OFFICIAL STATEMENT. Maturity Schedule

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1 NEW ISSUE BANK QUALIFIED OFFICIAL STATEMENT RATING S & P: AA+ BOOK-ENTRY ONLY In the opinion of Spencer Fane Britt & Browne LLP, Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest on the Bonds is excluded from gross income for federal and Missouri income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and individuals. The Bonds are qualified taxexempt obligations within the meaning of Section 265(b)(3)(B) of the Internal Revenue Code of 1986, as amended. See TAX EXEMPTION herein. $3,730,000 WRIGHT CITY R-II SCHOOL DISTRICT OF WARREN COUNTY, MISSOURI GENERAL OBLIGATION REFUNDING BONDS, SERIES 2011A (MISSOURI DIRECT DEPOSIT PROGRAM) Dated: February 3, 2011 Due: March 1, as shown below The Bonds are issuable only in fully registered form, without coupons, and, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Principal of the Bonds will be paid on March 1 of the years in which the Bonds mature, beginning March 1, 2012 by check or draft upon presentation and surrender of such Bond at the principal corporate trust office of UMB Bank, N.A., Kansas City, Missouri (the Paying Agent and Registrar ). Interest will be payable semiannually on March 1 and September 1 in each year, beginning September 1, 2011, by the Paying Agent to the person in whose name such Bond is registered on the fifteenth day (whether or not a business day) of the calendar month next preceding each interest payment date. Purchases of the Bonds will be made in book-entry form, in the denomination of $5,000 each or any authorized integral multiple thereof. Purchasers will not receive certificates representing their interests in the Bonds purchased. So long as Cede & Co. is the registered owner of the Bonds, as nominee for DTC, references herein to the Bond owners or registered owners shall mean Cede & Co. and shall not mean the Beneficial Owners (herein defined) of the Bonds. Principal of and semiannual interest on the Bonds will be paid by the UMB Bank, N.A., as Paying Agent, to DTC. DTC is expected to remit such principal and interest payments to the DTC Participants (herein defined) for subsequent payment to the Beneficial Owners. To support payment of the Bonds, the District has entered into a Direct Deposit Agreement under which the Treasurer of the State of Missouri has agreed to deposit with Wells Fargo Bank, N.A. (the Deposit Trustee ) to the extent appropriated by the State of Missouri and available therefor, moneys sufficient to pay when due the principal of and interest on the Bonds. The District has pledged those moneys to payment of the Bonds and, on the day prior to the dates set for payment of principal of or interest on the Bonds, the Deposit Trustee will deposit those moneys with the Paying Agent for payment of such interest and principal. See Direct Deposit Program herein. The Bonds are being issued for the purpose of providing funds to refund $695,000 outstanding callable principal amount of the District s General Obligation Bonds, Series 2003 maturing from March 1, 2012 to March 1, 2017 callable March 1, 2011 which will be redeemed on March 1, 2011; to refund $2,250,000 outstanding callable principal amount of the District s General Obligation School Building Bonds, Series 2006B maturing March 1, 2019 and March 1, 2020 callable March 1, 2011 which will be redeemed on March 1, 2011; and to refund $785,000 outstanding callable principal amount of the District s General Obligation Refunding Bonds, Series 2008 maturing from March 1, 2012 and March 1, 2013 callable March 1, 2011 which will be redeemed on March 1, THE BONDS AND INTEREST THEREON WILL CONSTITUTE GENERAL OBLIGATIONS OF THE DISTRICT, PAYABLE FROM AD VALOREM TAXES WHICH MAY BE LEVIED WITHOUT LIMITATION AS TO RATE OR AMOUNT UPON ALL OF THE TAXABLE TANGIBLE PROPERTY, REAL AND PERSONAL, WITHIN THE TERRITORIAL LIMITS OF THE DISTRICT. Maturity (March 1) Maturity Schedule Principal Amount Interest Rate Yield Price 2012 $735, % 0.85% 100% 2013 $635, % 1.05% 100% 2014 $335, % 1.40% 100% 2015 $1,165, % 1.80% 100% 2016 $860, % 2.10% 100% (Plus Accrued Interest from February 3, 2011) The Bonds maturing on and after March 1, 2015 may be called for redemption and payment prior to their stated Maturity at the option of the District on March 1, 2014 and thereafter as a whole at any time or in part on any Interest Payment Date in such order of maturity as the District shall determine, in the manner prescribed by the Registrar for partial redemption of Bonds within a single maturity, at the Redemption Price of 100% of the principal amount thereof, plus accrued interest thereon to the redemption date, as described herein under The Bonds - Redemption. The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval of legality by Spencer Fane Britt & Browne LLP, St. Louis, Missouri, Bond Counsel, and certain other conditions. It is expected that the Bonds in definitive form will be ready for delivery on or about February 3, L. J. HART & COMPANY The date of the Official Statement is January 20, 2011.

2 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR AFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MAY OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized by the District or the Underwriter to give any information or make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any offer, solicitation or sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder at any time shall under any circumstances create any implication that there has been no change in the affairs of the District as of any time subsequent to the date hereof. Pursuant to Rule 15c2-12 of the Securities Exchange Act of 1934, as amended, the District agrees to provide to the Municipal Securities Rulemaking Board through its Electronic Municipal Marketing Access ( EMMA ) system the following information: (a) annual financial information in substantially the scope and form contained herein under the headings The District, General Obligation Indebtedness Of The District, "Capital Facilities Lease Obligations Of The District", Financial Information Concerning The District and Property Taxes, (b) audited financial statements, (c) notice of any material events as defined by Rule 15c2-12 and (d) notice of failure timely to provide the required information. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 Purpose of the Official Statement... 1 Additional Information... 1 THE BONDS... 1 Purpose of the Bonds... 1 Security for the Bonds and Certain Market Risks... 3 Description of the Bonds... 3 Direct Deposit of State Aid Payments... 3 Book-Entry Only System... 4 Transfer or Exchange... 7 Optional Redemption... 7 Notice of Redemption... 8 APPLICATION OF BOND PROCEEDS... 8 THE DISTRICT... 9 Enrollment Figures Largest Employers Largest Taxpayers GENERAL OBLIGATION INDEBTEDNESS OF THE DISTRICT Outstanding Indebtedness of the District CAPITAL FACILITIES LEASE OBLIGATIONS OF THE DISTRICT FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures Sources of Revenue Missouri School Finance Laws Tax Rates PROPERTY TAXES Tax Collection Procedures Tax Collection Record LEGAL PROCEEDINGS TAX EXEMPTION Opinion of Bond Counsel Other Tax Consequences RATING LITIGATION UNDERWRITING CONTINUING DISCLOSURE MISCELLANEOUS APPENDIX A... 1 FINANCIAL STATEMENTS OF THE... 1

3 WRIGHT CITY R-II SCHOOL DISTRICT OF WARREN COUNTY, MISSOURI ADMINISTRATIVE OFFICE 90 Bell Road Wright City, Missouri (636) BOARD OF EDUCATION Austin Jones -- Alice Klem -- Mary Groeper -- Corri Ruge Olson -- Gina Allen -- Laura Marsh -- Melissa Springmeyer -- President and Member Vice President and Member Treasurer and Member Secretary and Member Member Member Member ADMINISTRATION Chris O. Gaines -- Superintendent of Schools David Buck -- Assistant Superintendent Jill H. Smoot -- Secretary to the Superintendent Konee Box -- Business Manager BOND COUNSEL Spencer Fane Britt & Browne LLP St. Louis, Missouri CERTIFIED PUBLIC ACCOUNTANT Larson Allen, LLP St. Louis, Missouri UNDERWRITER L.J. Hart & Company St. Louis, Missouri PAYING AGENT / REGISTRAR UMB Bank, N.A. Kansas City, Missouri

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5 OFFICIAL STATEMENT $3,730,000 WRIGHT CITY R-II SCHOOL DISTRICT OF WARREN COUNTY, MISSOURI GENERAL OBLIGATION REFUNDING BONDS, SERIES 2011A (MISSOURI DIRECT DEPOSIT PROGRAM) Purpose of the Official Statement INTRODUCTORY STATEMENT This Official Statement, including the cover page hereof and Appendix A hereto, is provided to furnish information relating to the Wright City R-II School District of Warren County, Missouri (the District ) and the offering and sale of $3,730,000 aggregate principal amount of General Obligation Refunding Bonds, Series 2011A (Missouri Direct Deposit Program), of the District, dated February 3, 2011 (the Bonds ). Descriptions, summaries and explanations of the Resolution, the Bonds, and provisions of the Constitution and laws of the State of Missouri set forth herein do not purport to be complete and are qualified in their entirety by reference to the Resolution, the form of the Bonds and the official compilations of said Constitution and laws. Additional Information Additional information regarding the District or the Bonds may be obtained from the District s Superintendent of Schools at the Administrative Office, 90 Bell Road, Wright City, Missouri , telephone (636) or from the Underwriter at Swingley Ridge Road, Suite 210, St. Louis, Missouri 63017, telephone (636) Purpose of the Bonds THE BONDS The Bonds are being issued in the aggregate amount of $3,730,000 for the purpose of refunding $695,000 principal amount of the District s General Obligation Bonds, Series 2003, dated January 23, 2003, (the Series 2003 Refunded Bonds ); $2,250,000 principal

6 amount of the District s General Obligation School Building Bonds, Series 2006B, dated December 21, 2006 (the Series 2006B Refunded Bonds ); and $785,000 principal amount of the District s General Obligation Refunding Bonds, Series 2008, dated May 28, 2008 (the Series 2008 Refunded Bonds ). The proceeds from the Bonds will prepay $695,000 of the Series 2003 Refunded Bonds maturing March 1, 2012 through March 1, 2017; $2,250,000 of the Series 2006B Refunded Bonds maturing March 1, 2019 and March 1, 2020; and $785,000 of the Series 2008 Refunded Bonds maturing March 1, 2012 and March 1, 2013 (together referred to as Refunded Bonds ) that will be called in for early redemption on March 1, The issuance and the sale of the Bonds are authorized by a resolution adopted by the Board of Education of the District on January 20, 2010 (the Resolution ). The Series 2003 Refunded Bonds were issued in the amount of $799,250 and the Series 2008 Refunded Bonds were issued in the amount of $2,735,000 pursuant to and in full compliance with the Constitution and laws of the State of Missouri, including particularly Section 26 of Article VI of the Constitution of Missouri and Chapters 162 and 164 of the Missouri Revised Statutes. The Series 2008 Refunded Bonds were issued to refund a $2,735,000 portion of the $10,000,000 General Obligation Bonds, Series 2002 dated May 22, 2002 (the Series 2002 Bonds ). The Series 2002 Bonds and the Series 2003 Refunded Bonds were pursuant to an election duly held in the District on Tuesday, April 2, 2002, at which time more than four-sevenths of the qualified voters of the District voting on the proposition voted in favor of the issuance of the general obligation bonds in the amount of $10,799,250 for the purpose of providing funds for the acquisition, construction, equipping, furnishing and betterment of school facilities, including, the site development, construction, equipping and furnishing of a new multipurpose school building to house grades five, six, seven and eight; to renovate the existing middle school for service as a primary center for pre-school and kindergarten students; to construct, equip, and furnish additional classrooms and to make other renovation improvements to the high school; to provide an upgrading of technology, handicapped accessibility, and other finish improvements to the elementary school. At the 2002 election 613 votes were cast in favor and 452 were opposed. The Series 2006B Refunded Bonds were issued in the amount of $2,250,000 pursuant to and in full compliance with the Constitution and laws of the State of Missouri, including particularly Section 26 of Article VI of the Constitution of Missouri and Chapters 162 and 164 of the Missouri Revised Statutes, and pursuant to an election duly held in the District on Tuesday, November 7, 2006, at which time more than four-sevenths of the qualified voters of the District voting on the proposition voted in favor of the issuance of the general obligation bonds in the amount of $12,250,000 for the purpose of providing funds for the acquisition, construction, equipping and furnishing of a new elementary school; and to the extent funds are available, to complete remodeling and repair improvements to the existing facilities of the District. At the 2006 election 2,246 votes were cast in favor and 1,168 were opposed. 2

7 Security for the Bonds and Certain Market Risks The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes upon all taxable tangible property, real and personal, within the territorial limits of the District. The full faith, credit and resources of the District are pledged to the payment of principal of and interest on the Bonds. Changes in interest rates generally might affect the market value of the Bonds prior to their maturity or the date, if any, that they are called for redemption prior to maturity. For example, as interest rates rise, the price a Bond owner would receive upon the sale of a Bond will decline, and it is possible that the amount a Bond owner would receive upon the sale of a Bond would be less than the amount the Bond owner paid for the Bond. Typically, this risk increases with the length of maturity of the Bond. In addition, a Bond owner is subject to the risk that the rate of inflation for the period of the investment will exceed the yield on the Bonds to the date, if any, that they are called or to the date of their maturity. For example, if the rate of inflation for the period of the investment exceeds the yield to maturity of a fixed income investment, then, although more dollars are returned to the investor in interest and principal than were invested, the value of those aggregate dollars returned is actually less than the amount originally invested. Description of the Bonds The Bonds are being issued in the aggregate stated principal amount of $3,730,000, are dated as of the date of original issuance and delivery, and will consist of fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof. The Bonds will mature on March 1 in the years and in the aggregate principal amounts set forth on the cover page hereof. Interest on the Bonds will be payable semiannually on March 1 and September 1 in each year beginning on September 1, Principal of the Bonds is payable upon presentation and surrender thereof at maturity or upon earlier redemption at the principal office of UMB Bank, N.A., Kansas City, Missouri, or its successor as bond registrar, transfer agent and paying agent (the Registrar ). Interest on the Bonds is payable by check or draft mailed by the Registrar on each interest payment date to the person in whose name each Bond is registered as of the close of business on the fifteenth day of the month next preceding such interest payment date at such person s address as it appears on the registration books kept by the Registrar. Direct Deposit of State Aid Payments Pursuant to Section et seq of the Revised Statutes of Missouri and related statutes (the Deposit Law ), the State of Missouri (the State ) and the District may agree to transfer to a Missouri bank, as direct deposit trustee (the Deposit Trustee ), a portion of the District s State aid payments and distributions normally used for operational purposes ( State Aid ) in order to provide for payment of debt service on the Bonds. On the date of issuance of the Bonds, the District will enter into a Direct Deposit Agreement (the Deposit Agreement ) with the Office of the Treasurer of the State of Missouri ( Treasurer s Office ), 3

8 the Department of Elementary and Secondary Education of the State of Missouri ( DESE ), the Health and Educational Facilities Authority of the State of Missouri (the Authority ) and the Deposit Trustee. Under the Deposit Agreement, the District will pledge its State Aid to the payment of the Bonds. The Deposit Agreement will provide that each month during the period March 2011 through December 2011, one-tenth (1/10) of the debt service due on the Bonds on September 1, 2011 and March 1, 2012 will be deposited with the Deposit Trustee. Thereafter, beginning in March 2012, one-tenth (1/10) of the annual debt service to be paid on the Bonds is to be deposited with the Deposit Trustee in each month of the ten month period of March through December of each year that the Bonds are outstanding. Amounts of State Aid to the District in excess of the one-tenth (1/10 th ) monthly deposit will not be deposited with the Deposit Trustee but will be transferred directly to the District as has historically been the case with all State Aid. Each month, pursuant to the terms of the Deposit Agreement, DESE will advise the Treasurer s Office of the amount of the District s State Aid to be deposited with the Deposit Trustee for the purpose of paying the Bonds, as specified in the Deposit Agreement. If there is a shortfall in a monthly payment, it is to be made up in the succeeding monthly payment of State Aid. Following receipt of the deposits, the Deposit Trustee will invest the amounts for the benefit of the District in permitted investments under the State of Missouri Statutes. The Deposit Trustee will transfer to the Paying Agent the amount necessary for payment of debt service on the Bonds no later than one business day prior to each payment date with respect to the Bonds. The District remains obligated to provide funds to the Paying Agent for debt service on the Bonds if the amounts of State Aid transferred are not sufficient to pay the Bonds when due. Nothing in the Deposit Law or the Deposit Agreement relieves the District of its obligation to make payments of principal and interest on the Bonds, or to impose any debt service levy sufficient to retire the Bonds. Moneys of the District which would otherwise be used to pay the Bonds on each payment date may be transferred to the District s operational funds to replace State Aid funds used to pay the Bonds. The State has not committed pursuant to the Deposit Law, the Deposit Agreement or otherwise to maintain any particular level of State Aid on behalf of the District, and the State is not obligated in any manner, contractually or morally, to make payments of debt service on the Bonds, other than its obligation to make transfers to the Deposit Trustee as described above. No assurance can be made that the amount of annual State Aid to the District will not in the future drop below that of the annual debt service requirements on the Bonds. Book-Entry Only System The Bonds are available in book-entry only form and beneficial ownership interests therein may be purchased in the principal amount of $5,000 or any integral multiple thereof. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. 4

9 The following information concerning The Depository Trust Company ( DTC ), New York, New York and DTC s book-entry system has been obtained from sources the District believes to be reliable. However, the District takes no responsibility as to the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non- U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as 5

10 periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment of principal or redemption price of and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the District or the Paying Agent, on the payment date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of 6

11 customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, its nominee, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal or redemption price of and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, registered in the name of DTC s partnership nominee, Cede & Co. (or such other name as may be requested by an authorized representative of DTC), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described herein under the caption Transfer or Exchange. Transfer or Exchange Upon surrender to the Registrar of any Bond duly endorsed for transfer or accompanied by a duly executed written instrument of transfer or authorization for exchange, in form and with guarantee of signature satisfactory to the Registrar, the Registrar shall authenticate and deliver one or more new Bonds of any authorized denomination and of like aggregate principal amount, maturity and interest rate. The Registrar need not transfer or exchange (i) any Bonds during the 15-day period next preceding the selection of Bonds to be redeemed and thereafter until the date of the mailing of a notice of redemption of Bonds selected for redemption, or (ii) any Bonds selected, called or being called for redemption in whole or in part except, in the case of any Bond to be redeemed in part, the portion thereof not so to be redeemed. Optional Redemption The Bonds maturing on and after March 1, 2015 shall be subject to redemption and payment prior to maturity, at the option of the District, on March 1, 2014, and thereafter as a whole at any time or in part on any interest payment date in such order of maturity as the District shall determine and in $5,000 principal amounts selected by lot or such other manner as the Registrar deems fair within a maturity, at a redemption price equal to 100% of the principal amount thereof to be redeemed plus accrued interest thereon to the redemption date. 7

12 Notice of Redemption In the event of any such redemption, the Registrar, acting on behalf of the District, will mail written notice of such redemption by United States registered or certified mail addressed to the State Auditor of Missouri, and to the original purchaser of the Bonds, and by United States first class mail to the registered owner of each Bond to be redeemed, each of said notices to be mailed not less than 30 days, nor more than 60 days prior to the redemption date. Bonds in denominations larger than $5,000 may be redeemed in part, in any integral multiple of $5,000. The owner of any Bond redeemed in part will receive, upon surrender of such Bond to the Registrar at its principal office, one or more new Bonds of authorized denominations equal in principal amount to the unredeemed portion thereof. The following table sets forth the debt service schedule for the Bonds: Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 02/03/ /01/ , , /01/ , % 28, , , /01/ , , /01/ , % 25, , , /01/ , , /01/ , % 21, , , /01/ , , /01/2015 1,165, % 19, ,184, ,204, /01/ , , /01/ , % 9, , , Total $3,730, $212, $3,942, APPLICATION OF BOND PROCEEDS The Bonds are being issued in the aggregate principal amount of $3,730,000 for the purpose of refunding the Refunded Bonds. The proceeds from the Bonds will be used to redeem the Refunded Bonds on March 1,

13 The sources and uses of funds in connection with the Bonds are as follows: Sources and Uses of Funds Sources of Funds: Proceeds of the Bonds (Aggregate principal amount) $3,730, Funds from the District's Debt Service Fund $49, TOTAL $3,779, Uses of Funds: Deposit the Refunding Account to prepay the $695,000 of the Series 2003 Bonds, $2,250,000 of the Series 2006B Bonds, and $785,000 of the Series 2008 Bonds on March 1, 2011 $3,730, Cost of Issuance (including Underwriter's Discount) $49, TOTAL $3,779, THE DISTRICT The District is located in the east central portion of Missouri, approximately 55 miles west of St. Louis, Missouri. The District is located within Warren and Lincoln Counties. The District s headquarters are located in the City of Wright City. The District encompasses approximately square miles. Access to the District is provided by Interstate Highway 70. The District is a reorganized school district and operates pursuant to Chapter 162 of the Missouri Revised Statutes, as amended, and is governed by a seven-member Board of Education. The members of the Board are elected by the voters of the District for staggered three-year terms with two members being elected in each of two years and three members being elected every third year. All Board members are elected at large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and presides over the Board meetings. The Board of Education appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. The District has a total of 204 employees (full time and part time), including 10 administrative personnel, 118 teachers or certificated personnel and 76 classified personnel. Approximately % of the teaching staff holds advanced degrees. 9

14 Approximately % of the teaching staff is tenured. The average years of teaching experience is years. The District currently has accredited status, the highest accreditation status given to Missouri school districts by the Missouri Department of Elementary and Secondary Education. Enrollment Figures Enrollment figures for the District for the following years are as listed: Fiscal Year Total Enrollment , , , , ,430 Largest Employers The ten largest employers in the area are as follows: Employer Name Nature of Business Est. No. of Employees Holland USA, Inc. Truck trailer landing gear & custom roll foaming 400 Preferred Outlets at Warrenton Retail 350 Binkley Holland Truck and Trailer Related Products 306 Warrenton Oil Fuel/Convenience Store 300 Ameriwood Industries Headquarters 250 Emmaus Homes, Inc. Array of Services for Individuals with MR/DD 210 Wal-Mart Retail 250 Wright City R-II School District Education 206 Innsbrook Resort/Conference Center 151 Truesdale Packaging Company Soft Drink Store

15 Largest Taxpayers The largest taxpayers in the District, according to the January 1, 2010 assessed valuation are as follows: Taxpayer Name Assessed Valuation* Cuivre River Electric $1,804,170 Manchester Investors VIII LLC $1,391,970 Hyponex Corporation $930,320 Tara Properties LLC $843,490 T&N Inc. $653,124 Aspenhof Corp $506,120 Tech Manufacturing LLC $469,092 American Bank of Missouri $464,720 Beachum & Buckel LLC $464,510 AMC Real Estate Holding LLC $382,640 *Source: Warren County Assessor s Office 11

16 GENERAL OBLIGATION INDEBTEDNESS OF THE DISTRICT Outstanding Indebtedness of the District The District fixes an annual debt service levy and levies taxes to meet the annual debt service requirements of its general obligation bonds. Article VI, Section 26(b) of the Constitution of the State of Missouri limits the outstanding amount of authorized general obligation bonds of a school district to 15% of assessed valuation of taxable tangible property within the school district. The District has outstanding six (6) issues of General Obligation Bonds (not including the Bonds and the Refunded Bonds). (1) one issue of General Obligation Bonds Series 2002, with an aggregate principal amount of $5,250,000 outstanding (of which $5,250,000 will be prepaid on March 1, 2012 from the Series 2006A Refunding Bond Escrow Account; (2) one issue of General Obligation Refunding Bonds Series 2006A, with an aggregate principal amount of $5,250,000 outstanding (of which the interest payments are paid by the Series 2006A Refunding Bond Escrow Account through the March 1, 2012 call date of the Series 2002 Bonds); (3) one issue of General Obligation Bonds Series 2007, with an aggregate principal amount of $10,000,000 outstanding; (4) one issue of General Obligation Bonds, Series 2009, with an aggregate principal amount of $2,700,000 outstanding; (5) one issue of General Obligation Bonds, Series 2009A, with outstanding principal of $300,000; and (6) one issue of General Obligation Bonds, Series 2009B, with principal outstanding in the aggregate amount of $489,977. Debt service is payable on the dates and in the amounts shown as follows: 12

17 $10,000,000 General Obligation Bonds (Portion Callable on 03/01/2012), Series 2002 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , , , /01/ , , /01/2012 * , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , % 131, , , /01/ , , /01/ , % 118, , , /01/ , , /01/ , % 105, , , /01/ , , /01/ , % 90, , , /01/ , , /01/ , % 74, , , /01/ , , /01/ , % 57, , , /01/ , , /01/ , % 39, , , /01/ , , /01/ , % 19, , , Total $5,250, $2,327, $7,577, * On March 1, 2012, the Series 2006A Refunding Bond Escrow Account will prepay the $5,250,000 of callable Series 2002 Bonds. $799,250 General Obligation Bonds, Series 2003 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , % 15, , , /01/ , , /01/ , % 14, , , /01/ , , /01/ , % 12, , , /01/ , , /01/ , % 10, , , /01/ , , /01/ , % 7, , , /01/ , , /01/ , % 5, , , /01/ , , /01/ , % 2, , , Total $795, $135, $930, * On March 1, 2011, the Bonds will prepay the $695,000 of the callable Series 2003 Bonds. 13

18 $5,250,000 General Obligation Bonds, Series 2006A Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , , , /01/ , , /01/2012 * , , , /01/ , , /01/ , , , /01/ , , /01/ , % 99, , , /01/ , , /01/2015 1,050, % 94, ,144, ,239, /01/ , , /01/2016 1,075, % 75, ,150, ,225, /01/ , , /01/2017 1,105, % 55, ,160, ,215, /01/ , , /01/2018 1,635, % 34, ,669, ,703, /01/ , , /01/ , % 2, , , Total $5,250, $1,318, $6,568, * The interest payments on the Series 2006A Refunding Bonds are paid by the Series 2006A Refunding Escrow Account through the March 1, 2012 call date of the Series 2002 Bonds. $2,250,000 General Obligation Bonds, Series 2006B Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/2019 1,535, % 44, ,579, ,624, /01/ , , /01/ , % 14, , , Total $2,250, $831, $3,081, * On March 1, 2011, the Bonds will prepay the $2,250,000 of the callable Series 2006B Bonds. 14

19 $10,000,000 General Obligation Bonds, Series 2007 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/2020 1,000, % 209, ,209, ,418, /01/ , , /01/2021 1,500, % 189, ,689, ,878, /01/ , , /01/2022 1,500, % 157, ,657, ,815, /01/ , , /01/2023 1,500, % 126, ,626, ,752, /01/ , , /01/2024 1,500, % 94, ,594, ,689, /01/ , , /01/2025 1,500, % 63, ,563, ,626, /01/ , , /01/2026 1,500, % 31, ,531, ,563, Total $10,000, $5,503, $15,503, $2,735,000 General Obligation Refunding Bonds, Series 2008 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 09/01/ , , /01/ , % 19, , , /01/ , , /01/ , % 11, , , /01/ , , /01/ , % 2, , , Total $2,735, $66, $1,501, * On March 1, 2011, the Bonds will prepay the $785,000 of the callable Series 2008 Bonds. 15

20 $2,700,000 General Obligation Bonds, Series 2009 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 03/01/ /01/ , , /01/ , , , /01/ , , /01/ , % 47, , , /01/ , , /01/ , % 45, , , /01/ , , /01/ , % 41, , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , % 36, , , /01/ , , /01/ , % 31, , , /01/ , , /01/ , % 25, , , /01/ , , /01/ , % 18, , , /01/ , , /01/ , % 12, , , /01/ , , /01/ , % 6, , , Total $2,700, $1,275, $3,975,

21 $310,023 General Obligation Bonds, Series 2009A Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 03/01/ /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , % 3, , , /01/ , , /01/ , % 2, , , /01/ , , /01/ , % 1, , , Total $300, $37, $337, REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK 17

22 $489,977 Qualified School Construction Bonds, Series 2009B Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 04/01/ /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , % 2, , /01/ , Total $489, $73, $563,

23 $1,400,000 General Obligation Bonds, Series 2010 Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 06/03/ /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , % 21, , , /01/ , , /01/ , , , /01/ , , /01/ , % 18, , , /01/ , , /01/ , % 17, , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , , , /01/ , , /01/ , % 15, , , /01/ , , /01/ , % 13, , , /01/ , , /01/ , % 9, , , /01/ , , /01/ , % 3, , , Total $1,400, $445, $1,845,

24 The following is an analysis of the overlapping debt and bonded debt ratios: The District Assessed Valuation ( ), ("A.V.") $172,245, Actual Valuation (Estimated 4 x A.V.) $688,983, General Obligation Debt Limit (15% x A.V.) $25,836, Estimated District Population 7,574 Estimated District Acreage 59,437 Net Direct and Overlapping Debt Direct Debt Series 2002 Bonds $5,250, Series 2007 Bonds $10,000, Series 2009 Bonds $2,700, Series 2009A Bonds $300, Series 2009B QSCB $489, Series 2010 Bonds $1,400, Series 2011A Ref. Bonds $3,730, Subtotal of Direct Debt $23,869, Total Direct Debt $23,869, Estimated Overlapping Debt $119, Estimated Underlying Debt $270, Total Direct, Overlapping and Underlying Debt $24,259, Bonded Debt Ratios Direct Debt to A.V 13.86% Total Direct, Overlapping and Underlying Debt to A.V % Per Capita Direct Debt $3, Per Capita Total Direct, Overlapping and Underlying Debt $3, Per Acre Direct Debt $ Per Acre Total Direct, Overlapping and Underlying Debt $

25 CAPITAL FACILITIES LEASE OBLIGATIONS OF THE DISTRICT The District currently has no outstanding lease financing arrangements. FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures The District follows a cash basis system of accounting. Under this system, financial data is recorded on a cash basis with revenues being recognized only as cash is received, and expenditures recognized only when cash is disbursed. Receivables, payables and accrued expenses are not recorded. Cash transactions are recorded in the following four funds which the District is required to maintain for the accounting of all school moneys: Incidental Fund Debt Service Fund Teachers Fund Capital Project s Fund The fiscal year of the District begins on July 1 of each year and ends on June 30 of the following year. An annual budget of estimated receipts and disbursements for each fiscal year is prepared by the Superintendent of Schools and is presented to the Board of Education for approval. The budget lists estimated disbursements by funds and purposes and includes a statement of the rate of levy per hundred dollars of assessed valuation required to raise each amount shown on the budget as coming from District property taxes. The financial records of the District are audited annually by a firm of independent certified public accountants. In recent years the annual audit has been performed by Larson Allen, LLP, Certified Public Accountants, St. Louis, Missouri. A copy of the financial statements, including the auditors opinion thereon, for the fiscal year ended June 30, 2010 is included in this Official Statement as Appendix A. A summary of significant accounting policies of the District is contained in the Notes accompanying the financial statements. A complete copy of the annual audit, including certain supplemental information in addition to the financial statements, may be obtained from the District s Superintendent of Schools. Sources of Revenue The District finances its operations through local property taxes, a 1% State Sales Tax, State Aid Formula Funds, federal grant programs, city sales taxes and miscellaneous sources including State Aid in Classroom Trust Fund (discussed below) and a pro rata share of interest from counties the District operates in. Certain of these sources of revenues are described hereinafter. For the Fiscal Year the portion of the District s revenue from various sources was budgeted as follows: 21

26 Source Percent Local Revenue (including state sales tax*) 56.42% County, Utility and other Revenue 2.84% State revenue 28.02% Federal revenue 12.66% Other (tuition received from other districts) 0.06% Total percentage % *Under the provisions of an initiative petition adopted by the voters of Missouri on November 2, 1982 (Proposition C ), revenues generated by a 1% state sales tax are credited to a special trust fund for school districts and are deemed to be local revenues. Revenues received by the District are credited to one of the funds referred to under the caption Accounting, Budgeting and Auditing Procedures. By statute, moneys may be disbursed from these funds only for the purposes for which they are levied, collected or received. The primary source of state revenue or State Aid is provided under a formula enacted under Chapter 163 of the Revised Statutes of Missouri, as amended. In its 2005 regular session, the Missouri General Assembly approved significant changes to the formula by the adoption of Senate Bill 287 ( SB 287 ), which became effective July 1, The changes to State Aid distribution laws are more fully described below under Missouri School Finance Laws. Missouri School Finance Laws State Aid. The amount of State Aid for school districts in Missouri has typically been calculated using a complex formula. SB 287 is intended to transition the State away from the current local tax rate based formula to a formula that is primarily student-needs based. The new formula is being phased in over a seven-year period starting with the fiscal year. During the phase-in period, State Aid for each school district will be based on a percentage of both the old local tax rate based formula (determined as a percentage of the State Aid Payments), and the new student-needs based formula. State aid will be calculated using the following percentages of the old and new formulas: 22

27 Phase In Year Percentage of State Aid Payment Percentage of SB 287 Formula % 15% % 30% % 44% % 58% % 72% % 86% % 100% Property Tax Levy Requirements. Beginning with the fiscal year, the sum of a district s local property tax levies in its Incidental and Teachers Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the fiscal year. Levy reductions required as a result of a Hancock rollback (See FINANCIAL INFORMATION CONCERNING THE DISTRICT Property Taxes Tax Limitations Provisions below) will not affect a district s eligibility for State Aid increases. The Formula. A district s State Aid is determined by first multiplying the district s weighted average daily attendance ( ADA ) by the state adequacy target (discussed below). This figure may be adjusted upward by a dollar value modifier, which is an index of the relative purchasing power of a dollar, calculated as one plus 15% of the difference of the regional wage ratio minus one. The product of the weighted ADA multiplied by the state adequacy target is then reduced by a district s local effort (discussed below) to calculate a district s final State Aid amount. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. Students receive additional weighted treatment if, categorically, they exceed certain thresholds (based on the percentage of students in each of the categories in Performance Districts, as defined below). Currently, additional weight is assigned to students above the following thresholds: above 26.6% for students who qualify for free or reduced lunch, above 14.9% for students receiving special education services, and above 1.1% for students possessing limited English language proficiency. The District s State Aid revenues would be adversely affected by decreases in its weighted ADA resulting from decreased enrollment generally and, specifically, decreased enrollment of students eligible for free and reduced lunch, special education students, or students with limited English language proficiency. State Adequacy Target. The new State Aid formula requires DESE to calculate a state adequacy target, which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE s calculation of the state adequacy target will be based upon amounts spent, excluding federal and state transportation 23

28 revenues, by certain high performing districts (known as Performance Districts ). Every two years, using the most current list of Performance Districts, DESE will recalculate the state adequacy target. The recalculation can never result in a decrease from the previous state adequacy target amount. DESE has established the state adequacy target for the fiscal year at $6,117. Local Effort. For the fiscal year, the local effort figure utilized in a district s State Aid calculation is the amount of locally generated revenue that the district would have received in the fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the performance levy. After the fiscal year, a district s local effort amount will be frozen at the amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement, and (4) educational and screening program entitlements. Classroom Trust Fund (Gaming Revenue) Distribution. A portion of the state aid received under the formula will be in the form of a distribution from the Classroom Trust Fund in the state treasury containing a portion of the State s gaming revenues. Starting with the fiscal year, this money will be distributed to school districts on the basis of average daily attendance (versus weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and shall be spent at the discretion of the local school district. For Fiscal Year , the District received a total of $513,841 in Classroom Trust Funds. Mandatory Deposit and Expenditures of Certain Amounts in the Teachers Fund. The following state and local revenues must be deposited in the Teachers Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the districts boundaries. In addition to these mandatory deposits, commencing with the fiscal year, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. Beginning in the fiscal year, school districts are further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year s weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers Fund, plus the amount of any transfers from the Incidental Fund to the Teachers Fund that are calculated to be local and 24

29 county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers Fund will result in a deduction of the amount of the expenditure shortfall from a district s basic formula State Aid for the following year, unless the district receives an exemption from the State Board of Education. The Formula also provides that certificated staff compensation now includes the costs of public school retirement and Medicare for those staff members. Commencing with the fiscal year, those costs will, therefore, be paid from the Teachers Fund, rather than the Incidental Fund. A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers Fund. Effective June 30, 2007 any district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds (which are repaid from a Debt Service Fund levy); (ii) revenue from the school district s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Teachers and Incidental Funds; and (iv) funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Transfers from Incidental Fund to Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund under the following limited circumstances: (1) The amount to be expended for transportation equipment that is considered an allowable cost under the state board of education rules for transportation reimbursements during the current year; (2) The amount necessary to repay costs of one or more guaranteed energy savings performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be 25

30 required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and (3) To satisfy current year capital project expenditures, an amount not to exceed the greater of: (a) $162,326; or (b) Seven percent (7.00%) of the state adequacy target ($6,117 in fiscal year ) times the district s weighted ADA. (4) For Fiscal Year the District s seven percent (7.00%) transfer based upon the district s weighted ADA of 1, students was calculated to be $648,054 ($6,117 x 1, = $9,257,913 x.07 = $648,054). Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school district is not using the seven percent (7.00%) or the $162,326 transfer (as discussed above) and is not making payments on lease purchases pursuant to Section , Revised Statutes of Missouri, then the school district may transfer from the Incidental Fund to the Debt Service and/or Capital Projects Fund the greater of: (1) The State Aid received in fiscal year as a result of no more than eighteen (18) cents of the sum of the debt service and capital projects levy used in the foundation formula and placed in the Capital Projects or Debt Service Funds; or (2) Five percent (5.00%) of the state adequacy target ($6,117 in ) times the district s weighted ADA. Tax Rates Debt Service Levy. The District s debt service levy for Fiscal Year is $ per $100 of assessed valuation. Once indebtedness has been approved by the requisite proportion of the voters voting therefor and bonds are issued, the District is required under Article VI, Section 26 (f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board of Education may set the tax rate for debt service, without limitation as to rate or amount, at the level required to make such payments. Operating Levy. The operating levy of the District has been established. The operating levy does not require annual voter approval but the Board of Education cannot raise the rate above that approved in the last election. Under Article X, Section 11(c) of the Missouri Constitution, as currently in effect, a simple majority of the voters of a school district may approve an operating tax levy of up to 26

31 $6.00 per each one hundred dollars of assessed valuation. The approval of a two-thirds majority of the district s voters is required to set the operating levy above $6.00. Tax Limitation Provisions. An amendment to the Missouri Constitution commonly known as the Hancock Amendment approved in 1980 places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of total state revenues to exclude voterapproved tax increases such as the 1% state sales tax for education under Proposition C. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than 5% or the increase in the general price level from the previous year (whichever is lower), the maximum authorized current levy applied thereto in each political subdivision must be reduced to yield the same gross revenue from existing property, adjusted for such changes, as could have been collected at the existing authorized levy on the prior assessed value. School districts that are required to reduce their operating levies below $2.75 per $100 assessed valuation because of the Hancock Amendment will not suffer a reduction in State aid for failure to maintain a $2.75 operating levy. The limitation on local governmental units does not apply to taxes imposed for the payment of principal and interest on general obligation bonds. PROPERTY TAXES History of Assessed Valuation: The total assessed valuation of all taxable tangible property situated in the District, according to the assessments of January 1 in each of the following school years, has been as follows: FISCAL YEAR REAL ESTATE PERSONAL PROPERTY TOTAL ASSESSED VALUATION $149,331,018 $22,914,815 $172,245, $147,008,378 $24,307,347 $171,315, $143,145,728 $27,309,533 $170,455, $137,026,078 $27,534,014 $164,560, $123,559,556 $25,649,017 $149,208,573 Locally assessed railroad and utility property is included above as either real or personal property. Merchant s and manufacturer s equipment is included above as personal property. Assessment Procedure: Property within the District is assessed by the County Assessor. Prior to 1985, Missouri statutes required that all property be assessed at 33-1/3% of true value. In practice, however, assessment ratios varied from county to county and within counties with respect to similar kinds of property. In 1982, the Missouri voters authorized the General Assembly to provide different assessment ratios for three subclasses of property -- residential, agricultural and 27

32 commercial. Accordingly, the General Assembly in 1985 established the following assessment ratios for these three subclasses, respectively -- 19%, 12%, and 32%. The assessment ratio for personal property remains at 33-1/3%. The purpose of establishing these assessment ratios was to preserve the relative assessment ratio these subclasses had to each other prior to statewide reassessment, thereby resulting in little or no change in assessed valuations in counties and other taxing districts following reassessment. Tax Collection Procedures Prior to the beginning of each fiscal year, the Board of Education of the District prepares an estimate of the amount of money for each fund to be raised by taxation for the ensuing fiscal year and the tax rates for each fund required to raise such amounts. Such estimates are based on the annual budget for the coming year and the assessed valuation figures provided by the County Clerk. The Board of Education certifies the estimated tax rate to the County Clerk on or before July 15, and must certify a final tax rate by September 1. Property taxes are collected for the District by the County, for which the County receives a collection fee of 2.5% of the gross tax collections made. The County Collector is required to make disbursements of collected taxes to the Treasurer of the District each month; however, because of tax collection procedures, the District receives the bulk of its moneys from local property taxes in the months of December, January, and February. The table below shows the District s tax levies (per $100 of assessed valuation) for each of the following years: FISCAL YEAR INCIDENTAL FUND TEACHER'S FUND DEBT SERVICE FUND CAPITAL PROJECT'S FUND TOTAL $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

33 Tax Collection Record The following table sets forth tax collection information for the District for each of the following fiscal years: Fiscal Year Total Levy per $100 A.V. Taxes Levied Current & Delinquent Collections* Total % Collected* $ $6,832,242 $6,691, % $ $6,725,841 $6,686, % $ $6,489,921 $6,384, % $ $5,884,488 $5,776, % $ $5,198,363 $5,243, % * Data not yet available for Fiscal Year as the taxes are due by December 31, 2010, and most collections are received by the District in December and January. LEGAL PROCEEDINGS Certain legal matters relating to the authorization, issuance, validity and tax exemption of the Bonds will be passed upon by Spencer Fane Britt & Browne LLP, St. Louis, Missouri, Bond Counsel. Bond Counsel expresses no opinion as to the accuracy or sufficiency of any information or statements contained in this Official Statement or Appendix A hereto, or of any other statements, material or financial information used in the sale or offering for sale of the Bonds. Opinion of Bond Counsel TAX EXEMPTION Federal and Missouri Tax Exemption. In the opinion of Spencer Fane Britt & Browne LLP, Bond Counsel, under existing law, the interest on the Bonds is excluded from gross income for federal and Missouri income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on all individuals and corporations. It should be noted, however, that for purposes of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such 29

34 interest is taken into account in determining adjusted current earnings. The opinions described in this paragraph are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal and Missouri income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal and Missouri income tax purposes retroactive to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. The Bonds have been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3)(B) of the Code, and financial institutions described in Section 265(b)(5) of the Code may treat the Bonds for purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7, Noncompliance with certain continuing requirements of the Code referred to above, however, may cause the Bonds to lose their status as qualified tax-exempt obligations retroactive to their date of issuance. No provision has been made for redemption of the Bonds or for any adjustment in the interest rate thereon in the event the interest on the Bonds becomes includable in gross income for federal income tax purposes or in adjusted gross income or taxable income for Missouri income tax purposes. Other Tax Consequences Prospective purchasers of the Bonds should be aware that there may be tax consequences of purchasing the Bonds other than those discussed under the caption Opinion of Bond Counsel including the following: (i) Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds, except with respect to certain financial institutions (within the meaning of Section 265(b)(5) of the Code); (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by fifteen percent of the sum of certain items, including interest on the Bonds; (iii) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code; (iv) passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year, if greater than twentyfive percent of the gross receipts of such Subchapter S corporation is passive investment income; and (v) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, 30

35 receipts or accruals of interest on the Bonds. The foregoing is not intended to be an exhaustive discussion of collateral tax consequences arising from receipt of interest on the Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of the Bonds should consult their own tax advisors as to the applicability of these tax consequences. RATING The rating assigned by Standard & Poor s Ratings Service is set forth on the Cover Page hereof, as a result of the Direct Deposit Agreement described under the caption THE BONDS-Direct Deposit of State Aid Payments herein. Such rating reflects only the views of the Rating Agency at the time the rating is given, and the District and the Underwriter make no representation as to the appropriateness of the rating. An explanation of the significance of the rating may be obtained only from the Rating Agency. There is no assurance that the rating will continue for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the Rating Agency, if in its judgment, circumstances so warrant. Any such downward revision, suspension or withdrawal may have an adverse effect on the market price of the Bonds. LITIGATION There is not now pending, or to the best knowledge of the District, threatened, any litigation seeking to restrain or enjoin or in any way limit the approval of the issuance and delivery of this Official Statement or the Bonds or the proceedings or authority under which they are to be issued. UNDERWRITING L. J. Hart & Company (the Underwriter ) has agreed to purchase the Bonds at a price equal to 98.90% of the principal amount of the Bonds. The Underwriter is purchasing the Bonds for resale in the normal course of the Underwriter s business activities. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, shall determine. 31

36 CONTINUING DISCLOSURE For purposes of this Section, the following terms have the following meanings: Beneficial Owner means any registered owner of the Bonds and any other person who, directly or indirectly, has investment power with respect to any of the Bonds. MSRB means the Municipal Securities Rulemaking Board through its Electronic Municipal Marketing Access ( EMMA ) system. This system can be accessed through its website, Rule 15c2-12 means Rule 15c2-12 adopted by the Securities and Exchange Commission under Securities Exchange Act of 1934, as the same may be amended from time to time. SID means any public or private information depository, if any, designated by the State of Missouri as such for purposes of Rule 15c2-12. Currently, no such depository has been designated as such. Within 180 days after the close of each fiscal year beginning with the fiscal year ending June 30, 2011, the District will furnish to the MSRB and each SID, if any, (i) a copy of the financial statements of the District prepared in accordance with a system of accounting conforming to the cash basis and budget laws of the State of Missouri (which is a comprehensive basis of accounting other than generally accepted accounting principles) and audited by its independent auditors (or if not available as of the date of the request, the unaudited financial statements of the District with the audited financial statements to follow as soon as practicable after they become available), and (ii) operating data and financial data of the District, updated for the fiscal year then ended, in substantially the scope and form contained in the Official Statement, dated February 3, 2011, related to the bonds in the tables or portions of the Official Statement labeled as follows: The District General Obligation Indebtedness of the District Capital Facilities Lease Obligations of the District Financial Information Concerning the District Property Taxes Any financial information described in the above paragraph may be incorporated by cross reference to other documents, including official statements of debt issues of the District that have been filed with the MSRB or the Securities and Exchange Commission, and in the case of a final official statement, that is available from the MSRB. The District 32

37 shall identify clearly each document provided by cross reference and the source from which it is available. The District shall send to the MSRB, and to each SID, if any, promptly upon the occurrence thereof, notice of any of the following events with respect to the Bonds, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws of debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; or (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 570-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of the Beneficial Owner, if material; (8) Calls, if material, and tender offers; (9) defeasances; (10) rating changes; (11) bankruptcy, insolvency, receivership or similar event of the District; (12) the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (13) appointment of a successor or additional registrar bank or the change of name of the registrar bank, if material. Notwithstanding the foregoing, notice of events described in (8) and (9) above need not be given any earlier than the notice (if any) of the underlying event is given to Owners as provided in the Resolution. In a timely manner, the District shall furnish to the MSRB, and to the appropriate SID, if any, notice of failure of the District to provide required annual financial information on or before the date specified above. The District s obligation to provide the information described above shall terminate upon the payment in full of the bonds either at maturity or upon redemption prior to maturity. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. 33

38 The Dissemination Agent may resign as dissemination agent hereunder at any time upon 30 days prior written notice to the District. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report (including without limitation the Annual Report) prepared by the District pursuant to the Continuing Disclosure Agreement. The District may, from time to time, appoint or designate one or more agents (each, a designated agent ) to submit Annual Reports, Material Event notices, and other notices or reports with the MSRB. The District may revoke this designation at any time upon written notice to the designated agent, and may designate one or more additional designated agents for the purposes of this provision from time to time by written designation to the newly appointed designated agent. Nothing in the Continuing Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by the Continuing Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by the Continuing Disclosure Agreement, it shall not be required to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission. The District is in compliance with all continuing disclosure obligations made by it in accordance with SEC Rule 15c2-12 in the last five years. The provisions referred to in this Section shall be subject to specific enforcement or action in mandamus in a court of equity by any beneficial owner of the Bonds. 34

39 MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The form of this Official Statement, and its distribution and use by the Underwriter, have been approved by the District; however, the District has not made any warranty or representation regarding either the accuracy or sufficiency of any material contained herein except that contained herein under the heading The District. The Underwriter is responsible for offering and selling the Bonds in a manner including, without limitation, the use of this Official Statement, which complies with applicable federal and state laws, rules and regulations. This Official Statement has been prepared only in connection with the initial offering and sale of the Bonds and may not be reproduced or used in whole or in part for any other purpose. 35

40 APPENDIX A FINANCIAL STATEMENTS OF THE WRIGHT CITY R-II SCHOOL DISTRICT OF WARREN COUNTY, MISSOURI FOR THE FISCAL YEAR ENDING JUNE 30, 2010 A-1

41 THIS PAGE LEFT INTENTIONALLY BLANK

42 WRIGHT CITY R-II SCHOOL DISTRICT FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2010

43 WRIGHT CITY R-II SCHOOL DISTRICT TABLE OF CONTENTS (CONTINUED) YEAR ENDED JUNE 30, 2010 FINANCIAL AND SINGLE AUDIT SECTION INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS 1 3 GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET ASSETS - CASH BASIS STATEMENT OF ACTIVITIES - CASH BASIS FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE ARISING FROM CASH TRANSACTIONS - GOVERNMENTAL FUNDS 13 RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE - CASH BASIS - TO NET ASSETS - CASH BASIS - OF GOVERNMENTAL ACTIVITIES 14 STATEMENT OF CASH RECEIPTS, DISBURSEMENTS AND CHANGES IN CASH BASIS FUND BALANCE - GOVERNMENTAL FUNDS 15 RECONCILIATION OF THE STATEMENT OF CASH RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS (CASH BASIS) TO THE STATEMENT OF ACTIVITIES (CASH BASIS) 16 STATEMENT OF RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - GENERAL FUND AND SPECIAL REVENUE FUND 17 NOTES TO BASIC FINANCIAL STATEMENTS 19 SUPPLEMENTARY INFORMATION SCHEDULE 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 30 SCHEDULE 2 SCHEDULE 3 SCHEDULE OF RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - DEBT SERVICE FUND AND CAPITAL PROJECTS FUND 32 SCHEDULE OF RECEIPTS BY SOURCE - ALL GOVERNMENTAL FUNDS - CASH BASIS 34 SCHEDULE 4 SCHEDULE OF DISBURSEMENTS BY OBJECT 36

44 WRIGHT CITY R-II SCHOOL DISTRICT TABLE OF CONTENTS (CONTINUED) YEAR ENDED JUNE 30, 2010 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 37 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A SCHEDULE OF FINDINGS AND QUESTIONED COSTS 41 SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS 44 CORRECTIVE ACTION PLAN 45 MISSOURI COMPLIANCE SECTION REPORT ON TRANSPORTATION COSTS PAID ELIGIBLE FOR STATE AID SCHEDULE OF TRANSPORTATION DISBURSEMENTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH STATE REQUIREMENTS 48 SCHEDULE OF SELECTED STATISTICS 49

45 Lars.nAllen"LLP CPAs, Consultants & Advisors INDEPENDENT AUDITORS' REPORT Board of Education Wright City R-II School District Wright City, Missouri We have audited the accompanying financial statements of the governmental activities and each major fund of the Wright City R-II School District as of and for the year ended June 30, 2010, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described in Note 2, the Wright City R-II School District prepares its financial statements on the cash basis, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position - cash basis of the government activities and each major fund of the Wright City R-II School District at June 30, 2010, and the respective changes in financial position cash basis, thereof and the respective budgetary comparison for the General Fund and the Major Special Revenue Fund for the year then ended, on the basis of accounting described in Note 2. In accordance with Government Auditing Standards, we have also issued our report dated November 12, 2010, on our consideration of the Wright City R-II School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. I~i!m INTER:-:AT10NA!. (1 ) An independent member of Nexia International

46 Board of Education Wright City R-II School District The management's discussion and analysis on pages 3 through 10 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Wright City R-II School District's basic financial statements. The accompanying supplementary information presented in Schedules 2 through 4 and the Schedule of Expenditures of Federal Awards as required by U.S. Office Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations is prepared for purposes of additional analysis as required by local and state agency requirements and is not a required part of the basic financial statements. The supplementary information and the Schedule of Expenditures of Federal Awards as have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. St. Louis, Missouri November 12, 2010 ~I-I-P LarsonAllen LLP (2)

47 WRIGHT CITY R II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30,2010 (UNAUDITED) The discussion and analysis of Wright City R-II School District's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance. Financial Highlights Key financial highlights for are as follows: In total, net assets decreased $2,225,871 which represents a 14% percent decrease from $15,706,326. Among major funds, the General Fund had $6,257,330 in receipts and $6,001,866 in disbursements. Among major funds, the Special Revenue (Teachers) Fund had $7,113,323 in receipts and $7,113,323 in disbursements. The transfer to the Teachers Fund for fiscal year 2009 was $0. The Special Revenue (Teachers) Fund had a zero balance. Therefore, a transfer was not necessary. All operating funds combined (General and Special Revenue (Teachers) Funds) had $13,370,653 in receipts and $13,115,189 in disbursements for fiscal year The operating funds decreased $294,509 over fiscal year 2009 which includes a decrease of $549,973 due to the transfer to the Capital Projects Fund. Among major funds, the Debt Service Fund had $1,879,302 in receipts and $1,852,151 in disbursements. The Debt Service Fund balance increased $27,151 over fiscal year Among major funds, the Capital Projects Fund had $3,100,376 in receipts and other financing sources due in part to the sale of three new bonds and $5,058,889 in disbursements. This includes the transfer to the Capital Projects Fund for fiscal year 2010 for the SB287 allowed transfer in the amount of $538,296, food service disbursements in the amount of $5,000 and transportation disbursements in the amount of $6,677. The Capital Projects Fund balance which includes activities related to the Bond Proceeds Fund decreased $1,958,513 over fiscal year General receipts accounted for $14,710,775 in receipts which represent 83 percent of all receipts and sources. Program specific receipts in the form of charges for services ($367,922), operating grants and contributions ($2,721,661) accounted for $3,089,583 (17 percent) of the total receipts and sources of $17,800,358. Total assets of governmental activities decreased by $2,223,757, which represents a 14% decrease from fiscal year 2009 balance of $15,745,304. (3)

48 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Using this Other Comprehensive Basis of Accounting Report (OCBOA) This annual report consists of a series of financial statements and notes to those statements. The Statement of Net Assets and the Statement of Activities (on pages 11 and 12) provide information about the activities of the Wright City R-II School District as a whole and present a longer-term view of the District's finances. Fund financial statements start on page 13. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. The statements then proceed to provide an increasingly detailed look at specific financial activities. Reporting the School District as a Whole Statement of Net Assets and the Statement of Activities While this document contains the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during 20107" The Statement of Net Assets and the Statement of Activities answer this question. These statements include all significant assets and liabilities using the cash basis of accounting, which is an Other Comprehensive Basis of Accounting than Generally Accepted Accounting Principles. The District's policy is to prepare its financial statements on the cash basis of accounting; consequently, revenues are recognized when received rather than when earned, and expenditures and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, and some not. Non-financial factors include the School District's property tax base, current property tax laws in Missouri, required educational programs and other factors. In the Statement of Net Assets and the Statement of Activities, the School District reports governmental activities. Governmental activities are the activities where most of the School District's programs and services are reported including, but not limited to, instruction, support services, operation and maintenance of plant, pupil transportation and extracurricular activities. The School District does not have any business like activities. Reporting the School District's Most Significant Funds Fund Financial Statements The analysis of the School District's major funds begins on page 13. Fund financial reports provide detailed information about the School District's major funds. The School District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General (Incidental) Fund, Special Revenue (Teachers) Fund, Debt Service Fund, and Capital Projects Fund. (4)

49 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in the future periods. These statements include all significant assets and liabilities using the cash basis of accounting, which is an Other Comprehensive Basis of Accounting than Generally Accepted Accounting Principles. The District's policy is to prepare its financial statements on the cash basis of accounting; consequently, revenues are recognized when received rather than when earned, and expenditures and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. The School District as a Whole Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for 201 0: ASSETS Current and Other Assets 2010 $ 13,521, $ 15,745,304 LIABILITIES Current Liabilities 41,092 38,978 NET ASSETS Restricted Unrestricted Total Net Assets 8,804,066 4,676,389 $ 13,480,455 12,034,963 3,671,363 $ 15,706,326 (5)

50 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) The School District as a Whole (Continued) Table 2 shows the changes in net assets for fiscal year RECEIPTS Charges for Services $ 367,922 $ 411,602 Operating Grants and Contributions 2,721,661 1,864,233 General Revenues: Property Taxes 8,081,181 8,078,474 Grants and Entitlements 4,066,781 4,257,338 Interest and Investment Earnings 314, ,811 Debt Proceeds 2,200,000 2,700,000 Other 48,250 23,350 Total Receipts 17,800,358 17,794,808 PROGRAM DISBURSEMENTS Instruction 7,606,714 7,546,193 Student Services 601, ,396 Instructional Staff Support 1,204, ,680 Building Administration 691, ,251 General Administration and Central Services 768, ,236 Operation of Plant 1,230,057 1,085,100 Transportation 1,017, ,332 Food Service 667, ,219 Community Services 112, ,047 Facility Acquisition and Construction 4,230,630 8,177,230 Debt Service and Fiscal Charges 1,895,626 1,696,768 Total Disbursements 20,026,229 22,952,452 CHANGE IN NET ASSETS $ (2,225,871 ) $ (5,157,644) Governmental Activities Receipts of $17,800,358 for the District's governmental activities for fiscal year 2010 increased by $5,550 over fiscal year 2009 (fiscal year 2009 receipts were $17,794,808) or less than one percent. Disbursements for fiscal year 2010 of $20,026,229 decreased by $2,926,223 over fiscal year 2009 (fiscal year 2009 disbursements were $22,952,452) or 13 percent. The decrease in disbursements was mainly due to the decrease in bond activities in the Capital Projects Fund in fiscal year 2010 compared to fiscal year (6)

51 WRIGHT CITY R II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Governmental Activities (Continued) The District's management took several actions this year to address the District's balances and reserves: The District maintains conservative budgeting practices. The District continued to invest bond proceed funds with a local bank that offered the best rate of return of all bids submitted. The District issued three new bonds (Series 2009A, 2009B and 2010) in the amounts of $310,023, $489,977 and $1,400,000, respectively. Instruction / Student Services / Instructional Staff Support / Building Administration disbursements comprise $10,103,991 for fiscal year 2010 representing 50 percent of district disbursements which compared to $9,760,520 (43 percent) for fiscal year Support services disbursements make up $9,922,238 for fiscal year 2010 representing 50 percent of total disbursements compared to $13,191,932 (57 percent) for fiscal year The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements Total Cost Net Cost Total Cost Net Cost of Services of Services of Services of Services Instruction $ 7,606,714 $ (5,536,937) $ 7,546,193 $ (6,240,952) Student Services 601,727 (601,727) 648,396 (648,396) Instructional Staff Support 1,204,332 (1,134,639) 819,680 (769,322) Building Administration 691,218 (691,218) 746,251 (746,251) General Administration and Central Services 768,444 (768,444) 727,236 (727,236) Operation of Plant 1,230,057 (1,230,057) 1,085,100 (1,085,100) Transportation 1,017,021 (737,181) 728,332 (415,197) Food Service 667,887 2, ,219 (51,118) Community Services 112,573 (112,573) 119,047 (119,047) Facility Acquisition and Construction 4,230,630 (4,230,630) 8,177,230 (8,177,230) Debt Service and Fiscal Charges 1,895,626 (1,895,626) 1,696,768 (1,696,768) Total Expenses $ 20,026,229 $ (16,936,646) $ 22,952,452 $ (20,676,617).:. Instruction disbursements include activities directly dealing with the teaching of pupils or the interaction between teachers and pupils. Teaching may be provided for pupils in a school classroom, in another location such as in a home or hospital, and in other learning situations such as those involving co-curricular activities. It may also be provided through some other approved medium such as television, radio, telephone, and correspondence. :. Student (Support) Services include attendance, guidance, health, psychological, speech and audio assistance. Student (Support) Services are services that provide administrative, technical, and logistical support to facilitate and enhance instruction, and to a lesser degree community services. (7)

52 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Governmental Activities (Continued).:. Instructional Staff Support Services include the activities involved with assisting the instructional staff with the content and process of providing learning experiences for pupils. :. Building Administration includes activities concerned with overall administrative responsibility for a single school or a group of schools. These expenditures provide for the building instructional leadership from the school principals and assistant principals. In addition, this includes expenditures for site administrative support to run the day-to-day operations of each building. :. General Administration and Central Services includes disbursements associated with administrative and financial supervision of the district. It also includes disbursements related to planning, research, development and evaluation of support services, as well as the reporting of this information internally and to the public. Finally it includes the support for the Student Services department and Human Resource department of the District..:. Operation of Plant activities involves keeping the buildings comfortable and safe for use; keeping the school grounds, buildings, and equipment in an effective working condition and state of repair..:. Transportation includes activities involved with the conveyance of students to and from school, as well as to and from school activities, as provided by state law. These activities may be either district-operated or contracted services and provide for both regular and handicapped transportation services. :. :. Food Services include the preparation, delivery, and servicing of regular and incidental meals, lunches, or snacks to students and school staff in connection with school activities. Community Services includes disbursement related to student activities provided by the School District which are designed to provide opportunities for pupils to participate in school events, public events, or a combination of these for the purposes of motivation, enjoyment and skill improvement..:. Facility Acquisition and Construction includes any disbursements relating to the acquisition of land and buildings, remodeling buildings, the construction of buildings and additions to buildings, initial installation and extensions of service systems and other built-in equipment, and improvement to sites. :. Debt Service and Fiscal Charges involves the transactions associated with the payment of principal, interest and other related charges relating to the debt of the School District. The School District's Funds Information about the School District's major funds starts on page 13. These funds are accounted for using the cash basis of accounting. All governmental funds had total receipts and other financing sources of $17,800,358 and disbursements of $20,026,229. (8)

53 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Budgeting Highlights The School District's budget is prepared according to Missouri law and is based on accounting for certain transactions on a basis of cash receipts, disbursements, and encumbrances. Adjustments made during the year are reflected in the budget information induded in the financial statements Fund adjustments in total equal: Increase (Decrease) Fund Receipts Disbursements General (Incidental) Fund Special Revenue (Teachers) Fund Debt Service Fund Capital Projects Fund $ 170,923 (253,218) ,130 $ (450,864) (234,364) 15,065 (511,777) Significant budget adjustments to the General (Incidental) Fund Disbursements were mostly due to the implementation of budget reductions during the year due to mid-year state revenue withholdings issued by the state governor. Significant budget adjustments to the Capital Projects Fund Disbursements were due to the athletic fields improvements and installation of air conditioning at the high school not 100% complete at the end of fiscal year Actual receipts in all funds combined (including Other Financing Sources) were $17,800,358, an increase of $31,221 or less than one percent over the final District budget of $17,769,137. Actual disbursements in all operating funds combined (including Other Financing Uses) were $20,026,229, a decrease of $150 or less than one percent decrease compared to the final budget of $20,026,379. The December 31,2009 Assessed Valuation was reported at $171,315,725. The December 31, 2008 Assessed Valuation was reported at $170,455,261. This is a growth in reassessment of $860,464 or one percent. (9)

54 WRIGHT CITY R-II SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2010 (UNAUDITED) Debt Administration At June 30, 2010, the School District had $29,869,977 in general obligation bonds, due in varying amounts with interest rate charges over 18 years. The purpose of the general obligation bonds were to construct, equip and renovate all of the buildings and grounds in the District. Outstanding Debt at June 30,2010: 2002 General Obligation Bonds 2003 General Obligation Bonds 2006A Refunding General Obligation Bonds 2006B General Obligation Bonds 2007 General Obligation Bonds 2008 Refunding General Obligation Bonds 2009 General Obligation Bonds 2009A General Obligation Bonds 2009B General Obligation Bonds 2010 General Obligation Bonds Total Amount $ 5,250, ,000 5,250,000 2,250,000 10,000,000 1,435,000 2,700, , ,977 1,400,000 $ 29,869,977 Current Financial Issues and Concerns Affecting Fiscal Year increase or decrease in student enrollment decrease in student attendance due to influenza possible cost to replace worn out air conditioners and other maintenance equipment possible cost to replace worn out food service equipment possible cost to replace old technology equipment continuation of high energy and fuel bills possible cuts in state funding for transportation and Parents As Teachers Program other possible additional cuts in state funding Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information contact the Wright City R-II School District, Office of the Superintendent, go Bell Road, Wright City MO (10)

55 WRIGHT CITY R-II SCHOOL DISTRICT STATEMENT OF NET ASSETS - CASH BASIS JUNE 30, 2010 ASSETS Cash and Cash Equivalents Restricted Assets: Cash in Escrow Investments in Escrow Total Assets Governmental Activities $ 7,594, ,732 5,249,201 13,521,547 LIABILITIES Payroll Deductions and Withholdings 41,092 NET ASSETS Restricted for: Debt Service Construction Projects Unrestricted Total Net Assets 6,735,955 2,068,111 4,676,389 $ 13,480,455 See accompanying Notes to Basic Financial Statements, (11 )

56 WRIGHT CITY R-II SCHOOL DISTRICT STATEMENT OF ACTIVITIES - CASH BASIS YEAR ENDED JUNE 30, 2010 Nel (Disbursements) Receipts and Changes in Program Cash Receipts Net Assets Charges for Operating Cash Services Grants and Governmental Functions/Programs Disbursements and Sales Contributions Activities GOVERNMENTAL ACTIVITIES: Instruction $ 7,606,714 $ 133,130 $ 1,936,647 $ (5,536,937) Student Services 601,727 (601,727) Instructional Staff Support 1,204,332 69,693 (1,134,639) Building Administration 691,218 (691,218) General Administration and Central Services 768,444 (768,444) Operation of Plant 1,230,057 (1,230,057) Transportation 1,017, ,840 (737,181) Food Service 667, , ,481 2,386 Community Services 112,573 (112,573) Facility Acquisition and Construction 4,230,630 (4,230,630) Debt Service and Fiscal Charges 1,895,626 (1,895,626) $ 20,026,229 $ 367,922 $ 2,721,661 (16,936,646) GENERAL RECEIPTS: Taxes Property Taxes, Levied for General Purposes Property Taxes, Levied for Instruction Property Taxes, Levied for Debt Services Property Taxes, Levied for Capital Projects Federal and State Aid Not Restricted to Specific Purposes General Interest and Investment Earnings Sale of Bonds Other Subtotal, General Receipts 3,206,691 3,063,703 1,572, ,558 4,066, ,563 2,200,000 48,250 14,710,775 Change in Net Assets (2,225,871) Net Assets - Beginning 15,706,326 NET ASSETS - ENDING $ 13,480,455 See accompanying Notes to Basic Financial Statements, (12)

57 WRIGHT CITY R-II SCHOOL DISTRICT STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE ARISING FROM CASH TRANSACTIONS - GOVERNMENTAL FUNDS JUNE 30, 2010 ASSETS Governmental Funds Special General Revenue Debt Capital (Incidental) (Teachers) Service Projects Fund Fund Fund Fund Total ASSETS Cash and Cash Equivalents $ 2,926,438 $ $ 809,022 $ 3,859,154 $ 7,594,614 Restricted Assets: Cash in Escrow 677, ,732 Investments in Escrow 5,249,201 5,249,201 Total Assets $ 2,926,438 $ $ 6,735,955 $ 3,859,154 $ 13,521,547 LIABILITIES AND FUND BALANCE LIABILITIES Payroll Deductions and Withholdings $ 41,092 $ $ $ $ 41,092 FUND BALANCE Reserved: Debt Service 6,735,955 6,735,955 Construction Projects 2,068,111 2,068,111 Unreserved: Undesignated 2,885,346 1,791,043 4,676,389 Total Fund Balance 2,885,346 6,735,955 3,859,154 13,480,455 Total Liabilities and Fund Balance $ 2,926,438 $ $ 6,735,955 $ 3,859,154 $ 13,521,547 See accompanying Notes to Basic Financial Statements. (13)

58 WRIGHT CITY R-II SCHOOL DISTRICT RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE - CASH BASIS TO NET ASSETS - CASH BASIS - OF GOVERNMENTAL ACTIVITIES JUNE 30, 2010 Total Fund Balance - Cash Basis - Governmental Funds $ 13,480,455 There are no reconciling iterns Total Net Assets - Governmental Activities $ 13,480,455 See accompanying Notes to Basic Financial Statements. (14)

59 WRIGHT CITY R-II SCHOOL DISTRICT STATEMENT OF CASH RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE - CASH BASIS - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2010 Special General Revenue Debt Capital (Incidental) (Teachers) Service Projects Fund Fund Fund Fund Total RECEIPTS Local $ 3,620,832 $ 3,064,268 $ 1,788,929 $ 327,939 $ 8,801,968 County 169, ,246 90, ,997 Slale 1,080,975 3,289,638 4,370,613 Federal 1,386, ,171 12,516 1,974,832 Other 9,948 9,948 Total Receipts 6,257,330 7,113,323 1,879, ,403 15,600,358 DISBURSEMENTS Instruction 1,576,051 5,696, ,273 7,606,714 Student Services 303, , ,727 Instructional Staff Support 485, , ,444 1,204,332 Building Administration 201, , ,218 General Administration and Central Services 504, , ,444 Operation of Plant 1,155,278 1,791 72,988 1,230,057 Transportation 1,017,021 1,017,021 Food Service 645,400 22, ,887 Community Services 112, ,573 Facility Acquisition and Construction 4,230,630 4,230,630 Debt Service and Fiscal Charges 1,852,151 43,475 1,895,626 Total Disbursements 6,001,866 7,113,323 1,852,151 5,058,889 20,026,229 RECEIPTS OVER (UNDER) DISBURSEMENTS 255,464 27,151 (4,708,486) (4,425,871) OTHER FINANCING SOURCES (USES) Transfer To (549,973) (549,973) Transfer From 549, ,973 Sale of Bonds 2,200,000 2,200,000 Total Other Financing Sources (Uses) (549,973) 2,749,973 2,200,000 NET CHANGE IN FUND BALANCE (294,509) 27,151 (1,958,513) (2,225,871 ) FUND BALANCE CASH BASIS JULY 1, ,179,855 6,708,804 5,817,667 15,706,326 FUND BALANCE - CASH BASIS - JUNE 30, 2010 $ 2,885,346 $ $ 6,735,955 $ 3,859,154 $ 13,480,455 See accompanying Notes to Basic Financial Statements. (15)

60 WRIGHT CITY R-II SCHOOL DISTRICT RECONCILIATION OF THE STATEMENT OF CASH RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS - CASH BASIS- TO THE STATEMENT OF ACTIVITIES - CASH BASIS YEAR ENDED JUNE 30, 2010 Total Net Change in Fund Balance - Cash Basis - Governmental Funds $ (2,225,871) There are no reconciling items. Change in Net Assets of Governmental Activities $ (2,225,871) See accompanying Notes to Basic Financial Statements. (16)

61 WRIGHT CITY R-II SCHOOL DISTRICT STATEMENT OF RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - GENERAL FUND AND SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2010 General (Incidental) Fund Variance Original Final with Final Budget Budget Actual Budget RECEIPTS Local $ 3,569,812 $ 3,609,249 $ 3,620,832 $ 11,583 County 155, , ,378 State 1,647,441 1,092,830 1,080,975 (11,855) Federal 719,000 1,391,203 1,386,145 (5,058) Total Receipts 6,091,737 6,262,660 6,257,330 (5,330) DISBURSEMENTS Instruction 1,907,227 1,556,838 1,576,051 (19,213) Student Services 343, , ,388 20,068 Instructional StaffSupport 455, , ,955 (6,321 ) Building Administration 220, , ,421 General Administration and Central Services 484, , , Operation of Plant 1,313,081 1,160,294 1,155,278 5,016 Transportation 915,626 1,017,022 1,017,021 1 Food Service 688, , , Community Services 124, , ,573 Debt Services Total Disbursements 6,453,127 6,002,263 6,001, RECEIPTS OVER (UNDER) DISBURSEMENTS (361,390) 260, ,464 (4,933) OTHER FINANCING USES Transfer To (549,973) (549,973) Total Other Financing Uses (549,973) (549,973) NET CHANGE IN FUND BALANCE (361,390) 260,397 (294,509) (554,906) CASH BASIS FUND BALANCE JULY 1, ,055,041 3,179,855 3,179,855 CASH BASIS FUND BALANCE JUNE 30, 2010 $ 2,693,651 $ 3,440,252 $ 2,885,346 $ (554,906) See accompanying Notes to Basic Financial Statements. (17)

62 Special Revenue (Teachers) Fund Variance Original Final with Final BUdget BUdget Actual Budget $ 3,137,428 $ 3,064,268 $ 3,064,268 $ 188, , ,246 3,275,477 3,270,784 3,289,638 18, , , ,171 7,347,687 7,094,469 7,113,323 18,854 6,048,030 5,686,730 5,696,390 (9,660) 321, , ,747 20, , , ,933 (11,106) 494, , , , , ,665 2,989 1,791 1,791 7,347,687 7,113,323 7,113,323 (18,854) 18,854 (18,854) 18,854 $ $ (18,854) =$==== =,;"$==1,,,,8=,8,;,,54= (18)

63 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 1 DESCRIPTION OF THE SCHOOL DISTRICT AND REPORTING ENTITY Wright City R-II School District (the District) was established August 2, 1949 under the Statutes of the State of Missouri. The District operates as a "six director" district (with seven members of the Board of Education) as described in RSMo Chapter 162. The School District, located in Warren County serves an area of approximately square miles. It is staffed by 77 non-certificated employees, 121 certificated full-time teaching personnel, and 9 administrative employees who provide services to nearly 1490 students and other community members. The School District currently operates two elementary schools (K-1) and (PK, 2-5), one middle school (6-8) and one high school (9 12). For financial reporting purposes, the School District has included all funds, organizations, agencies, board, commissions and authorities. The School District has also considered all potential component units for which it is financially accountable and other organizations for which the nature and significance of their relationship with the School District are such that exclusion would cause the School District's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set fourth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the School District to impose its will on that organization or (2) the potential for the organization to provide specific benefits or to impose specific financial burdens on the School District. As of June 30,2010, the School District has no component units. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The School District's basic financial statements consist of government-wide statements, including a statement of net assets and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Both the government-wide and fund financial statements categorize primary activities as either governmental or business type. For the year ended June 30, 2010, all of the District's activities are classified as governmental type. Government-Wide Financial Statements The statement of net assets presents the financial condition of the governmental activities of the School District at year-end. The statement of activities presents a comparison between direct disbursements and program receipts for each program or function of the School District's governmental activities. Direct disbursements are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program receipts include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Receipts which are not classified as program receipts are presented as general receipts of the School District. The comparison of direct disbursements with program receipts identifies the extent to which each governmental function is self-financing or draws from the general receipts of the School District. (19)

64 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30,2010 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Financial Statements The School District uses funds to maintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The District uses only the governmental category of funds. All the funds of the District are considered major due in part to an administrative directive from the Missouri Department of Elementary and Secondary Education. General (Incidental) Fund: Accounts for general activities of the District, including student activities, food service, and textbooks, which are not required to be accounted for in another fund. Special Revenue (Teachers) Fund: Accounts for expenditures for certified employees involved in administration and instruction. It includes receipts restricted by the state and local tax levy for the payment of teacher salaries and certain employee benefits. Debt Service Fund: Accounts for the accumulation of resources for, and in payment of, principal, interest, and finance charges on long-term debt. Capital Projects Fund: Accounts for the proceeds of long-term debt, taxes, and other receipts restricted for acquisition or construction of major capital assets, payment of capital leases, and certain equipment and expenditures designated by Missouri Statute. Measurement Focus and Basis of Accounting Government-Wide Financial Statements The School District's policy is to prepare its government-wide financial statements on the cash basis of accounting, consequently, receipts are recognized when received rather than when earned, and expenditures and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. Accordingly, the government-wide financial statements do not present the net assets and activities of the School District in accordance with U.S. generally accepted accounting principles. Fund Financial Statements The School District's policy is to prepare its fund financial statements on the cash basis of accounting; consequently, receipts are recognized when received rather than when earned, and expenditures and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. Accordingly, the fund financial statements do not present the financial position and results of operations of the funds in accordance with U.S. generally accepted accounting principles. Budgetary Data The District adheres to the following procedures in establishing the budgetary data reflected in the financial statements: In accordance with Chapter 67, RSMo, the District adopts a budget for each fund. (20)

65 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgetary Data (Continued) Prior to July the Superintendent, who serves as the budget officer, submits to the Board of Education a proposed budget for the fiscal year beginning on the following July 1. The proposed budget includes estimated receipts and proposed expenditures for all District funds. BUdgeted expenditures cannot exceed beginning available monies plus estimated receipts for the year. A public hearing is conducted to obtain taxpayer comments. Prior to its approvai by the Board of Education, the budget document is available for public inspection. The budget was legally enacted by the vote of the Board of Education on June 29, Subsequent to its formal approval of the budget, the Board of Education has the authority to make necessary adjustments to the budget by formal vote of the Board. Adjustments made during the year are reflected in the budget information included in the financial statements. BUdgeted amounts are as originally adopted, or as amended by the Board of Education. Budgets for District funds are prepared and adopted on the cash basis (budget basis), recognizing receipts when collected and expenditures when paid. Restricted Assets Assets are reported as restricted when limitations on their use change the normal understanding of the availability of the asset. Such constraints are either imposed by creditors, contributors, grantors, or laws of other governments or imposed by enabling legislation. The nature ofthe restriction is: Restricted for Debt Service: The District has $6,735,955 of segregated resources for purposes of servicing general obligation bonds. Compensated Absences Vacation time, personal business days, and sick leave are recorded as disbursements in the year paid. Teachers' Salaries Payroll checks written and dated in June 2010, for july and August 2010 payrolls from contracts are included in the financial statements as a disbursement paid in the month of June. This practice has been consistently followed in the previous years. (21 )

66 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Postemployment Benefits In addition to the pension benefits described in Note 8, the District provides postemployment healthcare benefits to all employees who retire from the District. The premium is paid fully by the retiree either monthly or quarterly at the retiree's discretion for the next period's coverage. There is no associated cost to the District under this program. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the District provides healthcare benefits to eligible former employees and eligible dependents. Certain requirements are outlined by the Federal government for this coverage. The premium is paid by the insured either monthly or quarterly at the insured's discretion for the next period's coverage. This program is offered for duration of 18 months after the termination date. There is no associated cost to the District under this program. Net Assets Net assets represent the difference between assets and liabilities. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The School District applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Fund Balance Reserves The District reserves those portions of fund equity which are legally segregated for a specific future use or which do not represent available expendable resources and therefore are not available for general appropriation or disbursement. Unreserved fund balance indicates that portion of fund equity which is available for general appropriation in future periods. The nature and purposes of the reserve balances are: Reserved for Debt Service: The District has $6,735,955 of segregated monies for the purpose of future debt service. Reserved for Construction Projects: The District has $2,068,111 set aside for purposes of future construction projects through the Capital Projects Fund. Interfund Activity Exchange transactions between funds are reported as receipts in the seller funds and as disbursements in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. Repayments from funds responsible for particular disbursements to the funds that initially paid for them are not presented on the financial statements. (22)

67 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Investments in Escrow Held By Trustee Cash and investments in escrow held by trustee are deposits and securities held with the Missouri Direct Deposit Program. NOTE 3 CASH AND INVESTMENTS Deposits Custodial Credit Risk - Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a deposit policy for custodial credit risk and follows Missouri Statutes for deposits. The District maintains a cash and investment pool that is available for use by all funds except the Debt Service Fund (State law requires that all deposits of the Debt Service Fund be kept separate and apart from all other funds of the District.) Each fund type's portion of this pool is displayed on the combined statement of assets, and fund balances arising from cash transactions under each fund's caption. In accordance with applicable Missouri Statute, the District maintains deposits at depository banks authorized by the School District's Board. Missouri Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of the collateral pledged must equal 100% of the deposits not covered by insurance or corporate surety bonds. The District's deposits in banks at June 30, 2010, were entirely covered by federal depository insurance or by surety bonds and collateral in accordance with Missouri Statutes. Investments The District may purchase any investments allowed by the State Treasurer and Repurchase Agreements. These include (1) obligations of the United States government or any agency or instrumentality thereof maturing and becoming payable not more than three years from the date of purchase, or (2) repurchase agreements maturing and becoming payable within ninety days secured by U.S. Treasury obligations or obligations of U.S. government agencies or instrumentalities of any maturity, as provided by law. The District records all interest revenue related to investment activities in the fund which owns the security. Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing of cash flows from maturities to meet cash requirements for ongoing operations. (23)

68 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 3 CASH AND INVESTMENTS (CONTINUED) Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The District's investment policy does not limit holding of securities by counterparties. Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following chart summarized yearend ratings for the District's investments: A summary of the District's investments, interest rates and maturities as of June 30, 2010 is as follows: Type of Investments Interest Rates Average Maturity Cost Fair Market Value State & Local Government SLUGS 3.79% 21 Months $ 5,249,201 $ 5,249,201 Investments of $5,249,201 are held by an escrow agent in accordance with escrow agreements established with the sale of the General Obligation Refunding Bonds Series 2006A. The securities mature on March 1, 2019 at which time the proceeds will be used to pay the callable principal amount of the General Obligation Bonds of 2002 on March 1, Credit risk for this type of investment does not apply. NOTE 4 TAXES Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on November 1 and payable by December 31. The county collects the property tax and remits it to the District. The assessed valuation of the tangible taxable property for the calendar year 2009 for purposes of local taxation was $171,315,725. (24)

69 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 4 TAXES (CONTINUED) The tax levy per $100 of the assessed valuation of tangible taxable property for the calendar year 2009 for purposes of local taxation was: Unadjusted Adjusted General (Incidental) Fund $ $ Special Revenue (Teachers) Fund Debt Service Fund Total $ $ The receipts of current and delinquent property taxes during the fiscal year ended June 30, 2010 aggregated approximately 97.9 percent of the current assessment computed on the basis of the levy as shown above. NOTE 5 LONG-TERM LIABILITIES Long-term liability balances and activity of the District's Governmental Activities for the year ended June 30, 2010 were as follows: Balance Balance Amounts Due June 30, 2009 Additions Reductions June 30, 2010 Within One Year Genera! Obligation Bonds $ 28,380,000 $ 2, $ ( ) $ 29,869,977 $ 750,000 Capita! Leases (6,816) ,752 Total Long-Term Liabilities $ 28,421,950 $ 2,200,000 $ (716,839) $ ,111 $ 763,752 During fiscal year 2010 the District issued $2,200,000 Series 2009a, 2009b, and 2010 general obligation bonds for the purpose of providing funds to complete heating, ventilation and air conditioning system improvements to the high school building and the elementary gymnasium; to complete renovation improvements to the high school athletic complex; to the extent funds are available, to complete other remodeling and repair improvements to the existing facilities of the District. (25)

70 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 5 LONG-TERM LIABILITIES (CONTINUED) General obligation bonds payable at June 30, 2010, consist of: $10,000,000 school bonds, dated May 22,2002, due in varying annual installments through March 1, 2012, interest at 2.5% to 4.85% $799,250 school bonds, dated January 23, 2003, due in varying annual installments through March 1, 2017, interest at 1.7% to 4.35% $5,250,000 school refunding bonds, dated December 21,2006, due in varying annual installments through March 1, 2019, interest at 3.65% to 3.95% $ 5,250, ,000 5,250,000 $2,250,000 school refunding bonds, dated December 21,2006, due in varying annual installments through March 1,2020, interest at 3.95% to 4.0% $10,000,000 school bonds, dated February 1, 2007, due in varying annual installments through March 1,2026, interest at 4.0% $2,735,000 school refunding bonds, dated May 28, 2008, due in varying annual installments through March 1,2013, interest at 2.0% to 3.0% $2,700,000 school bonds, dated May 13, 2009, due in varying annual installments through March 1,2029, interest at 1.5% to 2.0% $310,023 school bonds, dated October 1,2009, due in varying annual installments through March 1,2016, interest at 1.0% to 2.7% $489,977 school bonds, dated October 1, 2009, due in varying annual installments through October 1, 2024, interest at 1.4% $1,400,000 school bonds, dated June 3, 2010, due in varying annual installments through March 1, 2024, interest at 1.7% to 3.8% Total 2,250,000 10,000,000 1,435,000 2,700, , ,977 1,400,000 $ 29,869,977 General obligation bond debt service requirements to maturity are: Year Ended June 30, Principal Interest Total Total $ 750,000 6,255, ,000 1,215,000 1,265,000 7,825,000 9,314,977 2,500,000 $ 29,869,977 $ 1,179,393 1,169, ,686 1,112, ,788 3,658,161 2,593, ,000 $ 11,613,746 $ 1,929,393 7,424,356 1,624,686 2,327,956 2,097,788 11,483,161 11,908,383 2,688,000 $ 41,483,723 (26)

71 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 5 LONG-TERM LIABILITIES (CONTINUED) Article VI, Section 26(b), Constitution of Missouri, limits the outstanding amount of authorized general obligation bonds of a district to fifteen percent of the assessed valuation of a District (including state-assessed railroad and utilities). The District did not exceed its legal debt margin at June 30, Capital Leases The District has capital leases for copiers. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2010, were as follows: Year Ended June 30, Total minimum lease payments Less: Amount representing interest Present value of future minimum lease payments $ $ Total 13,752 13,752 12,084 7,080 46,668 (11,534) 35,134 NOTE 6 OPERATING LEASES The District's future minimum rental commitments for various leases, accounted for as operating leases at June 30, 2010, are as follows: Year Ended June 30, 2011 $ Future Payments 21,720 Total lease expense for fiscal year ending June 30, 2010 amounts to $49,569 for the District. NOTE 7 INTERFUND TRANSFERS Intertund transfers for the year ended June 30, 2010 consisted of $549,973 transferred from the General Fund to the Capital Projects Fund. The transfer was used to move tax, grant, and other revenues required by Statute to be collected by the General Fund to the required fund for expenditure. (27)

72 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 8 RETIREMENT PLAN The Wright City R-II School District contributed to the Public School Retirement System of Missouri (PSRS), a cost-sharing multiple-employer defined benefit pension plan. PSRS provides retirement and disability benefits to full-time (and certain part-time) certificated employees and death benefits to members and beneficiaries. Positions covered by the Public School Retirement System are not covered by Social Security. PSRS benefit provisions are set forth in Chapter of the Missouri Revised Statutes (1986). The statutes assign responsibility for the administration of the system to a seven-member Board of Trustees. PSRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the Public School Retirement System of Missouri, P.O. Box 268, Jefferson City, Missouri or by calling PSRS members are required to contribute 13.5% of their annual covered salary and the Wright City R-II School District is required to contribute a matching amount. The contribution requirements of members and the Wright City R-Il School District are established and may be amended by the PSRS Board of Trustees. The school district's contributions to PSRS for the years ending June 30, 2010, 2009 and 2008 were $811,221, $785,957 and $730,542, respectively, equal to the required contributions for each year. Wright City R-II School District also contributes to Public Education Employee Retirement System (PEERS), a cost-sharing multiple-employer defined benefit pension plan. PEERS provides retirement and disability benefits to employees of the District who work 20 or more hours per week and who do not contribute to the Public School Retirement System of Missouri. Positions covered by the Public Education Employee Retirement System are also covered by Social Security. Benefit provisions are set forth in Chapter of the Missouri Revised Statutes (1986). The statutes assign responsibility for the administration of the system to the Board of Trustees of the Public School Retirement System. PEERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the Public Education Employee Retirement System, P.O. Box 268, Jefferson City, Missouri or by calling PEERS members are required to contribute 6.5% of their annual covered salary and Wright City R-II School District is required to contribute a matching amount. The contribution requirements of members and Wright City R-II School District are established and may be amended by the Board of Trustees. The school district's contributions to PEERS for the years ending June 30, 2010, 2009 and 2008 were $137,893, $131,191 and $122,065, respectively, equal to the required contributions for each year. (28)

73 WRIGHT CITY R-II SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 9 PARTICIPATION IN PUBLIC ENTITY RISK POOL - (MUSIC) 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. The District was unable to obtain general liability insurance at a cost it considered to be economically justifiable and therefore joined together with approximately 470 other Missouri Public School Districts to form the Missouri School Insurance Council (MUSIC). MUSIC is a public entity risk pool currently operating as a common risk management and insurance program. The District does not pay premiums to purchase insurance policies but pays an assessment to be a member of the self-sustaining risk sharing group. Part of the assessment is used to purchase excess insurance for the group as a whole. The pooling agreement requires the pool to be self-sustaining. The District believes that it is not possible to estimate the range of contingent losses to be borne by the District. NOTE 10 COMMITMENTS AND CONTINGENCIES Federal and State Revenues Amounts received from federal or state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable fund. The amount, if any, of funds which may be disallowed by the agencies cannot be determined at this time although the District expects such amounts, if any, to be immaterial. Construction Contracts The District has an agreement with two general contractors and an architect for construction which includes improvements to the athletic fields and HVAC installation. At June 30, 2010, the District has construction commitments of approximately $1.9 million. (29)

74 WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2010 SCHEDULE 1 Federal Grantor/PassMthrough Grantorl Cluster or Program Title Federal CFDA Number Pass-ThroU9h Entity Identifyin9 Number Federal Expenditures Title I, Part A Cluster: U.S. Department of Education: Pass-through Missouri Department of Elementary and Secondary Education: Title I Grants to Local Educational Agencies (LEAs) ARRA - Title I Grants to Local Educational Agencies (LEAs), Recovery Act Total Title I, Part A Cluster $ 211,840 87, ,627 State Fiscal Stabilization Fund Cluster: U.S. Department of Education: Pass-through Missouri Department of Elementary and Secondary Education: Grants, Recovery Act(Education Stabilization Fund) Transportation-ARRA Total State Fiscal Stabilization Fund Cluster ,559 28, ,354 U.S. Department of Education: Pass-through Missouri Department of Elementary and Secondary Education: Title II, Part A of ESEA Title 11-0, Education Technol09Y - Non-ARRA Title II-D. EMINTS Title III, Part A of ESEA Title IV, Part A, Subpart 1 of ESEA Service Learning Grant Total ,744 3,192 1,527 10,424 5,489 16, ,395 Special Education Cluster: U.S. Department of Education: Pass-through Missouri Department of Elementary and Secondary Education: IDEA, Part B Early Childhood Special Education ARRA - Special Education-Grants to States (IDEA, Part B), Recovery Act Total Special Education Cluster ,832 44, , ,689 Total U.S. Department of Education 1,435,065 (30)

75 WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30,2010 SCHEDULE 1 (CONTINUED) Federal Grantor/Pass~throughGrantor! Cluster or Program Title Federal CFDA Number Pass-Through Entity Identifying Number Federal Expenditures National School Lunch Cluster: U.S. Department of Agriculture: Pass-through Missouri Department of Elementary and Secondary Education: Non Cash Assistance (Commodities) National School Lunch Program Food Distribution Non Cash Assistance Subtotal Cash Assistance Schoo! Breakfast Program Cash Assistance Subtotal Total National School Lunch Cluster Total U.S. Department of Agriculture U.S. Office of Library Services Grant to States Other Income Safe Schools Initiative Grant ~ ARRA Total Federal Financial Assistance $ 318, , , , , , , , ,915 $ 1,975,488 Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Wright City R-II School District and is presented on the cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. The information in this schedule is presented in accordance with the requirements of OMS Circular A 133, Audits of States, Local Governments, and Non-Profit Organizations. (31 )

76 SCHEDULE 2 WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - DEBT SERVICE FUND AND CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2010 Debt Service Fund Variance Original Final with Final Budget Budget Actual Budget RECEIPTS Local $ 1,792,981 $ 1,788,551 $ 1,788,929 $ 378 County 85,303 90,373 90,373 State Federal Other Tota! Receipts 1,878,284 1,878,924 1,879, DISBURSEMENTS Instruction Student Services Instructional Staff Support Operation of Plant Food Service Facility Acquisition and Construction Debt Services 1,836,773 1,851,838 1,852,151 (313) Total Disbursements 1,836,773 1,851,838 1,852,151 (313) RECEIPTS OVER (UNDER) DISBURSEMENTS 41,511 27,086 27, OTHER FINANCING SOURCES Transfer From Sale of Bonds Total Other Financing Sources NET CHANGE IN FUND BALANCE 41,511 27,086 27, CASH BASIS FUND BALANCE - JULY 1, ,445,393 6,708,804 6,708,804 CASH BASIS FUND BALANCE - JUNE 30, 2010 $ 6,486,904 $ 6,735,890 $ 6,735,955 $ 65 (32)

77 SCHEDULE 2 (CONTINUED) Capital Projects Fund Variance Original Final with Final BUdget BUdget Actual Budget $ 229,955 $ 321,747 $ 327,939 $ 6,192 16,000 60,000 1,390 12,516 11,126 1,000 9,948 9, , , ,403 17,318 87, , ,273 4, , , ,444 25,000 72,988 72,988 10,000 22,487 22,487 5,320,110 4,225,830 4,230,630 (4,800) 43,475 43,475 5,570,732 5,058,955 5,058, (5,263,777) (4,725,870) (4,708,486) 17, , ,973 2,200,000 2,200,000 2,200,000 2,749, ,973 (5,263,777) (2,525,870) (1,958,513) 567,357 11,190,141 5,817,667 5,817,667 $ 5,926,364 $ 3,291,797 $ 3,859,154 $ 567,357 (33)

78 SCHEDULE 3 WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF RECEIPTS BY SOURCE - ALL GOVERNMENTAL FUNDS - CASH BASIS YEAR ENDED JUNE 30, 2010 Government Funds Special General Revenue Debt Capital (Incidental) (Teachers) Service Projects Fund Fund Fund Fund Total LOCAL Current Taxes $ 2,916,868 $ 1,739,955 $ 1,430,130 $ $ 6,086,953 Delinquent Taxes 289, , , ,806 School District Trust Fund 1,150,864 1,150,864 Financial Institution Taxes 1,393 1,393 M & M Surcharge Tax 127, ,891 In Lieu of Tax 109, ,274 Earnings on Investment 9, ,700 88, ,563 Food Service Program 151, ,550 Food Service Non-Program 83,242 83,242 Student Activities 133, ,130 Other Local 37, ,302 Total Local 3,620,832 3,064,268 1,788, ,939 8,801,968 COUNTY Fines, etc. 82,236 82,236 State Assessed Utilities 169, ,010 90, ,761 Total County 169, ,246 90, ,997 STATE Basic Formula 3,106,942 3,106,942 Transportation 251, ,045 Exceptional Pupil/Gifted Aid 226, , ,522 Basic Formula: Classroom Trust Fund 494,985 18, ,839 Educational Screening Program 33,120 19,757 52,877 VocationallTechnical Aid 6,113 6,113 Food Service 3,382 3,382 High Need Fund 26,373 26,373 Other State 45,520 45,520 Total State 1,080,975 3,289,638 4,370,613 (34)

79 SCHEDULE 3 (CONTINUED) WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF RECEIPTS BY SOURCE - ALL GOVERNMENTAL FUNDS - CASH BASIS YEAR ENDED JUNE 30, 2010 Government Funds Special General Revenue Debt Capital (Incidental) (Teachers) Service Projects Fund Fund Fund Fund Total FEDERAL Medicaid $ 37,999 $ $ $ $ 37,999 Basic Formula - Federal Budget Stabilizaflon 255, , ,559 Transportation - ARRA 28,795 28,795 Safe Schools Initiative Grant - ARRA 73,525 1,390 74,915 Indiv'ldua!s with Disabilities Ed. Act 54, , ,814 Food Service 432, ,099 Title I, ESEA 202, ,249 Title IV, Drug Free Schools 5,489 5,489 Title II, ESEA 71,389 71,389 Title 11-0, Education Technology - ARRA 3,192 3,192 Nat'l & Community Services Trust Act 4,149 4,149 Title III, ESEA 8,057 2,367 10,424 IDEA, Part B - ARRA 118,210 8, ,969 Goals Title IV Lift Grant 87,787 87,787 Other Restricted Revenue 2, ,003 Total Federal 1,386, ,171 12,516 1,974,832 OTHER Sale of Other Property 9,948 9,948 Total Other 9,948 9,948 Total - All Sources $ 6,257,330 $ 7,113,323 $ 1,879,302 $ 350,403 $ 15,600,358 (35)

80 WRIGHT CITY R-II SCHOOL DISTRICT SCHEDULE OF DISBURSEMENTS BY OBJECT YEAR ENDED JUNE 30, 2010 SCHEDULE 4 Special General Revenue Debt Capital (Incidental) (Teachers) Service Projects Fund Fund Fund Fund Salaries $ 1,923,631 $ 5,588,764 $ $ Employee Benefits 626,458 1,412,379 Purchased Services 2,198, ,180 Supplies 1,253,340 Capital Outlay 5,015,414 Debt Service and Fiscal Charges 1,852,151 43,475 Total $ 6,001,866 $ 7,113,323 $ 1,852,151 $ 5,058,889 (36)

81 Lars.nAllenLLP CPAs, Consultants & Advisors REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Education Wright City R-II School District Wright City, Missouri We have audited the financial statements of the governmental activities, and each major fund of Wright City R-II School District, as of and for the year ended June 30, 2010, which collectively comprise the District's basic financial statements and have issued our report thereon dated November 12, As described in our report on the financial statements, the Wright City R-II School District prepares its financial statements on the cash basis of accounting. This basis is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Wright City R-II School District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the entity's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified a certain deficiency in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs, that we consider to be a significant deficiency in internal control over financial reporting (2010-1). A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. I'tfllm JNTIiRNi\TIONI\L (37) An independent member of Nexia International