the Board of Directors for the district totaled $157,057,467, including General Fund appropriations of $94,670,884, Special Revenue Fund (ASB) appropriations of $2,066,724, Debt Service Fund appropriations of $14,569,859, Capital Projects Fund appropriations of $45,500,000, and Transportation Vehicle Fund appropriations totaling $250,000.. The Board may adopt a revised or supplemental budget appropriation after a public hearing anytime during the fiscal year. During the year, the Board adopted a revised General Fund

27 budget increasing appropriations by $2,729,252 to $97,400,136 and a revised Transportation Vehicle Fund budget increasing appropriations by $114,000 to $364,000. General Fund expenditures were increased to accommodate an increase in enrollment larger than projected. Transportation Vehicle Fund was adjusted to expend a greater than anticipated allocation from the state for replacing buses. CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The District s investment in capital assets for its governmental type activities as of August 31, 2004 amounted to $175,931,757 (net of accumulated depreciation of $64,663,885). This investment in capital assets includes land, buildings, building improvements, furniture and equipment. During the year, completed projects for building improvements capitalized as fixed assets with a unit cost of $100,000 or more totaled $1,587,156. Equipment additions capitalized as fixed assets with a unit cost of $5,000 or more amounted to $348,559 primarily for computers and other instructional technology. Construction in progress increased by $26,505,522 as work on Auburn Mountainview High School continued and site preparation and preliminary design work on a new elementary school began. Work on the new high school started in May 2003 and will be completed when it opens in September See Note 4, Changes in Capital Assets, for more information. CAPITAL ASSETS Capital Assets Accumulated Depreciation Net Land $ 12,034,296 $ - $ 12,034,296 Building & Improvements 175,497,932 (54,693,813) 120,804,119 Equipment 13,232,139 (9,970,072) 3,262,067 Construction In Progress 39,831,275-39,831,275 Total $ 240,595,642 $ (64,663,885) $ 175,931,757 DEBT ADMINISTRATION At the end of the current fiscal year, the district had $127,180,000 in unlimited general obligation bonds outstanding. This debt is secured by a pledge of the full faith and credit of the district. $9,555,000 of that debt is due within the next twelve months. During the year the district advanced refunded $26 million of the 1997 bonds. The District also issued the $18 million of general obligation debt that remained unissued from the $54 million construction bond approved by the voters in February The Washington State Constitution and the Revised Code of Washington and limit the amount of general obligation (GO) debt that may be issued. With a vote of the people, debt cannot be incurred in excess of 5% of the value of the taxable property of the district, provided the indebtedness in excess of 2.5% is for capital outlay. For the fiscal year ended August 31, 2004, the maximum GO debt authorized by statutory limit was $316.7 million. The district had $127.2 million of debt outstanding at August 31, 2004, that was subject to that limitation leaving a legal debt margin of $189.5 million. The District s bond rating from Moody s Investor Service has been A1 since Standard and Poor s rating is A+. Additional information on the district s bonded debt obligations is presented in Note 7. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES The appropriations for governmental funds of the district were approved at

28 $169,397,595. For calendar year 2004, the total property tax rate for special levies is $5.35 per thousand dollars of assessed property value. The projected rate for 2005 is also $5.35. Total assessed value grew by 6.2% from $5,961,873,765 to $6,333,191,792 during For 2005, the projected increase is 4.7% to $6,628,626,867. The district serves the City of Auburn as well as the City of Pacific, the City of Algona and portions of unincorporated King and Pierce Counties. The local economy is expected to continue recovering slowly. Revenue forecasts reflect fairly static growth in General Fund revenues. Employment is expected to show signs of improvement comparable to projected national growth rates. The Boeing Company is the largest single employer in the City of Auburn. Other major employers include the Auburn School District, the Muckleshoot Tribal Casino, Auburn Regional Medical Center, Green River Community College, Emerald Downs Racetrack, the Social Security Administration, the Federal Aviation Administration and the Auburn Supermall. In 1990, Boeing accounted for 71% of all jobs in the City of Auburn. Today, Boeing jobs account for only 40% of the employment base in Auburn as the local economy continues to diversify. The projected future shape of the Boeing Company includes the Auburn Fabrication plant. As Boeing surplused buildings, regional distribution centers jumped in to take advantage of Auburn s location in the Puget Sound transportation corridor. Location was the primary reason Safeway purchased 115 acres of surplus Boeing land for a distribution center. The Safeway complex includes two warehouse buildings, a 766,000 square foot grocery and dry goods warehouse, a 514,000 square foot refrigerated warehouse for perishables, a truck shop, recycle center and administrative offices. Eight Boeing Company buildings that have been empty for years have been demolished to make way for the warehouse complex, which will be developed in three phases between 2004 and The distribution center is expected to employ about 850 people. Another 800 or so jobs such as contractors and suppliers will also be created. These 1,600 new workers are expected to take home around $47 million over the next decade. Over the last decade, Auburn s location has enabled it to diversify from primarily aircraft manufacturing to becoming a regional hub for wholesale distribution centers, entertainment complexes, medical centers, a large shopping mall, a commuter rail center and federal government administration centers. Auburn should continue to reap economic benefits from its location far into the future. REQUESTS FOR INFORMATION This financial report is designed to provide the district s citizens, taxpayers, customers, investors and creditors with a general overview of the district s finances and to demonstrate the district s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Toni Lally, CPA Executive Director of Business Services Auburn School District No th Street NE Auburn, WA Or visit the district s website at

29 Building the Future

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

31 Schedule 1 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF NET ASSETS August 31, 2004 Note # Primary Government Governmental Activities ASSETS Cash and Cash Equivalents 1.E.1 and 2 $ 59,905,601 Property Tax Receivable 1.E.2 16,749,918 Receivables, Net 1.E.3 258,130 Due from Other Governments 1.E.4 2,572,623 Inventories 1.E.6 708,662 Capital Assets, not being depreciated Land 4 $ 12,034,296 Construction-in-progress 5 39,831,275 Total capital assets, not being depreciated 51,865,571 Capital Assets, being depreciated - Buildings & Improvements 4 175,497,932 Equipment 4 13,232,139 Total capital assets, being depreciated 188,730,071 Less accumulated depreciation 4 (64,663,885) Total capital assets, net of accumulated depreciation 124,066,186 Capital assets, net of accumulated depreciation 175,931,757 Unamortized Bond Issuance Costs 7.B 1,205,584 TOTAL ASSETS 257,332,275 LIABILITIES Accounts Payable 3,300,916 Accrued Wages & Benefits Payable 631,251 Accrued Interest 1,488,183 Deferred Revenue 1.E.9 283,365 Long-Term Liabilities Due within one year 7.A 9,248,365 Due in more than one year 120,923,545 TOTAL LIABILITIES 135,875,625 NET ASSETS Invested in capital assets, net of related debt 62,621,344 Restricted for: Capital Projects 43,047,652 Debt Service 6,918,707 Other Purposes 4,402,000 Other Activities 955,991 Unrestricted 3,510,956 TOTAL NET ASSETS $ 121,456,650 The notes to the financial statements are an integral part of this statement. -19-

32 Schedule 2 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF ACTIVITIES For the Year Ended August 31, 2004 Functions/Programs Expenses Charges for Service PROGRAM REVENUES Operating Grants and Contributions Capital Grants and Contributions NET (EXPENSE) REVENUE AND CHANGES IN NET ASSETS PRIMARY GOVERNMENT Governmental Activities Primary Government: Governmental Activities: Regular Instruction $ 58,513,045 $ 303,794 $ - $ 7,621,845 $ (50,587,406) Special Instruction 7,247,797-7,072,669 - (175,128) Vocational Instruction 5,303, , ,692 - (4,660,102) Compensatory Education 7,629,317-7,810, ,383 Other Instructional Programs 919,938 25, ,496 - (21,342) Community Services 293, ,728 2,250 - (69,849) Support Services 12,324, ,463 69,216 - (12,151,065) Child Nutrition Services 3,031,509 1,229,272 1,962, ,384 Pupil Transportation Services 4,712,158 34,641 2,038,012 - (2,639,505) Extracurricular Activities (ASB) 2,007,567 1,876, (130,776) Interest Expense on Long-Term Debt 6,960, (6,960,305) Total Governmental Activities $ 108,944,022 $ 4,320,810 $ 19,947,656 $ 7,621,845 $ (77,053,711) General Revenues: Taxes: Property taxes, levies for educational programs 17,328,159 Property taxes, levies for debt service 14,070,114 Property taxes, levies for technology equipment 2,419,182 Unallocated State Apportionment & Others 53,947,687 Interest and Investment earnings 950,305 Total General Revenues 88,715,447 Changes in Net Assets 11,661,736 Net Assets - Beginning 109,794,914 Net Assets - Ending $ 121,456,650 The notes to the financial statements are an integral part of this statement. -20-

33 Governmental Fund Financial Statements Building the Future The governmental fund financial statements consist of major governmental funds: 1. General Fund 2. Special Revenue Fund (Associated Student Body) 3. Debt Service Fund 4. Capital Projects Fund 5. Transportation Vehicle Fund The governmental funds focus primarily on the sources, uses, and balances of current financial resources and the modified accrual basis of accounting.

34 Schedule 3 AUBURN SCHOOL DISTRICT NO. 408 FUND BALANCE SHEETS - GOVERNMENTAL FUNDS August 31, 2004 GENERAL FUND SPECIAL REVENUE FUND (ASB) DEBT SERVICE FUND CAPITAL PROJECT FUND TRANSPORT- ATION VEHICLE FUND TOTAL GOVERNMENTAL FUNDS ASSETS: Cash and Cash Equivalents $ 7,950,733 $ 1,010,224 $ 6,180,716 $ 44,370,440 $ 393,488 $ 59,905,601 Property Tax Receivable 8,773,713-6,887,480 1,247, ,908,940 Accounts Receivable, Net 154, ,346 Interest Receivable 15,246 1,724 10,783 74, ,784 Due From Other Funds 25, , ,154 64,366-1,119,671 Due From Other Government Units 866, ,706,009-2,572,623 Inventories at Cost 689,289 19, ,662 TOTAL ASSETS 18,476,118 1,315,295 13,825,133 47,462, ,201 81,473,627 LIABILITIES: Accounts Payable 781,286 89,004-2,401,121-3,271,411 Accrued Liabilities 612,305-18, ,251 Due To Other Funds 382, ,383-1,149,176 Deferred Revenue 8,787, ,548 6,887,480 1,247, ,192,305 TOTAL LIABILITIES 10,563, ,304 6,906,426 4,415, ,244,143 FUND BALANCES Unreserved: Designated for Opening New School 3,776, ,776,000 Designated for Inventory Replacement 326, ,000 Designated for Self Insurance 300, ,000 Designated for School Construction and Equipment ,047,652-43,047,652 Undesignated 3,510, ,991 6,918, ,178 11,779,832 TOTAL FUND BALANCES 7,912, ,991 6,918,707 43,047, ,178 59,229,484 TOTAL LIABILITIES AND FUND BALANCES $ 18,476,118 $ 1,315,295 $ 13,825,133 $ 47,462,880 $ 394,201 $ 81,473,627 The notes to the financial statements are an integral part of this statement. -21-

35 AUBURN SCHOOL DISTRICT NO. 408 RECONCILIATION BALANCE SHEET/STATEMENT OF NET ASSETS August 31, 2004 Schedule 3A Total Governmental Funds Long-Term Assets, Liabilities * Reclassifications and Eliminations* Statement of Net Assets Totals ASSETS Cash and Cash Equivalents $ 59,905,601 $ - $ - $ 59,905,601 Property Tax Receivable 16,908,940 (159,022) - 16,749,918 Receivables, Net 155, ,346 Interest Receivable 102, ,784 Due from Other Funds 1,119,671 - (1,119,671) - Due from Other Governments 2,572, ,572,623 Inventories 708, ,662 Capital Assets, Net 175,931, ,931,757 Unamortized Bond Issue Costs 1,205,584-1,205,584 TOTAL ASSETS 81,473, ,978,319 (1,119,671) 257,332,275 LIABILITIES Accounts Payable 3,271,411-29,505 3,300,916 Accrued Liabilities 631, ,251 Due to Other Funds 1,149,176 - (1,149,176) - Accrued Interest 1,488,183 1,488,183 Deferred Revenue 17,192,305 (16,908,940) - 283,365 Long-Term Liabilities 130,171, ,171,910 TOTAL LIABILITIES 22,244, ,751,153 (1,119,671) 135,875,625 FUND BALANCES/NET ASSETS Total Fund Balances/Net Assets 59,229,484 62,227, ,456,650 TOTAL LIABILITIES AND FUND BALANCES/NET ASSETS $ 81,473,627 $ 176,978,319 $ (1,119,671) $ 257,332,275 The notes to the financial statements are an integral part of this statement. * See Note 10A -22-

36 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 Schedule 4 GENERAL FUND SPECIAL REVENUE FUND (ASB) DEBT SERVICE FUND CAPITAL PROJECTS FUND TRANSPORTATION VEHICLE FUND TOTAL GOVERNMENTAL FUNDS REVENUES Local Taxes $ 17,012,830 $ - $ 12,978,017 $ 2,460,099 $ 2 $ 32,450,948 Local Non-Tax 3,293,132 1,876, ,298 3,068,130 6,295 8,344,646 State, General Purpose 53,199,920 - $ ,199,920 State, Special Purpose 11,848, ,678 12,182,447 Federal, General Purpose 180, ,885 Federal, Special Purpose 7,352, ,352,652 Revenues From Other Sources 650, , ,790 TOTAL REVENUES 93,538,478 1,876,791 13,078,315 5,560, , ,394,288 EXPENDITURES Current Operating: Regular Instruction 54,074, ,074,433 Special Instruction 6,966, ,966,441 Vocational Instruction 4,985, ,985,802 Compensatory Education 7,255, ,255,260 Other Educational Programs 854, ,429 Community Services 292, ,485 Support Services 11,947, ,947,104 Child Nutrition Services 2,970, ,970,835 Pupil Transportation Services 4,141, ,141,889 Extracurricular Activities (ASB) - 1,916, ,916,735 Debt Service: Principal - - 8,515, ,515,000 Interest and Other Charges - - 5,593, ,593,263 Capital Outlay: Sites ,305-92,305 Buildings and Bond Issuance Expenditures ,211,086-25,211,086 Equipment 418,167 78,008-1,202,131 1,501 1,699,807 TOTAL EXPENDITURES 93,906,845 1,994,743 14,108,263 26,505,522 1, ,516,874 Excess of Revenues Over (Under) Expenditures (368,367) (117,952) (1,029,948) (20,944,793) 338,474 (22,122,586) OTHER FINANCING SOURCES (USES) Sale of Equipment 5, ,065 37,459 Sale of Bonds ,294 22,800,000-23,571,294 TOTAL OTHER FINANCING SOURCES (USES) 5, ,294 22,800,000 32,065 23,608,753 NET CHANGE IN FUND BALANCE (362,973) (117,952) (258,654) 1,855, ,539 1,486,167 Fund Balances - September 1 8,275,929 1,073,943 7,177,361 41,192,445 23,639 57,743,317 Fund Balances - August 31 $ 7,912,956 $ 955,991 $ 6,918,707 $ 43,047,652 $ 394,178 $ 59,229,484 The notes to the financial statements are an integral part of this statement. -23-

37 AUBURN SCHOOL DISTRICT NO. 408 RECONCILIATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE STATEMENT OF ACTIVITIES August 31, 2004 Schedule 4A Total Governmental Funds Long-Term Revenue, Expenses * Capital Related items * Long-Term Debt Transactions * Statement of Activities Totals REVENUES AND OTHER SOURCES Property Taxes 32,450,948 $ 1,366,507 $ - $ - $ 33,817,455 Local Non-Taxes 8,344,646-4,844,963-13,189,609 State, General Purpose 53,199, ,199,920 State, Special Purpose 12,182, ,182,447 Federal, General Purpose 180, ,885 Federal, Special Purpose 7,352, ,352,652 Revenues From Other Sources 682, ,790 TOTAL 114,394,288 1,366,507 4,844, ,605,758 EXPENDITURES/EXPENSES Current: Regular Instruction 54,074,433 56,647 4,381,965-58,513,045 Special Instruction 6,966,441 1, ,238-7,247,797 Vocational Instruction 4,985,802 22, ,140-5,303,815 Compensatory Education 7,255,260 32, ,468-7,629,317 Other Instructional Programs 854,429 2,722 62, ,938 Community Services 292, ,827 Support Services 11,947,104 91, ,724-12,324,744 Child Nutrition Services 2,970,835 (2,585) 63,259-3,031,509 Pupil Transportation Services 4,141,889 8, ,743-4,712,158 Extracurricular Activities (ASB) 1,916,735-90,832-2,007,567 Debt Service: Principal 8,515, (8,515,000) - Interest and Other Charges 5,593, ,367,042 6,960,305 Capital Outlay: Sites 92,305 - (92,305) - - Buildings 25,211,086 - (25,211,086) - - Equipment 1,699,807 - (1,699,807) - - TOTAL EXPENDITURES/EXPENSES 136,516, ,229 (20,639,123) (7,147,958) 108,944,022 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (22,122,586) 1,152,278 25,484,086 7,147,958 11,661,736 OTHER FINANCING SOURCES (USES) Sale of Equipment 37,459 - (37,459) - - Sale of Bonds 23,571, (23,571,294) - TOTAL OTHER FINANCING SOURCES (USES) 23,608,753 - (37,459) (23,571,294) - NET CHANGE FOR THE YEAR $ 1,486,167 $ 1,152,278 $ 25,446,627 $ (16,423,336) $ 11,661,736 The notes to the financial statements are an integral part of this statement. * See Note 10B -24-

38 Fiduciary Funds Financial Statements Building the Future The fiduciary funds financial statements consist of the Private-Purpose Trust Fund. The fiduciary funds financial statements focus on net assets and changes in net assets. The Private-Purpose Trust Fund reports all trust arrangements under which principal and income benefit individuals, private organizations, or other governments.

39 AUBURN SCHOOL DISTRICT NO. 408 FIDUCIARY FUNDS STATEMENT OF NET ASSETS August 31, 2004 Schedule 5 Private-Purpose Trusts ASSETS Cash and Cash Equivalents $ 463,035 Interest Receivable 891 Due from Other Funds 29,505 TOTAL ASSETS 493,431 LIABILITIES Accounts Payable 750 TOTAL LIABILITIES 750 NET ASSETS Held in Trust for Scholarships and Student Aid 492,681 TOTAL NET ASSETS $ 492,681 The notes to the financial statements are an integral part of this statement. -25-

40 Schedule 6 AUBURN SCHOOL DISTRICT NO. 408 FIDUCIARY FUNDS STATEMENT OF CHANGES IN NET ASSETS For the Year Ended August 31, 2004 Private-Purpose Trusts ADDITIONS Donations $ 151,856 Investment Earnings 8,999 Total Additions 160,855 DEDUCTIONS Scholarships 84,550 Student Aid 14,321 Total Deductions 98,871 Change in Net Assets 61,984 Net Assets, Beginning of the year 430,697 Net Assets, End of the year $ 492,681 The notes to the financial statements are an integral part of this statement. -26-

41 Notes to the Financial Statements Building the Future

42 AUBURN SCHOOL DISTRICT NO. 408 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2004 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Auburn School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principals. The more significant accounting policies of the District are described below: A. REPORTING ENTITY The Auburn School District is a municipal corporation organized pursuant to Title 28A Revised Code of Washington (RCW) for the purpose of providing public school services to students in grades K-12. Auburn School District operates under an independently elected board of directors. Management of the district is appointed by and is accountable to the board of directors. Fiscal responsibility, including budget authority, the power to set fees, levy property taxes and issue debt consistent with provisions of state statutes, also rests with the board of directors. Based on the criteria specified in GASB Statement No. 14, The Financial Reporting Entity, the district has no component units. The district s Comprehensive Annual Financial Report includes all funds that are controlled by or dependent on the district s board of directors. Control by or dependence on the district was determined on the basis of budget adoption, taxing authority, outstanding debt secured by the general credit of the district, obligation of the district to finance any deficits that may occur, or receipt of significant subsidies from the district. B. BASIS OF PRESENTATION The accounts of the district are organized on the basis of funds in governmental fund financial statements, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The district s basic financial statements in this report consist of: 1). Government Wide Financial Statements Overall governmental activities are reported here without displaying individual funds or fund types and display information about the district as a whole. The Government-Wide financial statements do not include Fiduciary Funds. The government-wide financial statements consist of the following: a. Statement of Net Assets The Statement of Net Assets reports all financial and capital resources. Capital assets (land, land improvements, buildings, building improvements, vehicles, and equipment) are reported at historical cost, net of accumulated depreciation

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

44 IV). Capital Projects Fund This fund is used to account for the financial resources to be used for the construction or acquisition of major capital assets. This fund must be used when projects are financed wholly or in part by bond issues, intergovernmental resources, major private donations or insurance recoveries. This fund is also used to account for energy capital improvements. V). Transportation Vehicle Fund This fund is used to account for the purchase, major repair, rebuilding and debt service expenditures related to pupil transportation equipment. The major sources of revenue in this fund include the state reimbursement for pupil transportation equipment and special levies. b. Fiduciary Funds Fiduciary fund reporting focuses on net assets and changes in net assets. Fiduciary Funds such as private-purpose trust and agency funds are used by a district in its fiduciary capacity as trustee or agent for assets held for individuals, private organizations, and other governments. Auburn School District has only one of these funds, the private-purpose trust fund. All of the income and principal in this private-purpose trust may be disbursed in the course of its operation. It includes money for scholarships donated by community supporters and funds for student aid provided by the Saul Haas Foundation. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide financial statements measure and report all financial and capital assets, liabilities, revenues, expenses, gains and losses using the economic resources measurement focus and accrual basis of accounting. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets or cost recovery, and financial position. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements include the General Fund, Special Revenue Fund, Debt Service Fund, Capital Projects Fund and Transportation Vehicle Fund. They are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the district considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Private-purpose trust funds are reported on the accrual basis of accounting. Agency funds are reported on the modified accrual basis. Agency funds are custodial in nature and do not involve measurement of results of operation

45 1). Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbrances are liquidated at the end of the year; therefore, there are no outstanding encumbrances at year-end. 2). Eliminations and Reclassifications In the process of aggregating data for the government-wide statements of net assets and the statement of activities, the inter-fund receivables and payables within governmental funds, except those with fiduciary funds, were eliminated. D. BUDGETS AND BUDGETARY ACCOUNTING 1). General Budget Policies The Auburn School District budgets its funds in accordance with the Revised Code of Washington Chapter 28A.505 and Chapter of the Washington Administrative Code (WAC). The School District Board adopts the budget after a public hearing. An appropriation is a prerequisite to expenditure. Appropriations lapse at the end of the fiscal period. Annual appropriated budgets are adopted at the fund level. Each governmental fund s total expenditures cannot, by law, exceed its formal fund appropriation. Management is authorized to modify specific accounts within the overall fund appropriation. However, only the Board has the authority to increase or decrease a given fund's annual budget. The Board may adopt a revised or supplemental budget appropriation after a public hearing at anytime during the fiscal year. During the fiscal year, the General Fund budget was amended to increase appropriations by $2,729,252 to adjust for a greater increase in enrollment in certain grade levels than was projected. In addition, the Transportation Vehicle fund budget was also amended to increase expenditures by $ 114,000 in order to expend unexpected additional state revenues. 2). Budgetary Basis of Accounting For budget purposes, revenues and expenditures are accounted for on a modified accrual basis of accounting as prescribed in law for all governmental funds. Beginning fund balance is budgeted as available resources and, pursuant to law, the budgeted ending fund balance cannot be negative. Formal budgetary accounting is employed as a management control for all governmental funds. Budgets are adopted on the same basis of accounting used to reflect actual revenues and expenditures on a generally accepted accounting principles basis. E. ASSETS, LIABILITIES AND NET ASSETS/RESERVES/DESIGNATIONS 1). Cash and Cash Equivalents The district's cash and cash equivalents consist of cash balances, net of warrants outstanding, and cash equivalents with original maturities of three months or less. At August 31, 2004, cash deposits were $33,400, petty cash and lunchroom change funds were $4,664, the fair value of cash equivalents were $62,227,515 and warrants outstanding were $1,896,943. In accordance with authorized investment laws, the district s cash equivalents are deposited in the King County Investment Pool. The Pool invests in U.S. Agency mortgage-backed securities to enhance yield. As of August 31, 2004, such securities comprised 9.5% of the Pool s portfolio. As of August 31,

46 2004, the district s funds invested in the Pool comprised 1.89% of the Pool s portfolio. ( See Note 2) 2). Property Taxes Property tax revenues are collected as the result of special levies passed by the voters in the district. Per Revised Code of Washington , the tax assessment date is January 1 of the calendar year of collection. The tax lien date is January 1 of the year of collection and taxes receivable are recognized as of that date. Current year taxes are due in full as of April 30, and are delinquent after that date. However, without incurring penalty, the taxpayer may elect to pay one half of taxes due by April 30, with the remaining one half taxes due October 31, and are delinquent after that date. Typically, a little more than half of taxes due are collected on the April 30 date. King County forecloses on property following the third year of delinquency. In governmental fund financial statements, property tax revenue that is measurable but not available (taxes that are not expected to be collected within the current period) is recorded as a receivable and deferred revenue. In government-wide financial statements, property tax revenue, net of estimated uncollectible amounts, is accrued at year-end. 3). Accounts Receivable This account represents amounts due for services rendered by the district, net of allowance or doubtful accounts. 4). Due From/To Other Funds Interfund receivables and payables and the associated revenues and expenditures/expenses are recorded in the respective funds in governmental fund financial statements. Interfund receivables and payables are eliminated in government-wide financial statements, except those with fiduciary funds. 5). Due From Other Governments This account represents receivables for federal, state, and local grants. Grant revenues are recorded in the year in which the related expenditures are incurred. 6). Inventories Inventories of instructional materials are valued at cost using the first-in first-out method. Warehoused inventories of food and maintenance and food service supplies are valued at cost using the weighted average method perpetual inventory system. Inventory is charged as an expenditure when it is issued for consumption. Reservation of fund balance is not necessary. However, the Board of Directors has designated a portion of fund balance to replace or increase the inventories. 7). Bond Discounts, Premiums, Issuance Costs and Refunding Losses In governmental fund types, bond discounts, premium, issuance costs and refunding losses are recognized in the period of issuance. In government-wide financial statements, they are amortized over the life of the bond and charged to expense accounts

47 8). Capital Assets Capital Assets, which include property, buildings and improvements, and equipment are reported in the applicable governmental activities in the government-wide financial statements. Capital assets are defined by the district as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year for land, furniture, equipment, vehicles and school buses and $100,000 for buildings and improvements with an estimated useful life in excess of two years. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized, but are charged to expenditures in the current period. In governmental fund financial statements, there is no depreciation for fixed assets. However, depreciation is charged to expenses and allocated to various functions/programs in governmentwide financial statements in compliance with GASB Statement No. 34 (See Note 4). Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets estimated useful life using the straight- line method of depreciation. The range of estimated useful lives by type of asset is as follows: 9). Deferred Revenue Buildings 50 years Building Improvements 20 years School Buses 8-18 years Equipment and Vehicles 4-10 years In governmental fund financial statements, deferred revenues consist of amounts collected before revenue recognition criteria are met, and receivables which, under the modified accrual basis of accounting, are measurable but not yet available, e.g. unearned property tax revenues, unearned revenues from federal, state, and local grants, and unearned revenues on long-term receivables. In government-wide financial statements, property taxes are accrued, therefore there are no deferred property tax revenues. 10). Net Assets (Government-wide Financial Statements) In government-wide financial statements, the Invested in Capital Assets, Net of Related Debt component consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. The Restricted Net Assets component reports the net assets where constraints have been placed on net asset by external laws, regulations, or legislation. Therefore, they are available for disbursements only for specific purposes such as debt service and capital projects. The Unrestricted Net Assets are assets that can be used to finance day-to-day operations without constraints established by debt convenants, enabling legislation or other legal requirements

48 11). Reserves and Designations (Governmental Fund Financial Statements) Reserves represent those portions of the fund balance legally segregated for a specific future use or not appropriable for expenditures. Designated unreserved fund balances such as designated for Self-Insurance represent plans for future use of financial resources. These plans are subject to change and may never be authorized or result in expenditures. CHANGES IN GENERAL FUND DESIGNATIONS OF FUND BALANCE DESIGNATION BEGINNING BALANCE ADDITIONS TO BALANCE USE OF BALANCE ENDING BALANCE Opening New School $ 2,200,000 $ 1,576,000 $ - $ 3,776,000 Inventory Replacement 326, ,000 Self Insurance 300, ,000 TOTAL $ 2,826,000 $ 1,576,000 $ - $ 4,402,000 12). Compensated Absences a). Sick Leave - Full-time employees earn sick leave at a rate of 12 days per year up to a maximum of one contract year. Under the provisions of RCW 28A , sick leave accumulated by district employees is paid at death or retirement at the rate of 25% of each day of accrued leave, limited to 180 accrued days. This statute also provides for an annual buy-back of an amount up to the maximum annual accumulation of twelve days. To qualify for annual sick leave buy-back, the employee must have accumulated an excess of 60 days sick leave as of January 1. Sick leave is reported under long-term liabilities in the Statement of Net Assets. For reporting purposes, 25% of the sick leave liability (up to 180 days) for those eligible for retirement is considered accruable. The vesting method in GASB statement 16 was applied in calculating the sick leave. The amount of accrued sick leave as of August 31, 2004 was $608,610 and reported as a long-term liability in the government-wide financial statements. b). Vacation Leave - Vacation leave is accrued according to bargaining agreement rules for those employees eligible. Annual leave accumulated by district employees is paid upon retirement at 100% of per diem value In addition, annual leave accumulated by classified employees represented by the Public School Employees of Washington bargaining groups is paid upon termination at 100% of per diem value. As of August 31, 2004, vacation leave payable, estimated to be $381,484 is reported as a long-term liability in the government-wide financial statements. NOTE 2. DEPOSITS AND INVESTMENTS The King County Treasurer is the ex-officio treasurer for the district. In this capacity, the County Treasurer receives, deposits and transacts investments on the district's behalf

49 A. DEPOSITS At year-end, the carrying amounts of the district's deposits with financial institutions and with the King County Treasurer were respectively $33,400 and $62,227,515, the warrants outstanding were $1,896,943 and the petty cash and change funds totaled $4,664. Total district cash and cash equivalents were $60,368,636. Of this amount, $59,905,601 were in governmental funds and $463,035 were in fiduciary funds. (See Note 1). In addition to FDIC insurance, the district s deposits are protected by the Washington Public Deposit Protection Commission (a multiple financial institution collateral pool). The provision for guaranteed coverage against loss applies not only to demand deposits, but also to certificates of deposit, money market deposit accounts, and savings deposits as well as accrued interest through the date of repayment. Accordingly, the district s deposits are classified per GASB Statement No.3 as risk level one, insured or collateralized with securities held by the entity or by its agent in the entity's name. B. INVESTMENTS Washington State law restricts the district's investments in cash equivalents to obligations of the United States Treasury and instrumentalities, bankers acceptances issued in the secondary market, primary certificates of deposit issued by Washington State qualified public depositories as defined under RCW 39.58, the State Treasurer s Investment Pool and King County s Investment Pool. Investments are categorized to give an indication of the risk assumed at year end. These categories are as follows: Category 1: Category 2: Category 3: Includes insured or registered securities held by the district or its agent in the district's name. Includes uninsured and unregistered securities held by the broker s or dealer s trust department or agent in the district's name. Includes uninsured and unregistered investments for which the securities are held by the broker or dealer, or its trust department or agent but not in the district s name. As outlined in GASB Statement No. 3, investments in pools managed by other governments are not classified into one of the three categories of custodial credit risk described above. Custodial credit risk only applies to uninsured or unregistered investments that are evidenced by a security and investments in pools managed by other governments are not evidenced by securities. All noninvested cash is held in an external investment pool administered by King County, Washington and consequently is not subject to categorization. District investment in the pool was $62,227,515 at August 31, The pool is not registered by the SEC and does not operate in manner consistent with the SEC s rule 2a7 which would allow it to be treated as a money market fund for basis of presentation. Oversight of the Investment Pool is provided by the King County Executive Finance Committee (EFC) pursuant to RCW The EFC consists of the Chair of the County Council, the County Executive, the Chief Budget Officer, and Director of the Finance and Business Operations Division. All investments are subject to written policies and procedures adopted by the EFC. The EFC reviews pool performance monthly. All investments in cash equivalents are stated at fair value. Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Fair value for the King County Investment Pool is provided by the County s safekeeping bank or Bloomberg L.P., a provider of fixed income analytics, market monitors, and security pricing. The net decrease in fair value of the district s proportionate share of the King County Investment Pool for was $196,267. This decrease has been recognized and reported against investment income

50 NOTE 3. INTERFUND TRANSACTIONS A. INTERFUND RECEIVABLES AND PAYABLES As of August 31, 2004, short-term interfund receivables and payables in governmental funds that resulted from various interfund transactions in governmental fund financial statements were as follows: Due from Other Funds Due to Other Funds General Fund $ 25,938 $ 352,536 Special Revenue Fund 283, Debt Service Fund 746,154 - Capital Projects Fund 64, ,383 Total $ 1,119,671 $ 1,119,671 The interfund balances are liquidated on a monthly basis. Almost all of the interfund transfers are to reimburse the general fund from other funds for processing payroll and other accounts payable in the general fund. In addition, all funds collected in the district are electronically swept on a daily basis into the general fund bank account at the county treasurer. Funds are then transferred to the appropriate fund as soon as the receipts are reconciled to the daily deposit reports. The debt service interfund receivable of $740,234 from the capital projects fund is the August bond sale premium deposited in the capital projects fund in error by the King County Treasurer. Amounts due to the private purpose trust fund of $29,505 are reclassified as third party payables in the government-wide financial statements. NOTE 4. CHANGES IN CAPITAL ASSETS Purchases of equipment over $5,000 and building improvements over $100,000 are capitalized and depreciated in the government-wide financial statements. Land is excluded from depreciation. The district s property valuation of buildings and contents for insurance purposes was $253,488,336 on August 31, In the opinion of the district s insurance consultant, the amount is sufficient to adequately fund replacement of the district s assets. Balance 9/1/2003 Additions Deletions Governmental Activities: Capital assets, not being depreciated Land $ 12,034,296 $ - - Balance 8/31/2004 $ $ 12,034,296 Construction in progress 16,580,881 26,505,522 (3,255,128) 39,831,275 Total capital assets, not being depreciated 28,615,177 26,505,522 (3,255,128) 51,865,571 Capital assets, being depreciated: - Buildings and improvements 173,910,776 1,587, ,497,932 Furniture and equipment 12,991, ,559 (107,736) 13,232,139 Total capital assets, being depreciated 186,902,092 1,935,715 (107,736) 188,730,071 Less: accumulated depreciation - Buildings and improvements (51,095,418) (3,598,395) (54,693,813) Furniture and equipment (9,085,598) (968,654) 84,180 (9,970,072) Total accumulated depreciation (60,181,016) (4,567,049) 84,180 (64,663,885) Total capital assets, being depreciated, net 126,721,076 (2,631,334) (23,556) 124,066,186 Governmental activities capital assets, net $ 155,336,253 $ 23,874,188 $ (3,278,684) $ 175,931,

51 The increases to buildings and improvements include completed projects transferred from construction in progress less those portions of the projects classified as capitalized and non capitalized equipment. Additions to equipment include only those capital outlay purchases with a unit cost greater than $5,000 in accordance with the district s capitalization policy. Decreases to buildings and improvements were due to increasing the capitalization policy to $100,000 during the fiscal year. Decreases to equipment were the result of the sale or trade-in of obsolete equipment. Depreciation Depreciation expense was charged to governmental activities as follows: Regular instruction $ 2,861,547 Special instruction 268,663 Vocational instruction 230,107 Compensatory education 297,916 Other instructional programs 50,171 Support services 251,928 Child nutrition services 27,550 Transportation services 561,229 Extracurricular activities (ASB) 17,938 Total depreciation expense charged to governmental activities $ 4,567,049 NOTE 5. CONSTRUCTION IN PROGRESS Project Authorized Expended Committed Auburn Mountain View High School $ 45,635,938 $ 36,226,760 $ 18,953,231 Future Elementary Site 3,836,000 3,604, ,485 Total Construction in Progress $ 49,471,938 $ 39,831,275 $ 19,184,716 NOTE 6. PENSIONS A. GENERAL INFORMATION Substantially all of the district s full-time and qualifying part-time employees participate in one of the following three contributory, multi-employer, cost-sharing statewide retirement systems managed by the Washington State Department of Retirement Systems (DRS). The Teachers' Retirement Systems (TRS) includes certificated staff of 296 public school district employers and other public employers. As of September 30, 2003, it includes 72,635 active and inactive vested members

52 The Public Employees Retirement System (PERS) includes non-certificated staff of 296 public school district employers and other public employers. As of September 30, 2003, it includes 174,551 active and inactive vested members. The School Employees Retirement System (SERS) includes non-certificated staff of 296 public school district employers. As of September 30, 2003, it includes 52,764 active and inactive vested members. The employer contribution rates for PERS, TRS and SERS are established each biennium by the state Actuary. The employee contribution rate for Plan I is set by statute at six percent and does not vary from year to year. The employer rate is the same for all plans in a system. The method used to determine the contribution requirements are established under Chapter and Revised Code of Washington (RCW) for PERS and TRS, respectively. A new Plan III for TRS was established effective July 1, This plan is a combination defined benefit, defined contribution plan. Employer contribution rates are established each biennium by the legislature. The state actuary calculates the rates, the economic revenue forecast council adopts the rates and the legislature enacts the rates for the defined benefit portion of the plan. Employee rates are established each biennium by the legislature as well. These rates fund the defined contribution portion of the plan. The new retirement system for school employees, SERS, was established effective September 1, 2000 and includes a Plan III. This plan is a combination defined benefit, defined contribution plan. The Pension Funding Council establishes employer contribution rates each biennium. The state actuary calculates the rates and the Pension Funding Council adopts the rates, for the defined benefit portion of the plan. The Employee Retirement Benefits Board (ERBB) establishes employee rate choices. These rates fund the defined contribution portion of the plan. Employee contribution rates for Plan I and Plan II for both systems have been set at rates reflective of amounts that have been appropriated by the state legislature. The district contribution represents its full liability under both systems, except that future rates may be adjusted to meet the system needs. B. GENERAL SYSTEM INFORMATION BY INTERNAL BENEFITS PLANS Certificated public employees are members of TRS. Non-certificated public employees are members of PERS if Plan I or SERS. Plan I (employment on or before September 30, 1977) members of TRS and PERS are eligible to retire with full benefits after 5 years of credited service and attainment of age 60 or after 25 years of credited service and attainment of age 55 or after 30 years of credited service. Plan II (employment on or after October 1, 1977) members of TRS and SERS are eligible to retire with full benefits after 5 years of credited service and attainment of age 65 or after 20 years of credited service and attainment of age 55 with the benefit actuarial reduced from age 65. Plan III (employment on or after July 1, 1996) members of TRS are eligible to retire with full benefits after 10 years of credited service and attainment of age 65 or after 10 years of credited service and attainment of age 55 with benefit actuarially reduced from age

53 Average final compensation (AFC) of Plan I TRS and PERS members is the greatest average salary during any 2 consecutive years. For Plan II TRS and SERS members, it is the greatest average salary during any 5 consecutive years. The retirement allowance of Plan I TRS and PERS members is the AFC multiplied by 2 percent per year of service capped at 60 percent. For Plan II TRS and SERS members it is the AFC multiplied by 2 percent per year of service with provision for a cost of living adjustment capped at 3 percent per year. For the defined benefit portion of Plan III TRS it is the AFC multiplied by one percent per year of service with provision for a cost of living adjustment. C. CONTRIBUTIONS Employee contribution rates as of August 31, 2004: Plan I TRS 6.00% Plan I PERS 6.00% Plan II TRS 0.87% Plan II SERS.85% Plan III TRS % Plan III SERS % Employer contribution rates as of August 31, 2004: Plan I TRS 1.39% Plan I PERS 1.40% Plan II TRS 1.39% Plan II SERS 1.07% Plan III TRS 1.39% Plan III SERS 1.07% Under current law the employer must contribute 100 percent of the employer-required contribution. Employer required contributions were as follows: Plan Plan I TRS $ 83,660 $ 87,065 $ 196,429 Plan II TRS 50,283 48,695 88,854 Plan III TRS 421, , ,421 Plan I PERS 13,621 13,647 15,812 Plan II SERS 60,185 65,184 85,152 Plan III SERS 103, , ,593 Historical trend information showing TRS, PERS and SERS progress in accumulating sufficient assets to pay benefits when due is presented in the State of Washington s June 30, 2004, comprehensive annual financial report. Refer to this report for detailed trend information. It is available from: State of Washington Office of Financial Management 300 Insurance Building P. O. Box Olympia, Washington

54 NOTE 7. LONG-TERM DEBT A. CHANGES IN LONG-TERM LIABILITIES During the year ended August 31, 2004, the following changes occurred in liabilities reported in the government- wide financial statements. Beginning Balance Additions Reductions Ending Balance Amount Due within One Year GOVERNMENTAL ACTIVITIES Bonds Payable: 1992 B UTGO Bonds $ 15,700,000 $ - $ 3,030,000 $ 12,670,000 $ 5,985, UTGO Refunding Bonds 10,195,000-1,160,000 9,035,000 1,310, UTGO Bonds 34,500,000-26,700,000 7,800, , UTGO Refunding Bonds 19,515,000-3,625,000 15,890,000 1,220, UTGO Bonds 36,000, ,000, UTGO Refunding Bonds - 27,785,000-27,785, , UTGO Bonds - 18,000,000-18,000,000 - Total Bonds Payable 115,910,000 45,785,000 34,515, ,180,000 9,555,000 Unamortized Bond Premium 2,511,016 2,184, ,162 4,314, ,558 Unamortized Refunding Adjustment (1,307,518) (1,656,581) (651,380) (2,312,719) (673,193) Net Bonds Payable 117,113,498 46,313,100 34,244, ,181,816 9,226,365 Other Liabilities: Compensated Absences 775, ,412 21, ,094 22,000 GRAND TOTAL $ 117,889,363 $ 46,548,512 $ 34,265,965 $ 130,171,910 $ 9,248,365 The debt service fund is established to redeem the outstanding bonds. Compensated Absences payments are liquidated by the general fund. Besides the long-term liabilities, the district also has short-term liabilities such as general accounts payable, wages and benefits payables, and deferred revenues. Those are on-going liabilities in the General Fund and will liquidate within one year. The district does not have conduit debt or hold demand bonds. B. UNAMORTIZED BOND ISSUANCE COSTS The unamortized bond issuance costs for the general obligation bonds are as follows: Unamortized Bond Issuance Costs Descriptions Beginning Increases Decreases Ending 1992 B UTGO Bonds $ 135,142 $ - $ 30,032 $ 105, UTGO Refunding Bonds 84,872-24,248 60, UTGO Bonds 246,157-18, , UTGO Refunding Bonds 107,917-23,982 83, UTGO Bonds 323,637-17, , UTGO Refunding Bonds - 268,632 10, , UTGO Bonds - 163, ,549 Total $ 897,725 $ 432,181 $ 124,322 $ 1,205,

55 C. PRIOR-YEAR DEFEASANCE OF DEBT In prior years, the district defeased other general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the bonds defeased in the current year as well as those defeased in prior years are not included in the district s financial statements. At August 31, 2004, $26,000,000 of bonds outstanding are considered defeased. D. LEGAL DEBT MARGIN RCW and RCW provide that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the district:.375% Without a vote of the people (Non-bonded debt only per RCW 28A51.010) 2.5% With a vote of the people 5.0% With a vote of the people, provided the indebtedness in excess of 2.5% is for capital outlay. Assessed valuation of taxable property for 2004 taxing purposes was $6,333,191,792. E. DEBT SERVICE, BOND PREMIUM, DISCOUNT AND REFUNDING ADJUSTMENT Below is a schedule of the debt service, amortization of the bond premium, discount and the refunding loss adjustment for the general obligation bonds outstanding at August 31, Bond premiums, discounts, and refunding adjustment losses are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. The 1992 B general obligation bonds refunded $11,930,000 par amount of the 1988 general obligation bonds and provided $25,370,000 of the $53,520,000 aggregate principal amount approved by the voters in the February 6, 1990 to build and equip schools. It was sold at a premium of $4,555. The 1993 general obligation bonds refunded $5,450,000 par amount of the 1986 bond issue, $6,875,000 par amount of the 1987 bond issue and $7,520,000 par amount of the 1990 bond issue. It was sold at a discount of $198,169. The $38,000, bond issue was sold at a premium of $312,815. The 1998 general obligation bonds refunded $11,185,000 of the 1992 A bonds and $8,090,000 of the 1992 B bonds. It was sold at a premium of $855,004. The $36,000, bond issue was sold at a premium of $1,945,125. The 2004 $27,785,000 general obligation refunding bonds refunded $26,000,000 par amount of the 1997 bond issue. It was sold at a premium of $1,464,510. The $18,000, bond issue was sold at a net premium of $720,

56 Schedule of Debt Service, Bond Premium, Discount, Refunding Adjustment Amortization Date Payment Interest Expense Premium/ Discount Amortized Refunding Adjustment Amortized Principal Carrying Amount of Bonds 08/31/03 117,113,481 08/31/04 $ 14,267,834 $ 5,377,351 $ 252,743 $ 651,379 $ 8,515, ,181,816 08/31/05 17,926,121 5,498, , ,193 9,555, ,955,451 08/31/06 14,864,864 5,124, , ,188 9,505, ,779,079 08/31/07 11,445,653 4,707, , ,096 10,335, ,368,423 08/31/08 15,180,507 4,086, , ,097 10,780,000 89,550,593 08/31/09 9,439,220 3,730, , ,097 5,440,000 84,117,768 08/31/10 11,137,218 3,459, , ,048 7,415,000 76,577,993 08/31/11 6,935,681 3,248, ,724-3,430,000 72,891,269 08/31/12 7,019,756 3,138, ,724-3,625,000 69,009,545 08/31/13 5,411,482 3,004, ,724-2,150,000 66,602,821 08/31/14 9,407,831 2,856, ,724-6,295,000 60,051,097 08/31/15 5,622,864 2,626, ,724-2,740,000 57,054,373 08/31/16 7,826,205 2,444, ,724-5,125,000 51,672,649 08/31/17 8,051,943 2,226, ,405-5,625,000 45,847,244 08/31/18 8,277,215 1,978, ,070-6,155,000 39,548,174 08/31/19 8,515,527 1,641, ,070-6,730,000 32,674,104 08/31/20 8,771,765 1,282, ,070-7,345,000 25,185,034 08/31/21 9,025, , ,069-7,980,000 17,060,965 08/31/22 9,280, ,122 91,498-8,650,000 8,319,467 08/31/23 8,507, ,033 19,467-8,300,000 - Total $ 196,914,846 $ 58,059,565 $ 4,567,278 $ 2,964,098 $ 135,695,000 F. GENERAL OBLIGATION DEBT Debt outstanding as of August 31, 2004 is composed of the following: Description Governmental Activities: Purpose Interest Rate Issue Date Maturity Date Amount Issued Amount Outstanding 1992 UTGO Refunding Construction % 05/01/92 12/01/07 $ 38,750,000 $ 12,670, UTGO Refunding Construction % 09/20/93 12/01/06 22,525,000 9,035, UTGO Bonds Construction % 03/13/97 12/01/16 38,000,000 7,800, UTGO Refunding Construction % 10/13/98 12/01/07 20,880,000 15,890, UTGO Bonds Construction % 05/08/03 12/01/21 36,000,000 36,000, UTGO Refunding Construction % 03/02/04 12/01/16 27,785,000 27,785, UTGO Bonds Construction % 08/09/04 12/01/22 18,000,000 18,000,000 Total $ 201,940,000 $ 127,180,

57 NOTE 8. OPERATING LEASES (NON-CAPITALIZED) The district is obligated under certain leases accounted for as operating leases. Operating leases do not give rise to property rights or lease obligations, and therefore, the results of the lease agreements are not reflected in the district's Capital Assets. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms of one year or more as of August 31, 2004: Y e a r E n d i n g A u g u s t 31, C o p i e r s , , , , ,332 Total $ 506,653 NOTE 9. RISK MANAGEMENT A. UNEMPLOYMENT Auburn School District self-insures for unemployment compensation for all of its employees. Actual employee claims are paid by the State of Washington, Department of Employment Security and then reimbursed by the district. This self-insurance program costs the district less than full participation in the state unemployment compensation program. For the fiscal year ended August 31, 2004 the district paid $26,729 in unemployment compensation claims. Funds are designated in the General Fund amounting to $300,000 for payment of excess loss claims resulting from work stoppage, layoffs, or other emergencies resulting in excess benefit claims. B. INDUSTRIAL INSURANCE For the fiscal year ended August 31, 2004, Auburn School district made payments totaling $760,704 to the Workers Compensation Trust administered by Puget Sound Educational Service district No. 121 for industrial insurance for all district employees. This trust is operated for the benefit of several neighboring school districts in-lieu-of districts making monthly premium payments to the State of Washington for industrial insurance. This practice enables these districts to pay industrial insurance claims as they occur and minimizes the districts costs for the program. C. RISK MANAGEMENT POOL The district is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. In order to obtain general liability insurance at a cost it considered to be economically justifiable, the district joined the Washington Schools Risk Management Pool administered by Puget Sound Educational Service District No This pool is a public entity risk pool currently operating as a common risk management and insurance program. The district pays an annual premium to the pool for its general insurance coverage. For the fiscal year ended August 31, 2004, the district contributed $672,840 to the pool. The agreement for formation of the Washington School Risk Management Pool provides that the pool will be self-sustaining through member premiums and reinsure through commercial companies for claims in excess of $1 million for each property loss. For each liability loss up to $100 million per occurrence, the pool will reinsure for claims in excess of $2 million plus 50% quota share on losses from $2 million to $10 million, for a maximum of $6 million on a $10 million claim. The Pool maintains an excess insurance contract with Royal Insurance Company for property and machinery and

58 boiler coverage, which provides a $100 million limit of coverage over the Pool s self-insured retention limit. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Washington School risk Management Pool has published its own financial report for the year ended August 31, This report can be obtained from: Washington Schools Risk Management Pool P.O. Box SW 152 nd St. Burien, WA NOTE 10. EXPLANATION OF DIFFERENCES BETWEEN GOVERNMENTAL FUND FINANCIAL STATEMENTS AND GOVERNMENT-WIDE FINANCIAL STATEMENTS A. RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS Total fund balances for governmental funds $ 59,229,484 Total net assets for governmental activities in the statement of net assets differs because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land $ 12,034,296 Construction in progress 39,831,275 Buildings and improvements, net of $54,693,813 accum. depreciation 120,804,119 Furniture and equipment, net of $ 9,970,072 accumulated depreciation 3,262, ,931,757 Property taxes that are deferred in government funds since not available soon enough to pay for the current period's expenditures. 16,749,918 Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is recognized. (1,488,183) Bond issuance costs are reported as expenditures in the governmental funds. 1,205,584 Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the statement of net assets. Balances at year-end are: Bonds payable $ (127,180,000) Unamortized deferred refunding loss 2,312,719 Unamortized premiums (4,314,535) Accrued vacation (381,484) Accrued sick leave (608,610) (130,171,910) Total net assets of governmental activities $ 121,456,

59 B. RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES ` Net change in fund balances-total governmental funds $ 1,486,167 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets with an initial, individual cost of more than $5,000 for furniture and equipment and $100,000 for buildings and improvements are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period: Capital outlays $ 30,068,644 Depreciation expense (4,567,049) $ 25,501,595 The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilites and does not affect the statement of activities and repayment of principal reduces the liablity. Governmental funds expend issuance costs and premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. However, interest expense is recognized as it accrues, regardless of when it is due. The effect of these differences in the treatment of general obligation bonds and related items is as follows: General obligation bond proceeds $ (45,785,000) Bond premium (2,184,681) Repayment of bond principal 8,515,000 Refunded bond principal 26,000,000 Refunding adjustment (1,656,581) Interest expense - general obligation bonds (968,405) Amortization of bond premium 252,743 Deferred Charge Refunding (651,380) (1,367,042) (16,478,304) Property tax revenues received prior to the year for which they are being levied are reported as deferred revenue in the governmental funds. They are, however, recorded as revenues in the statement of activities. Deferred property tax revenues increased this year. 1,366,507 In the statement of activities, certain operating expenses such as compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used. During this year, accrued vacation and sick leave payable increased by (214,229) Change in net assets of governmental activities $ 11,661,

60 NOTE 11. SUMMARY OF SIGNIFICANT CONTINGENCIES A. LITIGATION Auburn School District is party to various pending legal actions arising from its normal educational activities. It is the opinion of the administration that these will be resolved without any material impact on the operations or the financial position of the district. B. CLAIMS AND JUDGMENTS The district participates in a number of federally assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Since these have not been completed, the amount, if any, of expenditures that may be disallowed by the granting agencies has not yet been determined. The district believes that disallowed expenditures, if any, will not have a material effect on any of the governmental funds or the overall financial position of the district. NOTE 12. FUND BALANCE (GOVERNMENTAL FUNDS) A. CHANGES IN UNDESIGNATED FUND BALANCES General Fund Special Revenue Fund Debt Service Fund Capital Projects Fund Transportation Vehicle Fund Total Fund Balance 8/31/03 $ 8,275,929 $ 1,073,943 $7,177,361 $41,192,445 $ 23,639 Designated for Opening New High School 1,576, Designated for School Construction and Equipment ,855, ,539 Unreserved, Undesignated Fund Balance (1,938,973) (117,952) (258,654) - Total Fund Balance 8/31/04 $ 7,912,956 $ 955,991 $6,918,707 $43,047,652 $ 394,

61 NOTE 13. OTHER DISCLOSURES KING COUNTY DIRECTORS ASSOCIATION The district is a member of the King County Directors Association (KCDA). KCDA is a purchasing cooperative designed to pool the member district s purchasing power. This association serves 280 public school districts. Auburn School District s equity in KCDA totaled $277,269 as of December 31, This equity is the accumulation of the annual assignment of KCDA s operating surplus based upon the percentage derived from KCDA s total sales to the district compared to all other districts applied against paid administrative fees. The district may withdraw from the joint venture and will receive its equity in 10 annual allocations of merchandise or 15 annual payments. The district s equity is not included in the district s financial statements. Annual purchases from the cooperative were $1,164,

62 Required Supplemental Information Building the Future The required supplemental information presents budgetary comparison (original and final budget), actual inflows and outflows, and balances for general fund and for each major fund.

63 REQUIRED SUPPLEMENTARY INFORMATION AUBURN SCHOOL DISTRICT NO. 408 BUDGETARY COMPARISON SCHEDULE* GENERAL FUND FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 Schedule A-1 BUDGETED AMOUNTS ACTUAL ORIGINAL FINAL AMOUNT VARIANCE REVENUES Local $ 19,994,869 $ 20,252,596 $ 20,305,962 $ 53,366 State 63,548,451 64,451,034 65,048, ,655 Federal 7,012,346 7,640,012 7,533,537 (106,475) Other 711, , ,290 17,165 TOTAL REVENUES 91,266,916 92,976,767 93,538, ,711 EXPENDITURES CURRENT Regular Instruction 55,036,562 55,975,093 54,074,433 1,900,660 Special Education 6,595,333 7,074,019 6,966, ,578 Vocational Instruction 5,141,667 5,166,361 4,985, ,559 Compensatory Education 6,821,147 7,413,516 7,255, ,256 Other Instructional Programs 818, , ,429 86,334 Community Services 308, , ,485 32,391 Support Services 12,647,120 13,035,935 11,947,104 1,088,831 Child Nutrition Services 2,790,401 2,767,324 2,970,835 (203,511) Pupil Transportation Services 4,015,189 4,134,977 4,141,889 (6,912) CAPITAL OUTLAY Equipment 496, , , ,105 TOTAL EXPENDITURES 94,670,884 97,400,136 93,906,845 3,493,291 Excess of Revenues Over (Under) Expenditures (3,403,968) (4,423,369) (368,367) 4,055,002 OTHER FINANCING SOURCES (USES) Sale of Equipment - - 5,394 5,394 Total Other Financing Sources (Uses) - - 5,394 5,394 Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Uses (3,403,968) (4,423,369) (362,973) 4,060,396 FUND BALANCE-September 1 6,638,008 8,248,699 8,275,929 27,230 - FUND BALANCE -August 31 $ 3,234,040 $ 3,825,330 $ 7,912,956 $ 4,087,626 * Prepared on the GAAP Budgetary Basis of Accounting -47-

64 REQUIRED SUPPLEMENTARY INFORMATION AUBURN SCHOOL DISTRICT NO. 408 BUDGETARY COMPARISON SCHEDULE* SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 Schedule A-2 BUDGETED AMOUNTS ACTUAL ORIGINAL FINAL AMOUNT VARIANCE REVENUES General $ 818,295 $ 818,295 $ 611,715 $ (206,580) Athletics 132, , ,312 23,312 Classes 128, , ,989 (4,601) Clubs 882, , ,294 85,709 Private Monies 30,700 30,700 17,481 (13,219) Total Revenues 1,992,170 1,992,170 1,876,791 (115,379) EXPENDITURES General 677, , , ,969 Athletics 172, , ,334 (41,401) Classes 162, , ,110 25,482 Clubs 1,021,369 1,021,369 1,148,371 (127,002) Private Monies 32,740 32,740 23,799 8,941 Capital Outlay ,008 (78,008) Total Expenditures 2,066,724 2,066,724 1,994,743 71,981 Excess of Revenues Over (Under) Expenditures (74,554) (74,554) (117,952) (43,398) FUND BALANCE - September 1 605, ,492 1,073, ,451 FUND BALANCE - August 31 $ 530,938 $ 530,938 $ 955,991 $ 425,053 *Prepared on the GAAP Budgetary Basis of Accounting. -48-

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

66 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2004 AND 2003 Schedule B ASSETS Cash and Cash Equivalents $ 7,950,733 $ 7,304,017 Property Tax Receivable 8,773,713 8,478,097 Accounts Receivable, Net 154,585 56,364 Interest Receivable 15,246 19,736 Due From Other Funds 25,938 23,907 Due From Other Governments 866, ,485 Inventories, at Cost 689,289 1,151,161 TOTAL ASSETS 18,476,118 18,031,767 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 781, ,825 Accrued Wages and Benefits Payable 612, ,699 Due To Other Funds 382, ,459 Deferred Revenue 8,787,530 8,498,855 TOTAL LIABILITIES 10,563,162 9,755,838 Fund Balance: Unreserved: Designated for Opening New School 3,776,000 2,200,000 Designated for Inventory Replacement 326, ,000 Designated for Self Insurance 300, ,000 Undesignated 3,510,956 5,449,929 TOTAL FUND BALANCE 7,912,956 8,275,929 TOTAL LIABILITIES AND FUND BALANCE $ 18,476,118 $ 18,031,

67 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) Schedule B BUDGET ACTUAL VARIANCE ACTUAL REVENUES: Source: Local Taxes $ 17,032,754 $ 17,012,830 $ (19,924) $ 16,356,842 Local Non-Tax 3,219,842 3,293,132 73,290 3,118,070 State, General Purpose 52,755,987 53,199, ,933 51,662,408 State, Special Purpose 11,695,047 11,848, ,722 12,117,740 Federal, General Purpose 129, ,885 51, ,369 Federal, Special Purpose 7,510,642 7,352,652 (157,990) 6,561,934 Revenues from other sources 633, ,290 17, ,894 TOTAL REVENUES 92,976,767 93,538, ,711 90,629,257 EXPENDITURES Current: Regular Instruction 55,975,093 54,074,433 1,900,660 50,738,718 Special Instruction 7,074,019 6,966, ,578 6,415,923 Vocational Instruction 5,166,361 4,985, ,559 4,952,534 Compensatory Education 7,413,516 7,255, ,256 7,401,506 Other Educational Programs 940, ,429 86, ,683 Community Services 324, ,485 32, ,741 Support Services 13,035,935 11,947,104 1,088,831 11,412,385 Child Nutrition Services 2,767,324 2,970,835 (203,511) 2,800,516 Pupil Transportation Services 4,134,977 4,141,889 (6,912) 3,701,198 Capital Outlay - Equipment 567, , , ,386 TOTAL EXPENDITURES 97,400,136 93,906,845 3,493,291 89,337,590 Excess of Revenues Over (Under) Expenditures (4,423,369) (368,367) 4,055,002 1,291,667 OTHER FINANCING SOURCES (USES) Sale of Equipment - 5,394 5,394 8,931 Total Other Financing Sources (Uses) - 5,394 5,394 8,931 Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Uses (4,423,369) (362,973) 4,060,396 1,300,598 FUND BALANCE-September 1 8,248,699 8,275,929 27,230 6,975,331 FUND BALANCE -August 31 $ 3,825,330 $ 7,912,956 $ 4,087,626 $ 8,275,

68 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) Schedule B-3 (Page 1 of 2) DESCRIPTION BUDGET ACTUAL VARIANCE ACTUAL LOCAL TAXES Local Property Tax $ 17,031,878 $ 17,011,751 $ (20,127) $ 16,355,808 Other Taxes 876 1, ,034 TOTAL LOCAL TAXES 17,032,754 17,012,830 (19,924) 16,356,842 LOCAL NON-TAX Tuition & Fees, Unassigned 183, ,588 5, ,886 Secondary Vocational Tuition - - 1,500 Traffic Safety Education Fees ,842 Summer School Tuition 26,025 24,957 (1,068) 26,025 Sales of Goods and Supplies 79,445 88,941 9,496 79,448 Sales of Goods and Supplies, Vocational 590, ,021 (65,579) 487,011 Food Services Sales 1,222,224 1,229,272 7,048 1,222,224 School Bus Revenue 20,533 13,807 (6,726) 20,533 Investment Earnings 220, ,286 (33,714) 149,003 Gifts & Donations 547, ,445 66, ,457 Fines & Damages 28,000 26,265 (1,735) 28,984 Rental of Property 170, ,728 51, ,212 Insurance Recoveries 11,000 16,308 5,308 22,582 Local Non-Tax Unassigned 73,000 88,155 15,155 70,025 E-Rate 48,000 69,216 21,216 48,338 TOTAL LOCAL NONTAX 3,219,842 3,293,132 73,290 3,118,070 STATE FUNDS, GENERAL PURPOSE Apportionment 52,693,725 53,137, ,933 51,570,676 Local Effort Assistance 62,262 62,262-91,732 TOTAL STATE, GENERAL PURPOSE 52,755,987 53,199, ,933 51,662,408 STATE FUNDS, SPECIAL PURPOSE Special Purpose, Unassigned 3,750 4,900 1,150 3,758 Special Education 5,079,751 5,065,923 (13,828) 4,921,730 Learning Assistance 859, ,729 (2,806) 817,194 Special Pilot Programs 169,468 66,951 (102,517) 744,210 Transitional Bilingual 802, ,971 (11,181) 728,341 Student Achievement 2,765,067 2,863,164 98,097 2,611,958 Highly Capable 87,876 87,802 (74) 85,057 Flexible Education ,796 School Food Services 72,310 74,317 2,007 74,557 Transportation - Operations 1,855,138 2,038, ,874 1,855,139 TOTAL STATE, SPECIAL PURPOSE $ 11,695,047 $ 11,848,769 $ 153,722 $ 12,117,

69 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) Schedule B-3 (Page 2 of 2) DESCRIPTION BUDGET ACTUAL VARIANCE ACTUAL FEDERAL FUNDS, GENERAL PURPOSE Impact Aid $ 82,108 $ 132,310 $ 50,202 $ 82,107 Federal Forests 47,262 48,575 1,313 47,262 TOTAL FEDERAL, GENERAL PURPOSE 129, ,885 51, ,369 FEDERAL, SPECIAL PURPOSE Special Purpose, Unassigned 175,000 16,182 (158,818) 156,338 Special Education, Medicaid Reimbursement 50,544 44,189 (6,355) 50,544 Special Education 1,962,558 1,962,557 (1) 1,560,104 Vocational Education 90, ,995 15,410 90,051 Disadvantaged, Title I 1,580,522 1,439,547 (140,975) 1,201,648 School Improvement 722, ,663 35, ,718 Limited English Proficiency 96, ,018 4,023 94,271 Eisenhower Professional Development ,066 School Food Service 1,617,977 1,723, ,866 1,548,679 Direct Special Purpose Grants 50,000 38,611 (11,389) 21,054 Federal Grants Through Other Agencies - 11,697 11,697 - Head Start 579, ,770 16, ,288 Indian Education 288, ,276 11, ,098 Medicaid Administrative Match 145,000 90,843 (54,157) 199,698 USDA Commodities 150, ,461 13, ,377 TOTAL FEDERAL, SPECIAL PURPOSE 7,510,642 7,352,652 (157,990) 6,561,934 REVENUES FROM OTHER DISTRICTS Transportation - 20,834 20,834 15,459 Vocational Education - 1,000 1,000 - Non-High Participation 604, ,449 (747) 571,820 TOTAL REVENUES FROM OTHER DISTRICTS 604, ,283 21, ,279 REVENUES FROM OTHER AGENCIES Agency & Association Grants 28,929 25,007 (3,922) 95,615 TOTAL REVENUES FROM OTHER AGENCIES 28,929 25,007 (3,922) 95,615 TOTAL REVENUES 92,976,767 93,538, ,711 90,629,

70 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 Schedule B-4 (Page 1 of 2) PROGRAM BUDGET ACTUAL VARIANCE ACTUAL REGULAR INSTRUCTION Teaching $ 41,009,163 $ 39,258,489 $1,750,674 $ 36,823,246 Extracurricular 2,421,379 2,571,442 (150,063) 2,474,443 Instructional Supervision 757, ,083 13, ,845 Learning Resources - Library Services 2,098,319 1,962, ,501 1,842,553 Principals 5,429,909 5,409,694 20,215 5,140,662 Guidance and Counseling 1,998,771 1,992,616 6,155 1,919,832 Pupil Management and Safety 1,017, , , ,401 Health Services - Psychologists, Nurses 1,242,160 1,271,365 (29,205) 1,006,736 Total Regular Instruction 55,975,093 54,074,433 1,900,660 50,738,718 SPECIAL INSTRUCTION Basic State Program 5,155,114 4,998, ,316 4,868,104 Supplemental Federal Program 1,918,905 1,967,643 (48,738) 1,547,819 Total Special Instruction 7,074,019 6,966, ,578 6,415,923 VOCATIONAL INSTRUCTION Basic State Program 5,079,244 4,882, ,250 4,864,817 Supplemental Federal Program 87, ,808 (15,691) 87,717 Total Vocational Instruction 5,166,361 4,985, ,559 4,952,534 COMPENSATORY EDUCATION Federal Remediation-Title I 1,536,473 1,400, ,136 1,141,125 Federal School Improvement ESEA 703, ,805 (44,598) 635,435 State Remediation 831, ,373 (1,525) 737,413 Special and Pilot Programs 177,102 83,841 93, ,308 Federal Head Start 574, ,439 6, ,539 Federal Limited English Proficiency 94,353 95,880 (1,527) 90,518 State Transitional Bilingual 783, ,659 68, ,346 Student Achievement I 728 2,432,356 2,513,048 (80,692) 2,560,945 Federal Indian Education 280, ,878 (17,484) 258,877 Total Compensatory Education $ 7,413,516 $ 7,255,260 $ 158,256 $ 7,401,

71 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 Schedule B-4 (Page 2 of 2) PROGRAM BUDGET ACTUAL VARIANCE ACTUAL OTHER EDUCATIONAL PROGRAMS Traffic Safety Education $ - $ - $ - $ 57,668 Summer School 94, ,558 (47,775) 121,083 Highly Capable 77,379 78,543 (1,164) 76,259 State Flexible Education Fund ,453 Eisenhower Professional Development ,681 Other Instructional Programs 768, , , ,539 Total Other Educational Programs 940, ,429 86, ,683 COMMUNITY SERVICES 324, ,485 32, ,741 SUPPORT SERVICES Board of Directors 304, ,592 70, ,678 Superintendent's Office 429, ,869 20, ,768 Business Services 1,047,895 1,028,609 19,286 1,004,896 Human Resources 741, ,897 6, ,140 Maintenance 2,912,556 2,640, ,263 2,806,119 Custodial 3,028,234 2,999,234 29,000 3,028,729 Utilities 2,943,063 2,403, ,496 2,298,078 Insurance 603, ,877 6, ,800 Building Security 151, ,395 (13,017) 89,223 Information Technology 546, , , ,305 Warehouse 327, ,351 15, ,649 Total Support Services 13,035,935 11,947,104 1,088,831 11,412,385 CHILD NUTRITION SERVICES 2,767,324 2,970,835 (203,511) 2,800,516 PUPIL TRANSPORTATION SERVICES 4,134,977 4,141,889 (6,912) 3,701,198 CAPITAL OUTLAY-EQUIPMENT 567, , , ,386 Total Expenditures $ 97,400,136 $ 93,906,845 $ 3,493,291 $ 89,337,

72 Schedule C-1 AUBURN SCHOOL DISTRICT NO. 408 SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) COMPARATIVE BALANCE SHEETS AUGUST 31, 2004 AND ASSETS Cash and Cash Equivalents $ 1,010,224 $ 1,075,948 Accounts Receivable, net Accrued Interest Receivable 1,724 2,458 Due From Other Funds 283, ,274 Inventory of Supplies, at Cost 19,373 15,088 TOTAL ASSETS 1,315,295 1,359,529 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 89,004 27,079 Due To Other Funds 752 1,499 Deferred Revenue 269, ,008 Total Liabilities 359, ,586 Fund Balance: Unreserved Fund Balance 955,991 1,073,943 Total Fund Balance 955,991 1,073,943 TOTAL LIABILITIES AND FUND BALANCE $ 1,315,295 $ 1,359,

73 AUBURN SCHOOL DISTRICT NO. 408 SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) Schedule C BUDGET ACTUAL VARIANCE ACTUAL REVENUES General $ 818,295 $ 611,715 $ (206,580) $ 638,240 Athletics 132, ,312 23, ,958 Classes 128, ,989 (4,601) 131,848 Clubs 882, ,294 85, ,385 Other 30,700 17,481 (13,219) 22,874 Total Revenues 1,992,170 1,876,791 (115,379) 1,786,305 EXPENDITURES Current: General 677, , , ,978 Athletics 172, ,334 (41,401) 188,272 Classes 162, ,110 25, ,999 Clubs 1,021,369 1,148,371 (127,002) 1,011,006 Other 32,740 23,799 8,941 24,584 Capital Outlay: Equipment - 78,008 (78,008) 71,537 Total Expenditures 2,066,724 1,994,743 71,981 1,786,376 Excess of Revenues Over (Under) Expenditures (74,554) (117,952) (43,398) (71) FUND BALANCE - September 1 605,492 1,073, ,451 1,074,014 FUND BALANCE - August 31 $ 530,938 $ 955,991 $ 425,053 $ 1,073,

74 Schedule D-1 AUBURN SCHOOL DISTRICT NO. 408 DEBT SERVICE FUND (BOND FUND) COMPARATIVE BALANCE SHEETS AUGUST 31, 2004 AND ASSETS Cash and Cash Equivalent $ 6,180,716 $ 7,194,163 Property Tax Receivable 6,887,480 6,254,248 Accrued Interest Receivable 10,783 16,434 Due from Other Funds 746,154 2,377 TOTAL ASSETS 13,825,133 13,467,222 LIABILITIES AND FUND BALANCE Liabilities: Accrued Liabilities 18,946 35,613 Deferred Revenue-Taxes Receivable 6,887,480 6,254,248 Total Liabilities 6,906,426 6,289,861 Fund Balance: Unreserved Fund Balance 6,918,707 7,177,361 Total Fund Balance 6,918,707 7,177,361 TOTAL LIABILITIES AND FUND BALANCE $ 13,825,133 $ 13,467,

75 Schedule D-2 AUBURN SCHOOL DISTRICT NO. 408 DEBT SERVICE FUND (BOND FUND) SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Taxes $ 13,629,162 $ 12,978,017 $ (651,145) $ 12,357,961 Local Non-Tax 178, ,298 (78,357) 101,342 Total Revenues 13,807,817 13,078,315 (729,502) 12,459,303 EXPENDITURES DEBT SERVICE Principal Retirement 8,515,000 8,515,000-7,700,000 Interest on Bonds 6,050,359 5,591, ,969 4,498,413 Bond Transfer Fees 4,500 1,873 2,627 1,673 Total Expenditures 14,569,859 14,108, ,596 12,200,086 Excess of Revenues Over Expenditures (762,042) (1,029,948) (267,906) 259,217 OTHER FINANCING SOURCES(USES) Bond Premium - 771, ,294 1,945,125 Total Other Financing Sources - 771, ,294 1,945,125 Excess of Revenues & Other Financing Sources Over Expenditures (762,042) (258,654) 503,388 2,204,342 FUND BALANCE - September 1 5,283,167 7,177,361 1,894,194 4,973,019 FUND BALANCE -August 31 $ 4,521,125 $ 6,918,707 $ 2,397,582 $ 7,177,

76 Schedule E-1 AUBURN SCHOOL DISTRICT NO. 408 CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2004 AND ASSETS Cash and Cash Equivalent $ 44,370,440 $ 42,363,096 Property Tax Receivable 1,247,724 1,247,158 Accrued Interest Receivable 74,341 97,916 Due From Other Funds 64,366 62,470 Due From Other Governments 1,706,009 1,561,590 TOTAL ASSETS 47,462,880 45,332,230 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 2,401,121 2,870,220 Due to Other Funds 766,383 22,407 Deferred Revenue 1,247,724 1,247,158 Total Liabilities 4,415,228 4,139,785 Fund Balance: Unreserved: Designated for School Construction and Equipment 43,047,652 41,192,445 Total Fund Balance 43,047,652 41,192,445 TOTAL LIABILITIES AND FUND BALANCE $ 47,462,880 $ 45,332,

77 Schedule E-2 AUBURN SCHOOL DISTRICT NO. 408 CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Taxes $ 2,477,248 $ 2,460,099 $ (17,149) $ 2,498,520 Local Non-Tax 2,246,166 3,068, ,964 2,001,317 State, Special Purpose ,895 Other Agencies and Associations - 32,500 32,500 - TOTAL REVENUES 4,723,414 5,560, ,315 4,506,732 EXPENDITURES Capital Outlay Sites 5,000,000 92,305 4,907,695 44,001 Building 38,000,000 25,027,474 12,972,526 4,381,291 Equipment 2,500,000 1,202,131 1,297,869 1,274,037 Bond Issuance Expense - 183,612 (183,612) - TOTAL EXPENDITURES 45,500,000 26,505,522 18,994,478 5,699,329 Excess Of Revenues Over (Under) Expenditures (40,776,586) (20,944,793) 19,831,793 (1,192,597) OTHER FINANCING SOURCES (USES) Sale of Bonds - 22,800,000 22,800,000 36,000,000 TOTAL OTHER FINANCING SOURCES (USES) - 22,800,000 22,800,000 36,000,000 Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Uses (40,776,586) 1,855,207 42,631,793 34,807,403 FUND BALANCE - September 1 40,805,840 41,192, ,605 6,385,042 ` FUND BALANCE - August 31 $ 29,254 $ 43,047,652 $ 43,018,398 $ 41,192,

78 Schedule F-1 AUBURN SCHOOL DISTRICT NO. 408 TRANSPORTATION VEHICLE FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2004 AND ASSETS Cash and Cash Equivalents $ 393,488 $ 388,732 Taxes Receivable Interest Receivable 690 1,261 TOTAL ASSETS 394, ,024 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable - 366,354 Deferred Revenue Tax Receivable Total Liabilities $ 23 $ 366,385 Fund Balance: Unreserved 394,178 23,639 Total Fund Balance $ 394,178 $ 23,639 TOTAL LIABILITIES AND FUND BALANCE $ 394,201 $ 390,

79 Schedule F-2 AUBURN SCHOOL DISTRICT NO. 408 TRANSPORTATION VEHICLE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2003) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Sources $ 8,350 $ 6,297 $ (2,053) $ 15,714 State, Special Purpose 333, , ,942 TOTAL REVENUES 342, ,975 (2,053) 494,656 EXPENDITURES Capital Outlay: Equipment 364,000 1, , ,531 TOTAL EXPENDITURES 364,000 1, , ,531 Excess of Revenues (Under) Expenditures (21,972) 338, ,446 (54,875) OTHER FINANCING SOURCES (USES) Sales of surplus buses 32,065 32,065 TOTAL OTHER FINANCING SOURCES(USES) - 32,065 32,065 - Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses (21,972) 370, ,511 (54,875) FUND BALANCE - September 1 22,552 23,639 1,087 78,514 FUND BALANCE - August 31 $ 580 $ 394,178 $ 393,598 $ 23,

80 Schedule G-1 AUBURN SCHOOL DISTRICT NO. 408 PRIVATE-PURPOSE TRUST STATEMENT OF FIDUCIARY NET ASSETS AUGUST 31, 2004 AND ASSETS Cash and Cash Equivalents $ 463,035 $ 424,274 Interest Receivable 891 1,086 Due From Other Funds 29,505 5,337 TOTAL ASSETS 493, ,697 LIABILITIES Accounts Payable Total Liabilities NET ASSETS $ 492,681 $ 430,

81 Schedule G-2 AUBURN SCHOOL DISTRICT NO. 408 PRIVATE-PURPOSE TRUST STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 ADDITIONS: Contributions: Private Donations $ 151,856 Investment Earnings: Net Increase (Decrease) in Fair Value of Investments (1,527) Interest 10,526 TOTAL ADDITIONS 160,855 DEDUCTIONS Scholarships 84,550 Other 14,321 TOTAL DEDUCTIONS 98,871 CHANGES IN NET ASSETS 61,984 NET ASSETS - September 1 430,697 NET ASSETS - August 31 $ 492,

82 Schedule H-1 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF CHANGES IN LONG-TERM DEBT FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 BALANCE BALANCE 9/1/2003 INCREASES DECREASES 8/31/2004 Governmental Bonds Payable 1992 B UTGO and Refunding Bonds $ 15,700,000 $ - $ 3,030,000 $ 12,670, UTGO Refunding Bonds 10,195,000-1,160,000 9,035, UTGO Bonds 34,500,000-26,700,000 7,800, UTGO Refunding Bonds 19,515,000-3,625,000 15,890, UTGO Bonds 36,000, ,000, UTGO Refunding Bonds - 27,785,000-27,785, UTGO Bonds - 18,000,000-18,000,000 Total Bonds Payable 115,910,000 45,785,000 34,515, ,180,000 Unamortized Bond Premium/Discount 2,511,016 2,184, ,162 4,314,535 Unamortized Refunding Loss (1,307,518) (1,656,581) (651,380) (2,312,719) Net Bonds Payable 117,113,498 46,313,100 34,244, ,181,816 Compensated Absences 775, ,412 21, ,094 Total Long-Term Debt $ 117,889,363 $ 46,548,512 $ 34,265,965 $ 130,171,

83 AUBURN SCHOOL DISTRICT NO. 408 OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS AUGUST 31, 2004 Schedule H-2 Original Issue Amount Original Issue Amount Original Issue Amount Original Issue Amount Original Issue Amount Original Issue Amount Original Issue Amount $38,750,000 $22,525,000 $38,000,000 $20,880,000 $36,000,000 $27,785,000 $18,000,000 DUE 1992 Bond 1993 Bond 1997 Bond 1998 Bond 2003 Bond 2004 Refunding Bond 2004 Bond TOTAL TOTAL DATE Dated 5/1/1992 Dated 9/1/1993 Dated 3/1/1997 Dated 10/1/1998 Dated 5/8/2003 Dated 3/1/2004 Dated 8/1/2004 DEBT CALENDAR Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest SERVICE YEAR 12/1/04 5,985, ,856 1,310, , ,725 1,220, , , , , ,188 12,056,365 12,056,365 6/1/05-213, , , , , , , , ,283 3,341,197 12/1/05 3,555, ,084 3,870, , ,750 1,905, , , , ,282 12,187,472 15,528,669 6/1/06-99,769-93, , , , , , ,282 2,786,724 12/1/06 3,130,000 99,769 3,855,000 93, ,750 3,170, , , , ,283 12,764,976 15,551,700 6/1/ , , , , , ,282 2,516,989 12/1/ ,000, ,750 9,595, , , , ,283 12,930,192 15,447,181 6/1/ , , , , ,282 2,250,315 12/1/ ,050, , , ,439 2,200, ,283 7,313,235 9,563,550 6/1/ , , , , ,533 2,125,985 12/1/ ,450,000 86, , ,064 2,350, ,532 7,733,609 9,859,594 6/1/ ,762 1,615, , ,783 3,403,609 12/1/ ,763 1,600, , ,782 3,364,841 6,768,450 6/1/ ,762 1,830, , ,783 3,570,840 12/1/ ,763 1,830, , ,782 3,541,103 7,111,943 6/1/ ,762 1,795, , ,783 3,478,653 12/1/ ,763 1,795, , , ,782 3,802,241 7,280,894 6/1/ , , ,683 1,609,241 12/1/ ,763 4,010, , , ,682 5,889,240 7,498,481 6/1/ ,762 2,015, , ,283 3,518,591 12/1/ ,763 2,015, , , ,282 4,207,069 7,725,660 6/1/ , , ,783 1,415,795 12/1/ ,763 3,920, ,250 1,205, ,782 6,540,795 7,956,590 6/1/ ,762-97, ,398 1,285,410 12/1/ ,763 3,890,000 97,250 1,735, ,398 6,910,411 8,195,821 6/1/ , ,770 1,141,532 12/1/ ,030, , , ,770 7,296,533 8,438,065 6/1/ , , ,683 12/1/ ,580, , , ,207 7,710,682 8,691,365 6/1/ , , ,845 12/1/ ,170, , , ,095 8,149,845 8,954,690 6/1/ , , ,920 12/1/ ,780, , , ,420 8,601,920 9,223,840 6/1/ , , ,120 12/1/ ,440, , , ,120 9,073,120 9,496,240 6/1/ , ,500 12/1/ ,300, ,500 8,507,500 8,715,000 12,670,000 1,029,563 9,035, ,262 7,800,000 1,996,200 15,890,000 2,214,075 36,000,000 28,643,038 27,785,000 10,698,236 18,000,000 11,518, ,064, ,064,098

84 Schedule I-1 AUBURN SCHOOL DISTRICT NO.408 SCHEDULE OF CAPITAL ASSETS BY LOCATION AUGUST 31, 2004 Construction Property Location Land Buildings in Progress Equipment Totals SENIOR HIGH SCHOOLS Auburn 800 4th Street N.E. $ 592,951 $ 26,403,544 $ - $ 1,115,850 $ 28,112,345 Auburn Riverside 501 Oravetz Rd 3,509,188 31,642, ,235 35,790,649 West Auburn 401 West Main Street 16,650 3,966,302 16,590 3,999,542 Auburn Memorial 801 4th Street N.E. 47,242 6,358,208 60,613 6,466,063 MIDDLE SCHOOLS Cascade th Street NE 121,486 8,495,693 76,157 8,693,336 Mt. Baker th Street SE 2,923,600 13,453,860 94,070 16,471,530 Olympic 1825 "K" Street SE 92,532 8,966,021 30,360 9,088,913 Rainier th Ave. SE 107,681 10,956,929 35,900 11,100,510 ELEMENTARY SCHOOLS Alpac 310 Milwaukee Blvd N. 83,007 4,788,914 60,483 4,932,404 Chinook 3502 Auburn Way S. 32,985 3,513,839 78,900 3,625,724 Dick Scobee th Street NE 9,731 4,415,674 67,275 4,492,680 Evergreen Heights 5602 So 316th 22,223 2,151,056 64,695 2,237,974 Gildo Rey th Street SE 30,232 2,996,162 49,931 3,076,325 Hazelwood SE 304th Street 230,323 5,614,612 29,341 5,874,276 Ilalko 301 Oravetz Pl SE 2,007,182 6,770,908 89,749 8,867,839 Lake View SE 318th 408,702 4,273,651 48,254 4,730,607 Lea Hill th Ave. SE 21,620 3,774, ,930 3,921,555 Pioneer 2301 "M" Street SE 18,082 3,140,723 45,729 3,204,534 Terminal Park 1101 "D" Street SE 26,603 2,955,375 54,517 3,036,495 Washington 20 "E" Street NE 10,000 6,723,246 65,758 6,799,004 OTHER LOCATIONS James P. Fugate Center 915 4th Street NE 88,690 2,110, ,907 3,167,179 Administration Annex 502 4th Street NE 232, ,035 6, ,714 Support Services Center th Street SW 1,046,802 4,466,330 1,169,680 6,682,812 Transportation th Street SW 18 4,661,051 8,239,182 12,900,251 Portables Various Sites 2,033,924 2,033,924 Miscellaneous Sites Various Sites 354, , ,182 Construction in Progress 39,831,275 39,831,275 TOTALS $ 12,034,296 $ 175,497,932 $ 39,831,275 $ 13,232,139 $ 240,595,

85 Schedule I-2 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF CHANGES IN CAPITAL ASSETS AUGUST 31, 2004 CAPITAL ADDITIONS DELETIONS CAPITAL ASSETS ASSETS CAPITAL ASSET TYPES 9/1/2003 8/31/2004 Land $ 12,034,296 $ - $ - $ 12,034,296 Buildings and Improvements 173,910,776 1,587, ,497,932 Equipment 12,991, ,559 (107,736) 13,232,139 Construction In Progress 16,580,881 26,505,522 (3,255,128) 39,831,275 Totals at Historical Cost 215,517,269 28,441,237 (3,362,864) 240,595,642 Less: Accumulated Depreciation Building and Improvements (51,095,418) (3,598,395) - (54,693,813) Equipment (9,085,598) (968,654) 84,180 (9,970,072) Total Accumulated Depreciation (60,181,016) (4,567,049) 84,180 (64,663,885) Capital Assets, Net of Accumulated Depreciation $ 155,336,253 $ 23,874,188 $ (3,278,684) $ 175,931,

86 AUBURN SCHOOL DISTRICT NO. 408 SCHEDULE OF CAPITAL ASSETS BY FUNCTION AND ACTIVITY AUGUST 31, 2004 Schedule I-3 Construction Function and Activity Land Buildings in Progress Equipment Totals ADMINISTRATION Administration $ - $ - $ - $ 81,946 $ 81,946 General Buildings 321,335 5,009,602 5,330,937 Total Administration 321,335 5,009,602 81,946 5,412,883 INSTRUCTION Supervision 58,823 58,823 Learning Resources 48,017 48,017 Teaching 2,236,386 2,236,386 Extracurricular 255, ,216 School Buildings 10,666, ,360, ,027,090 Total 10,666, ,360,949 2,598, ,625,532 CHILD NUTRITION SERVICES Operations 267, ,479 Total , ,479 PUPIL TRANSPORTATION Supervision 18 4,661, ,736 4,767,805 Maintenance 7,847,463 7,847,463 Total 18 4,661,051 7,954,199 12,615,268 MAINTENANCE & OPERATIONS Supervision 1,046,802 4,466,330 41,488 5,554,620 Grounds Care 440, ,779 Operations of Plant 382, ,315 Maintenance - 357, ,766 Total 1,046,802 4,466,330 1,222,348 6,735,480 OTHER SERVICES Information Technology 897, ,002 Printing & Graphics - 48,485 48,485 Warehousing - 162, ,238 Total - 1,107,725 1,107,725 CONSTRUCTION IN PROGRESS 39,831,275 39,831,275 Total $ 12,034,296 $ 175,497,932 $ 39,831,275 $ 13,232,139 $ 240,595,

87 AUBURN SCHOOL DISTRICT NO. 408 SUMMARY AMORTIZATION SCHEDULE FOR ALL OUTSTANDING BONDS BOND PREMIUM, DISCOUNT, REFUNDING ADJUSTMENT FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J-1 Date Payment Interest Expense Premium/ Discount Amortized Unamortized Premium/ Discount Principal $ $ - $ - $ 4,555 - Refunding Adjustment Amortized Unamortized Refunding Adjustment Bond Carrying Value $ $ - $ 1,394,786 $ 37,359,769 05/01/92-12/01/92 1,412,779 1,412, ,398-58,116 1,336,670 37,417,728 06/01/93 1,950,219 1,210, (193,928) - 58,116 1,278,554 57,149,219 12/01/93 1,812,134 1,467,402 (7,183) (186,745) 600, ,166 3,771,687 56,716,568 06/01/94 2,100,044 1,707,227 (7,183) (179,562) - 160,166 3,611,521 56,883,917 12/01/94 1,809,044 1,707,227 (7,183) (172,379) 515, ,166 3,451,355 56,536,266 06/01/95 1,691,342 1,698,524 (7,183) (165,196) - 160,166 3,291,189 56,703,615 12/01/95 1,811,342 1,698,525 (7,183) (158,013) 120, ,166 3,131,023 56,750,964 06/01/96 2,993,342 1,695,525 (7,183) (150,830) - 160,166 2,970,857 56,918,313 12/01/96 2,354,199 1,695,525 (7,183) 169,168 1,995, ,166 2,810,691 93,403,477 06/01/97 3,837,237 2,146, , , ,166 2,650,525 93,213,006 12/01/97 3,240,257 2,640, ,894 1,965, ,166 2,490,359 91,407,535 06/01/98 5,655,342 2,334, ,022,261 1,100, ,166 2,330, ,568,104 12/01/98 3,999,518 2,428,281 45, ,624 3,790, ,664 3,617,493 98,989,131 06/01/99 5,278,344 2,662,707 45, , , ,664 3,360,829 98,950,158 12/01/99 4,419,499 2,657,582 45, ,350 4,085, ,664 3,104,165 95,076,185 06/01/00 4,921,340 2,560,703 45, , , ,664 2,847,501 94,987,212 12/01/00 5,136,214 2,554,403 45, ,076 4,595, ,664 2,590,837 90,603,239 06/01/01 3,991,864 2,436,227 45, , , ,664 2,334,173 90,314,266 12/01/01 6,228,389 2,427,727 45, ,802 4,890, ,664 2,077,509 85,735,293 06/01/02 3,963,099 2,287,462 45, , , ,664 1,820,845 85,446,320 12/01/02 7,266,233 2,276,586 45, ,528 6,100, ,664 1,564,181 79,557,347 06/01/03 3,905,188 2,099,551 45,637 2,511, , ,664 1,307, ,113,499 12/01/03 9,827,968 3,102,020 98,208 3,877,318 7,815, ,664 1,050, ,049,884 06/01/04 4,439,866 2,275, ,535 4,314, , ,715 2,312, ,181,816 12/01/04 10,714,924 2,804, ,279 4,142,256 9,080, ,596 1,976, ,266,133 06/01/05 7,211,197 2,693, ,279 3,969, , ,597 1,639, ,955,451 12/01/05 8,223,140 2,685, ,279 3,797,698 9,330, ,596 1,302, ,789,768 06/01/06 6,641,724 2,439, ,281 3,625, , , , ,779,079 12/01/06 8,928,663 2,550, ,290 3,453,116 10,155, , , ,589,837 06/01/07 2,516,990 2,157, ,462 3,273, , , , ,368,423 12/01/07 12,930,191 2,155, ,466 3,094,200 10,595, , ,193 89,732,006 06/01/08 2,250,316 1,930, ,461 2,959, , , ,145 89,550,593 12/01/08 7,313,234 1,928, ,461 2,825,278 5,250, , ,097 84,304,180 06/01/09 2,125,986 1,801, ,461 2,690, , , ,048 84,117,768 12/01/09 7,733,608 1,799, ,461 2,556,355 5,800, ,048-78,321,355 06/01/10 3,403,610 1,660, ,362 2,427,993 1,615, ,577,993 12/01/10 3,364,840 1,636, ,362 2,299,631 1,600, ,849,631 06/01/11 3,570,841 1,612, ,362 2,171,269 1,830, ,891,269 12/01/11 3,541,102 1,582, ,362 2,042,907 1,830, ,932,907 06/01/12 3,478,654 1,555, ,362 1,914,545 1,795, ,009,545 12/01/12 3,802,240 1,523, ,362 1,786,183 2,150, ,731,183 06/01/13 1,609,242 1,480, ,362 1,657, ,602,821 12/01/13 5,889,239 1,480, ,362 1,529,459 4,280, ,194,459 06/01/14 3,518,592 1,375, ,362 1,401,097 2,015, ,051,097 12/01/14 4,207,068 1,338, ,362 1,272,735 2,740, ,182,

88 Date Payment Interest Expense Premium/ Discount Amortized Unamortized Premium/ Discount Principal Refunding Adjustment Amortized Unamortized Refunding Adjustment Bond Carrying Value 06/01/15 1,415,796 1,287, ,362 1,144, ,054,373 12/01/15 6,540,794 1,287, ,362 1,016,011 5,125, ,801,011 06/01/16 1,285,411 1,157, , , ,672,649 12/01/16 6,910,410 1,157, , ,279 5,625, ,919,279 06/01/17 1,141,533 1,069,498 72, , ,847,244 12/01/17 7,296,532 1,069,497 72, ,209 6,155, ,620,209 06/01/18 980, ,648 72, , ,548,174 12/01/18 7,710, ,647 72, ,139 6,730, ,746,139 06/01/19 804, ,810 72, , ,674,104 12/01/19 8,149, ,810 72, ,069 7,345, ,257,069 06/01/20 621, ,885 72, , ,185,034 12/01/20 8,601, ,885 72, ,000 7,980, ,132,999 06/01/21 423, ,086 72, , ,060,965 12/01/21 9,073, ,086 72,034 38,931 8,650, ,338,931 06/01/22 207, ,036 19,464 19, ,319,467 12/01/22 8,507, ,033 19,467-8,300, $ 276,691,815 $ 103,866,223 $ 4,975,592 $ 167,850,000 $ 7,248, ,914,846 58,059,565 4,567,278 70,541, ,695,000 2,964,098 12,147,

89 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM AND REFUNDING ADJUSTMENT 1992B-BONDS FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J B Unlimited Tax General Obligation and Refunding Bond Issue (Refunded 1988 Bonds) Date Payment Refunding Unamortized Interest Premium Unamortized Bond Carrying Principal Adjustment Refunding Expense Amortized Premium Value Amortized Adjustment 05/01/92 $ - $ - $ 4,555 $ - $ - $ 1,394,786 $ 37,359,769 12/01/92 1,412,779 1,412,622 $ 157 4,398-58,116 1,336,670 37,417,728 06/01/93 1,210,954 1,210, ,241-58,116 1,278,554 37,475,687 12/01/93 1,320,954 1,210, , ,000 58,116 1,220,438 37,423,646 06/01/94 1,208,864 1,208, ,927-58,116 1,162,322 37,481,605 12/01/94 1,323,864 1,208, , ,000 58,116 1,104,206 37,424,564 06/01/95 1,206,161 1,206, ,613-58,116 1,046,090 37,482,523 12/01/95 1,326,161 1,206, , ,000 58, ,974 37,420,482 06/01/96 1,203,161 1,203, ,299-58, ,858 37,478,441 12/01/96 1,893,161 1,203, , ,000 58, ,742 36,846,400 06/01/97 1,185,049 1,184, ,985-58, ,626 36,904,359 12/01/97 1,810,049 1,184, , ,000 58, ,510 36,337,318 06/01/98 905, , ,671-58, ,394 28,305,277 12/01/98 1,985, , ,514 1,080,000 58, ,278 27,283,236 06/01/99 871, , ,357-58, ,162 27,341,195 12/01/99 2,341, , ,200 1,470,000 58, ,046 25,929,154 06/01/00 828, , ,043-58, ,930 25,987,113 12/01/00 3,103, , ,886 2,275,000 58, ,814 23,770,072 06/01/01 760, , ,729-58, ,698 23,828,031 12/01/01 4,540, , ,572 3,780,000 58, ,582 20,105,990 06/01/02 644, , ,415-58, ,466 20,163,949 12/01/02 5,339, , ,258 4,695,000 58, ,350 15,526,908 06/01/03 499, , ,101-58, ,234 15,584,867 12/01/03 3,529, , ,030,000 58,116 58,118 12,612,826 06/01/04 403, , ,118-12,670,787 12/01/04 6,388, , ,985,000 6,685,630 06/01/05 213, , ,685,473 12/01/05 3,768, , ,555,000 3,130,316 06/01/06 99,768 99, ,130,157 12/01/06 3,229,768 99, ,130,000 - $ 54,552,945 $ 23,888,390 $ 4,555 $ 30,660,000 $ 1,394,786 Refunded in ,090,000 Total Original Issue $ 38,750,

90 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND DISCOUNT AND REFUNDING ADJUSTMENT 1993 BONDS FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J Unlimited Tax General Obligation Refunding Bonds (Refunded 1986, 1987, 1990 Bond Issues) Refunding Unamortized Interest Discount Unamortized Date Payment Principal Adjustment Refunding Expense Ammortized Discount Amortized Adjustment Bond Carrying Value 09/20/93 $ - $ - $ 198,169 $ - $ - $ 2,653,299 $ 19,673,532 12/01/93 739, ,605 $ 7, , , ,050 2,551,249 19,292,922 06/01/94 491, ,520 7, , ,050 2,449,199 19,402,312 12/01/94 891, ,520 7, , , ,050 2,347,149 19,111,702 06/01/95 485, ,520 7, , ,050 2,245,099 19,221,092 12/01/95 485, ,521 7, , ,050 2,143,049 19,330,482 06/01/96 485, ,521 7, , ,050 2,040,999 19,439,872 12/01/96 1,790, ,521 7, ,789 1,305, ,050 1,938,949 18,244,262 06/01/97 461, ,378 7, , ,050 1,836,899 18,353,652 12/01/97 1,801, ,378 7, ,109 1,340, ,050 1,734,849 17,123,042 06/01/98 434, ,248 7, , ,050 1,632,799 17,232,432 12/01/98 2,654, ,248 7, ,429 2,220, ,050 1,530,749 15,121,822 06/01/99 390, ,848 7, , ,050 1,428,699 15,231,212 12/01/99 2,710, ,848 7, ,749 2,320, ,050 1,326,649 13,020,602 06/01/00 341, ,128 7,340 95, ,050 1,224,599 13,129,992 12/01/00 2,356, ,128 7,340 88,069 2,015, ,050 1,122,549 11,224,382 06/01/01 297, ,302 7,340 80, ,050 1,020,499 11,333,772 12/01/01 1,407, ,302 7,340 73,389 1,110, , ,449 10,333,162 06/01/02 272, ,327 7,340 66, , ,399 10,442,552 12/01/02 1,402, ,327 7,340 58,709 1,130, , ,349 9,421,942 06/01/03 246, ,337 7,340 51, , ,299 9,531,332 12/01/03 1,406, ,337 7,340 44,029 1,160, , ,249 8,480,722 06/01/04 219, ,077 7,340 36, , ,199 8,590,112 12/01/04 1,529, ,077 7,340 29,349 1,310, , ,149 7,389,502 06/01/05 188, ,637 7,340 22, , ,099 7,498,892 12/01/05 4,058, ,637 7,340 14,669 3,870, , ,049 3,738,282 06/01/06 93, ,306 7,340 7, ,049-3,847,671 12/01/06 3,948, ,295 7,329-3,855,000 - $ 31,593,724 $ 9,266,893 $ 198,169 $ 22,525,000 $ 2,653,

91 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 1997 BONDS FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J Unlimited Tax General Obligation Bond Issue Date Premium Unamortized Principal Bond Carrying Payment Interest Expense Amortized Premium Payment Value 03/13/97 $ - $ - $ - $ 312,815 $ - $ 38,312,815 06/01/97 851, ,330 7, , ,000 37,954,995 12/01/97 995, ,480 7, ,175-37,947,175 06/01/98 2,095, ,480 7, ,355 1,100,000 36,839,355 12/01/98 973, ,480 7, ,535-36,831,535 06/01/99 1,223, ,480 7, , ,000 36,573,715 12/01/99 968, ,355 7, ,895-36,565,895 06/01/00 1,268, ,355 7, , ,000 36,258,075 12/01/00 961, ,055 7, ,255-36,250,255 06/01/01 1,361, ,055 7, , ,000 35,842,435 12/01/01 953, ,555 7, ,615-35,834,615 06/01/02 1,453, ,555 7, , ,000 35,326,795 12/01/02 942, ,680 7, ,975-35,318,975 06/01/03 1,542, ,680 7, , ,000 34,711,155 12/01/03 929, ,330 7, ,335 34,703,335 06/01/04 930, ,830 7,820 67, ,000 7,867,096 12/01/04 214, ,625 6,100 60,996-7,860,996 06/01/05 514, ,625 6,100 54, ,000 7,554,896 12/01/05 207, ,650 6,100 48,796-7,548,796 06/01/06 207, ,650 6,100 42,696-7,542,696 12/01/06 207, ,650 6,100 36,596-7,536,596 06/01/07 207, ,650 6,100 30,496-7,530,496 12/01/07 1,207, ,650 6,100 24,396 1,000,000 6,524,396 06/01/08 177, ,651 6,099 18,297-6,518,297 12/01/08 3,227, ,651 6,099 12,198 3,050,000 3,462,198 06/01/09 86,250 80,151 6,099 6,099-3,456,099 12/01/09 3,536,250 80,151 6,099-3,450,000 - $ 27,246,200 $ 15,061,804 $ 184,396 $ 12,000,000 Refunded in ,419 26,000,000 Total Original Issue $ 312,815 $ 38,000,

92 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM AND REFUNDING ADJUSTMENT 1998 BONDS FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J-5 Date 1998 Unlimited Tax General Obligation Refunding Bonds (Refunded 1992 Bonds) Refunding Unamortized Interest Premium Unamortized Payment Principal Adjustment Refunding Expense Amortized Premium Amortized Adjustment Bond Carrying Value 10/13/98 $ - $ - $ 855,004 $ - $ 1,543,964 $ 20,191,040 12/01/98 650, ,576 $ 45, , ,000 96,498 1,447,466 19,752,538 06/01/99 473, ,153 45, ,004-96,498 1,350,968 19,804,036 12/01/99 768, ,153 45, , ,000 96,498 1,254,470 19,560,534 06/01/00 467, ,991 45, ,004-96,498 1,157,972 19,612,032 12/01/00 772, ,991 45, , ,000 96,498 1,061,474 19,358,530 06/01/01 461, ,891 45, ,004-96, ,976 19,410,028 12/01/01 461, ,891 45, ,004-96, ,478 19,461,526 06/01/02 461, ,891 45, ,004-96, ,980 19,513,024 12/01/02 736, ,890 45, , ,000 96, ,482 19,289,522 06/01/03 456, ,390 45, ,004-96, ,984 19,341,020 12/01/03 4,081, ,390 45, ,004 3,625,000 96, ,486 15,767,518 06/01/04 381, ,625 45, ,004-96, ,988 15,819,016 12/01/04 1,601, ,625 45, ,004 1,220,000 96, ,490 14,650,514 06/01/05 357, ,225 45, ,004-96, ,992 14,702,012 12/01/05 2,262, ,225 45, ,004 1,905,000 96,498 96,494 12,848,510 06/01/06 319, ,125 45, ,004-96,494-12,900,004 12/01/06 3,489, ,125 45,000 90,004 3,170,000 9,685,004 06/01/07 239, ,875 45,000 45,004-9,640,004 12/01/07 9,834, ,871 45,004-9,595,000 - $ 28,278,907 $ 6,543,903 $ 855,004 $ 20,880,000 $ 1,543,

93 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 2003 BONDS FOR THE YEAR ENDED AUGUST 31, 2004 Schedule J Unlimited Tax General Obligation Bond Issue Date Payment Interest Expense Premium Amortized Unamortized Premium Principal Bond Carrying Value 05/08/03 $ - $ - $ - $ 1,945,125 $ - $ 37,945,125 12/01/03 1,068,390 1,015,819 52,571 1,892,554-37,892,554 06/01/04 915, ,192 52,571 1,839,983-37,839,983 12/01/04 915, ,191 52,571 1,787,412-37,787,412 06/01/05 915, ,192 52,571 1,734,841-37,734,841 12/01/05 915, ,191 52,571 1,682,270-37,682,270 06/01/06 915, ,192 52,571 1,629,699-37,629,699 12/01/06 915, ,191 52,571 1,577,128-37,577,128 06/01/07 915, ,192 52,571 1,524,557-37,524,557 12/01/07 915, ,191 52,571 1,471,986-37,471,986 06/01/08 915, ,192 52,571 1,419,415-37,419,415 12/01/08 915, ,191 52,571 1,366,844-37,366,844 06/01/09 915, ,192 52,571 1,314,273-37,314,273 12/01/09 915, ,191 52,571 1,261,702-37,261,702 06/01/10 915, ,192 52,571 1,209,131-37,209,131 12/01/10 915, ,191 52,571 1,156,560-37,156,560 06/01/11 915, ,192 52,571 1,103,989-37,103,989 12/01/11 915, ,191 52,571 1,051,418-37,051,418 06/01/12 915, ,192 52, ,847-36,998,847 12/01/12 915, ,191 52, ,276-36,946,276 06/01/13 915, ,192 52, ,705-36,893,705 12/01/13 915, ,191 52, ,134-36,841,134 06/01/14 915, ,192 52, ,563-36,788,563 12/01/14 915, ,191 52, ,992-36,735,992 06/01/15 915, ,192 52, ,421-36,683,421 12/01/15 915, ,191 52, ,850-36,630,850 06/01/16 915, ,192 52, ,279-36,578,279 12/01/16 915, ,191 52, ,708-36,525,708 06/01/17 915, ,192 52, ,137-36,473,137 12/01/17 6,945, ,191 52, ,566 6,030,000 30,390,566 06/01/18 757, ,904 52, ,995-30,337,995 12/01/18 7,337, ,904 52, ,424 6,580,000 23,705,424 06/01/19 584, ,179 52, ,853-23,652,853 12/01/19 7,754, ,179 52, ,282 7,170,000 16,430,282 06/01/20 405, ,929 52, ,711-16,377,711 12/01/20 8,185, ,929 52, ,140 7,780,000 8,545,140 06/01/21 211, ,430 52,570 52,570-8,492,570 12/01/21 8,651, ,430 52,570-8,440,000 - $ 66,627,190 $ 28,682,065 $ 1,945,125 $ 36,000,

94 Building the Future Statistical Section