$21,070,000 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP Delaware County, Pennsylvania General Obligation Bonds, Series of 2017

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1 NEW ISSUE -- Book Entry Only UNDERLYING RATING: Moody s Investors Service Aa3 In the opinion of Bond Counsel, interest on the Bonds is not includable in gross income for purposes of federal income taxation under existing statutes, regulations, rulings and court decisions, subject to the condition described in TAX MATTERS herein and interest on the Bonds is not treated as an item of tax preference under Section 57 of the Internal Revenue Code of 1986, as amended (the Code ) for purposes of the individual and corporate alternative minimum taxes. However, under the Code, such interest may be subject to certain other taxes affecting corporate holders of the Bonds. Under the laws of the Commonwealth of Pennsylvania, the Bonds are exempt from personal property taxes in Pennsylvania, and interest on the Bonds is exempt from Pennsylvania personal income tax and the Pennsylvania corporate net income tax. For a more complete discussion, see TAX MATTERS herein. $21,070,000 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP Delaware County, Pennsylvania General Obligation Bonds, Series of 2017 Dated: Date of Delivery Interest Payable: March 15 and September 15 Principal Due: September 15, as shown herein First Interest Payment: September 15, 2017 The General Obligation Bonds, Series of 2017 in the aggregate principal amount of $21,070,000 (the Bonds ), will be issued in registered form, without coupons, in denominations of $5,000 principal amount or any integral multiple thereof. The Bonds are being issued as fully registered securities and, when issued, will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Purchases of the Bonds may be made in book-entry-only form and purchasers (the Beneficial Owners ) will not receive certificates representing their interests in the Bonds. So long as DTC, or its nominee, Cede & Co., or any other nominee of DTC, is the registered owner of the Bonds, payments of the principal of, and interest on, the Bonds will be made by TD Bank, National Association, Philadelphia, Pennsylvania, as Paying Agent (the Paying Agent ) directly to Cede & Co. Disbursement of such payments to DTC Participants is the responsibility of DTC, and disbursement of such payments to Beneficial Owners of the Bonds is the responsibility of DTC Participants and Indirect Participants. See BOOK-ENTRY ONLY SYSTEM herein. The Bonds are not subject to optional redemption prior to maturity as described herein. The Bonds are general obligations of the School District of Haverford Township, Delaware County, Pennsylvania (the School District ), payable, subject to provisions set forth in the Taxpayer Relief Act (as defined herein) from its tax and other general revenues. The School District has covenanted that it will provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will duly and punctually pay or cause to be paid from the sinking fund established under the Resolution described herein (the Resolution ) or any other of its revenues or funds the principal of every Bond and the interest thereon at the dates and place and in the manner stated in the Bonds, and for such budgeting, appropriation and payment the School District in the Resolution irrevocably pledges its full faith, credit and taxing power, which taxing power presently includes the power to levy ad valorem taxes on all taxable property within the limitations provided by law (see The Bonds Security, Taxing Powers and Act 1 of Special Session 2006 ( Taxpayer Relief Act ) herein). The proceeds of the Bonds will be used (i) to currently refund a portion of the School District s General Obligation Bonds, Series of 2012 (the 2012 Bonds ), outstanding in the aggregate principal amount of $9,520,000 of which $7,595,000 will be refunded (the Refunded 2012 Bonds ); (ii) to currently refund all of the School District s outstanding General Obligation Note, Series of 2013 (the 2013 Note ), outstanding in the aggregate principal amount of $5,444,000; (iii) to currently refund all of the School District s outstanding General Obligation Note, Series of 2014 (the 2014 Note ), outstanding in the aggregate principal amount of $9,843,000; and (iv) to pay the costs of issuing the Bonds. The Bonds are an authorized investment for fiduciaries in the Commonwealth of Pennsylvania pursuant to the Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164 P.L. 508, as amended and supplemented. MATURITY DATES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES AND CUSIP NUMBERS ARE DISPLAYED INSIDE THE FRONT COVER The Bonds are offered for delivery when, as and if issued by the School District and received by the Underwriter, subject to the approving legal opinion of Saul Ewing LLP, Bond Counsel. Certain matters will be passed upon for the School District by Catania & Parker LLP, Media, Pennsylvania, School District Solicitor and for the Underwriter by their Limited Scope Underwriter s Counsel, McNees Wallace & Nurick LLC, Lancaster, Pennsylvania. PFM Financial Advisors LLC, Malvern, Pennsylvania, has acted as financial advisor in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery to DTC on or about June 5, Official Statement Dated: May 4, 2017

2 $21,070,000 School District of Haverford Township Delaware County, Pennsylvania General Obligation Bonds, Series of 2017 Dated: Date of Delivery Principal Due: September 15, as shown herein Interest Payable: March 15 and September 15 First Interest Payment: September 15, 2017 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES/YIELDS AND CUSIPS Principal Interest CUSIP (1) September 15 Amount Rate Yield Price SUFFIX 2018 $20, % 0.950% KP , KQ ,695, KR , KT ,980, KS , KU ,420, KV , KX ,415, KW ,020, KZ ,995, KY0 (1) The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the School District or the Underwriter, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. Neither the School District nor the Underwriter has agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above.

3 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP Delaware County, Pennsylvania BOARD OF SCHOOL DIRECTORS Denis A. Gray, Esq. Patricia Giambuzzi Richard T. Henderson Kimberly Allen-Stuck, Ph.D Russell Bilotta Lawrence A. Feinberg Ari Flaisher James E. Goldschmidt, Ph.D Philip Hopkins Joseph P. Martin, Ph.D. P.E. President Vice-President Secretary* Member Member Member Member Member Member Member * Non-member. SUPERINTENDENT Dr. Maureen Reusche BUSINESS MANAGER Richard T. Henderson SOLICITOR Catania & Parker LLP Media, Pennsylvania BOND COUNSEL Saul Ewing LLP Philadelphia, Pennsylvania FINANCIAL ADVISOR PFM Financial Advisors LLC Malvern, Pennsylvania UNDERWRITER RBC Capital Markets, LLC Philadelphia, Pennsylvania LIMITED SCOPE UNDERWRITER S COUNSEL McNees Wallace & Nurick LLC Lancaster, Pennsylvania PAYING AGENT TD Bank, National Association Philadelphia, Pennsylvania SCHOOL DISTRICT ADDRESS 50 East Eagle Road Havertown, Pennsylvania i

4 No dealer, broker, salesman or other person has been authorized by the School District, the financial advisor or the underwriters to give information or to 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. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the School District and from other sources which are believed to be reliable but the School District does not guarantee the accuracy or completeness of information from sources other than the School District. 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 shall, under any circumstances, create any implication that there has been no change in any of the information set forth herein since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this official statement pursuant to its responsibilities to investors under the federal securities laws, but the Underwriter does not guarantee the accuracy or completeness of such information. INTRODUCTION... 1 PURPOSE OF THE ISSUE... 1 THE BONDS... 2 REDEMPTION OF BONDS... 4 BOOK-ENTRY ONLY SYSTEM... 5 THE SCHOOL DISTRICT... 6 SCHOOL DISTRICT FINANCES... 7 SUMMARY OF CHANGES IN FUND BALANCE REVENUES AND EXPENDITURES BUDGET TAXING POWERS ACT 1 OF SPECIAL SESSION 2006 ( TAXPAYER RELIEF ACT ) OUTSTANDING DEBT SCHOOL DISTRICT BORROWING CAPACITY DEBT SERVICE SCHEDULE FUTURE FINANCING LABOR RELATIONS NO LITIGATION APPROVALS DEFAULTS AND REMEDIES TAX MATTERS INTEREST RATE SWAP AGREEMENT OF THE SCHOOL DISTRICT SECONDARY MARKET DISCLOSURE RATING UNDERWRITING LEGAL OPINION FINANCIAL ADVISOR OTHER MATTERS MISCELLANEOUS APPENDIX A - DEMOGRAPHIC AND ECONOMIC INFORMATION... A-1 RELATING TO THE COUNTY OF DELAWARE APPENDIX B - AUDITED FINANCIAL STATEMENTS OF THE SCHOOL DISTRICT... B-1 APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT... C-1 APPENDIX D - FORM OF BOND COUNSEL OPINION... D-1 ii

5 OFFICIAL STATEMENT $21,070,000 School District of Haverford Township Delaware County, Pennsylvania General Obligation Bonds, Series of 2017 INTRODUCTION This Official Statement, including the cover page, inside cover page hereof and appendices hereto, is furnished by the School District of Haverford Township, Delaware County, Pennsylvania (the School District ) in connection with the offering of its $21,070,000 General Obligation Bonds, Series of 2017 (the Bonds ). The Bonds are being issued pursuant to a Resolution of the Board of School Directors of the School District adopted on November 17, 2016 (the Resolution ), in accordance with the provisions of the Local Government Unit Debt Act of the Commonwealth of Pennsylvania, 53 Pa. Chs (the Act ). TD Bank, National Association, Philadelphia, Pennsylvania, will act as paying agent, sinking fund depository and registrar for the Bonds (in each capacity, the Paying Agent ). PURPOSE OF THE ISSUE The proceeds of the Bonds will be used (i) to currently refund a portion of the School District s General Obligation Bonds, Series of 2012 (the 2012 Bonds ) of which $7,595,000 will be refunded (the Refunded 2012 Bonds ), outstanding in the aggregate principal amount of $9,520,000; (ii) to currently refund all of the School District s outstanding General Obligation Note, Series of 2013 (the 2013 Note ), outstanding in the aggregate principal amount of $5,444,000; (iii) to currently refund all of the School District s outstanding General Obligation Note, Series of 2014 (the 2014 Note ), outstanding in the aggregate principal amount of $9,843,000 and (iv) to pay the costs of issuing the Bonds. Sources and Uses of Funds The estimated sources and uses of funds for the Bonds are summarized as follows: Total SOURCES OF FUNDS Par Amount of Bonds $21,070, Plus: Original Issue Premium 2,163, Total Sources of Funds $23,233, USES OF FUNDS Amount required to Refund the Refunded 2012 Bonds $7,631, Amount required to Refund the 2013 Note 5,474, Amount required to Refund the 2014 Note 9,899, Cost of Issuance (1) 221, Miscellaneous Expenses/Rounding 6, Total Uses of Funds $23,233, (1) Includes legal, financial advisor, printing, rating, Underwriter s discount, redemption fee, Paying Agent, rounding and miscellaneous costs. 1

6 THE BONDS Description of the Bonds The Bonds are dated as of the date of delivery, and bear interest at the rates and mature in the amounts and on the dates described on the inside cover page. When issued, the Bonds will be available for purchase only in book entry form. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 in principal amount or any integral multiple thereof only under the book-entry system maintained by The Depository Trust Company ( DTC ), New York, New York, through brokers and dealers who are, or act through, DTC Participants. The purchasers of the Bonds (the Beneficial Owners ) will not receive any physical delivery of bond certificates, and beneficial ownership of the Bonds will be evidenced only by book entries maintained by DTC. For so long as any purchaser is the Beneficial Owner of a Bond, that purchaser must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of, and interest on, the Bonds. See BOOK - ENTRY ONLY SYSTEM herein. Payment of Principal and Interest When issued, the Bonds will be registered in the name of Cede & Co., as nominee for DTC. So long as Cede & Co., as nominee for DTC, is the registered owner of the Bonds, payments of principal of, and interest on, the Bonds, when due, are to be made by the Paying Agent to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the School District with respect to, and to the extent of, principal, and interest so paid. If the use of a book-entry system for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal and interest on the Bonds shall be made as described in the following paragraphs. Principal of the Bonds will be paid to the registered owners thereof or assigns, when due, upon surrender of the Bonds to the Paying Agent at its corporate trust office in Philadelphia, Pennsylvania (or to any additional or appointed alternate or successor paying agent at its designated office(s)) so long as one location is within Pennsylvania. Interest on any Bond held in physical, certificated form is payable to the registered owner of such Bond from the interest payment date next preceding the date of authentication of the Bond, unless: (a) such Bond is authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date; or (b) such Bond is authenticated after a Regular Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such succeeding interest payment date; or (c) such Bond is authenticated on or prior to the Regular Record Date (hereinafter defined) preceding September 15, 2017, in which event such Bond shall bear interest from the Date of Delivery. Interest shall be paid semiannually on March 15 and September 15 of each year, beginning September 15, 2017, until the principal sum is paid. Interest on each Bond while held in physical, certificated form is payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15 th ) day (whether or not a business day) next preceding each interest payment date (the Regular Record Date ), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bond subsequent to such Regular Record Date and prior to such interest payment date. If the School District shall default in the payment of interest due on such interest payment date, such interest shall thereupon cease to be payable to the registered owners of the Bonds shown on the registration books as of the Regular Record Date. In the event of any such default, such defaulted interest shall be payable to the person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owners of such Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names such Bonds are registered at the close of business on the fifth (5 th ) day preceding the date of mailing. If the date for the payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or on a day on which banking institutions in the Commonwealth of Pennsylvania or in the jurisdiction in which the corporate trust payment office of the Paying Agent is located are authorized or directed by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or directed to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment. Transfer, Exchange and Registration of Bonds When issued, the Bonds will be registered in the name of Cede & Co., as nominee for DTC. So long as Cede & Co., as nominee for DTC, is the registered owner of the Bonds, transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of DTC Participants acting on behalf of the Beneficial Owners. See BOOK ENTRY ONLY SYSTEM herein. 2

7 If the use of the Book Entry Only System is discontinued and bond certificates are issued, any Bond will be transferable or exchangeable by the registered owner thereof upon surrender of such Bond to the Paying Agent, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his duly appointed attorney or other legal representative. The Paying Agent shall enter any transfer of ownership of such Bond in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered Bond or Bonds of authorized denominations of the same maturity and interest rate for the aggregate amount which the registered owner is entitled to receive. Bonds may also be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same maturity and interest rate. Security The Bonds will be general obligations of the School District, payable from its tax and other general revenues which presently include ad valorem taxes levied upon all taxable property within the School District within limitations provided by law. (See Taxing Powers and Act 1 of Special Session 2006 ( Taxpayer Relief Act ) herein). The School District has covenanted that it will provide in its budget for each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year, and will duly and punctually pay, or cause to be paid, from its Sinking Fund established for the Bonds, as hereinafter described, or from any other of its revenues or funds, the principal of every Bond and the interest thereon at the dates and place and in the manner stated on the Bonds; for such budgeting, appropriation, and payment the School District has irrevocably pledged its full faith, credit and taxing power (see "Defaults and Remedies" herein). The Public School Code of 1949, P.L. 30, No. 14, as amended (the "School Code") presently provides for the withholding and application of subsidies in the event of failure to pay debt service (see "State Enforcement of Debt Service Payments" herein). Sinking Fund The School District will create a sinking fund, designated as Sinking Fund -- General Obligation Bonds, Series of 2017 (the Sinking Fund ), under the Resolution which will be held by the Paying Agent as the Sinking Fund Depository. The School District shall deposit in the Sinking Fund a sufficient sum not later than the date when interest and principal is to become due on the Bonds so that on each payment date the Sinking Fund will contain an amount which shall be sufficient to pay, in full, interest and principal then due on the Bonds. The Paying Agent, as Sinking Fund Depository, is authorized without further order from the School District to pay from the Sinking Fund the principal of and interest on the Bonds when due and payable. State Enforcement of Debt Service Payments Section 633 of the School Code, as amended by Act 154 of 1998, presently provides that in all cases where the board of school directors of any school district fails to pay or to provide for the payment of any indebtedness at date of maturity or date of mandatory redemption, or any interest due on such indebtedness on any interest payment date, in accordance with the schedule under which such indebtedness was issued, the Secretary of Education is required to notify such board of school directors of its obligation and shall withhold out of any State appropriation due such school district an amount equal to the sum of the principal amount maturing or subject to mandatory redemption and interest owing by such school district, and shall pay over the amount so withheld to the bank or other person acting as sinking fund depository for such bond issue. These withholding provisions presently apply to debt service on the Bonds; however, they are not part of any contract with the holders of the Bonds, and could be amended or repealed by future legislation. The effectiveness of Section 633 may be limited by the application of other withholding provisions contained in the School Code, such as provisions for withholding and paying over of unpaid teacher's salaries. Enforcement may also be limited by bankruptcy, insolvency or other laws or equitable principles affecting the enforcement of creditors' rights generally. There can be no assurance, however, that any payments pursuant to this withholding provision will be made by the date on which such payments are due to the Bondholders. The effectiveness of Section 633 of the Public School Code may be limited by the application of other withholding provisions contained in the Public School Code, such as provisions for withholding and paying over of appropriations for payment of unpaid teachers salaries. Enforcement may also be limited by bankruptcy, insolvency, or other laws or equitable principles affecting the enforcement of creditors rights generally. But see Pennsylvania Budget Adoption. Pennsylvania Budget Adoption Over the past several years the Commonwealth of Pennsylvania has, from time to time, started its fiscal year without a fully adopted state budget. In the state s fiscal year, a final budget was not enacted until 270 days following the beginning of the fiscal year on March 27, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on March 17,

8 For the current fiscal year, the state budget became law, known as Act 16A of 2016, on July 12, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on July 1, On July 13, 2016, the General Assembly adopted and Governor signed into law additional tax and revenue package, known as Act 85 of 2016 that was needed to balance the state budget. During a state budget impasse, school districts in Pennsylvania cannot be certain that state subsidies and revenues owed them from the Commonwealth will become available. This includes many of the major state subsidies, and overall revenues, that a Pennsylvania school district receives including basic education funding, special education funding, PlanCon reimbursements, and certain block grants, among many others. Future budget impasses may affect the timeliness or amount of payments by the Commonwealth under the withholding provisions of Section 633 of the Public School Code, however recent legislation included in Act 85 of 2016 has attempted to address the timeliness of the withholding provisions of Section 633 of the Public School Code during any future budget impasses. See Act 85 of 2016 below. Act 85 of 2016 On July 13, 2016, the Governor of the Commonwealth signed into law Act No. 85 of 2016, (P.L. 664, No. 85) ( Act 85 of 2016 ), an amendment to the Act of April 9, 1929 (P.L. 343, No. 176), known as the Fiscal Code ( Fiscal Code ). Act 85 of 2016 adds to the Fiscal Code Article XVII-E.4, entitled School District Intercepts for the Payment of Debt Service During Budget Impasse, which provides for intercept of subsidy payments by the Pennsylvania Department of Education ( PDE ) to a school district subject to an intercept statute or an intercept agreement in the event of a Commonwealth budget impasse in any fiscal year. Act 85 of 2016 includes in the definition of intercept statutes Section 633 of the Public School Code. The School District's general obligation bonds, including the Bonds, are subject to Section 633 of the Public School Code. Act 85 of 2016 provides that the amounts that may be necessary for PDE to comply with the provisions of the applicable intercept statute or intercept agreement shall be appropriated to PDE from the General Fund of the Commonwealth after PDE submits justification to the majority and minority chairs of the appropriations committees of the Pennsylvania Senate and House of Representatives allowing ten (10) calendar days for their review and comment, if, in any fiscal year: (1) annual appropriations for payment of Commonwealth money to school districts have not been enacted by July 1 and continue not to be enacted when a payment is due; (2) the conditions under which PDE is required to comply with an intercept statute or intercept agreement have occurred, thereby requiring PDE to withhold payments which would otherwise be due to school districts; and (3) the Secretary of PDE, in consultation with the Secretary of the Budget, determines that there are no payments or allocations due to be paid to the applicable school districts from which PDE may withhold money as required by the applicable intercept statute or intercept agreement. The necessary amounts shall be appropriated on the expiration of the tenth (10th) day following submission of the justification described above to the majority and minority chairs of the appropriations committees, who may comment on the justification but cannot prevent the effectiveness of the appropriation. The total of all intercept payments under Article XVII-E.4 for a school district may not exceed 50% of the total nonfederal general fund subsidy payments made to that school district in the prior fiscal year. Act 85 of 2016 requires that each school district with bonds or notes subject to an intercept statute or intercept agreement must deliver to PDE, in such format as PDE may direct, a copy of the final Official Statement for the relevant bonds or notes or the loan documents relating to the obligations, within thirty (30) days of receipt of the proceeds of the obligations. The School District intends on submitting this information with respect to the Bonds to PDE within the prescribed timeframe following the issuance of the Bonds. Act 85 of 2016 provides that any obligation for which PDE does not receive the required documents shall not be subject to the applicable intercept statute or intercept agreement. The provisions of Act 85 of 2016 are not part of any contract with the holders of the Bonds and may be amended or repealed by future legislation. REDEMPTION OF BONDS The Bonds are not subject to optional or mandatory redemption prior to maturity. 4

9 BOOK-ENTRY ONLY SYSTEM The information in this section has been obtained from materials provided by DTC for such purpose. The School District (herein referred to as the Issuer ) and the Underwriter do not guaranty the accuracy or completeness of such information, and such information is not to be construed as a representation of the School District or the Underwriter. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds (the Bonds ). 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 and rate of interest of the Bonds, each in the aggregate principal amount of such maturity and that rate of interest, and will be deposited with DTC. DTC the world's largest securities depository is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of 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 Bonds may wish to ascertain that the nominee holding the Bonds for their benefit bas 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 of any particular 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 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 5

10 Payments of Principal, interest and redemption premium, if any, 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 Issuer or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Issuer or the Paying Agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of Principal, interest and redemption premium, if any, 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 Issuer 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 depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. NEITHER THE ISSUER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER. The Issuer and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Preliminary Official Statement. Introduction THE SCHOOL DISTRICT The School District is coterminous with the Township of Haverford, Pennsylvania (the Township ), and is located in the northeastern portion of Delaware County (the County ). Both the School District and the Township occupy an area of approximately 9.9 square miles and are bordered by Radnor Township to the northwest, Montgomery County to the northeast, Upper Darby Township to the southeast, and Marple Township to the southwest. Philadelphia, which provides a small border to the School District, lies immediately to the east, and Haverford is part of the Philadelphia Standard Metropolitan Statistical Area. The School District is in large part residential. Administration The School District is a school district of the Second Class, organized and existing under the laws of the Commonwealth. The governing body of the School District is a board of nine school directors who are each elected for a four-year term. The daily operation and management of the School District is carried out by the administrative staff of the School District, headed by the Superintendent of Schools who is appointed by the Board of School Directors. 6

11 School Facilities TABLE 1 SCHOOL DISTRICT FACILITIES Original Construction Last Grades Name of Facility Date Renovated Served Enrollment Elementary Schools Chatham Park K Coopertown K Lynnewood K Manoa K Chestnutwold K Haverford Middle School ,430 Haverford High School , ,736 Enrollment Trends Source: School District Officials. Past, present and projected pupil enrollments are as follow: TABLE 2 SCHOOL DISTRICT ENROLLMENT TRENDS Actual Enrollments Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,420 3,059 5, ,929 3,174 6, ,504 3,033 5, ,949 3,194 6, ,549 3,050 5, ,958 3,205 6, ,599 3,050 5, ,584 3,068 5, ,645 3,042 5, ,771 3,051 5, ,784 3,079 5, ,820 3,067 5, ,887 3,166 6,053 Source: School District Officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and the Business Manager of the School District and is submitted to the School Board for approval prior to the beginning of the fiscal year. 7

12 Financial Reporting The School District has organized its accounts on the basis of funds or groups of funds, each of which is a separate accounting entity. It maintains a General Fund for instructional, operation and administrative expenses, a Food Services Fund, Capital Fund, Debt Service Fund, Community Education Fund, Extended Care Fund and various school activity funds. Federal funds are appropriated by the School District during the fiscal year after grant commitments and project approvals are received. The School District keeps the books and prepares the financial reports for the General Fund according to a modified accrual basis of accounting. Major accrual items are payrolls, payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units. Taxes are credited when received. The School District financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Maillie, Falconiero & Company, Oaks, Pennsylvania, currently serves as auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see ACT 1 OF SPECIAL SESSION 2006 ( TAXPAYER RELIEF ACT herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. To use any of the referendum exceptions for which court approval is required under the Taxpayer Relief Act, the school district must petition the court of common pleas no later than 75 days prior to the upcoming election, after giving one week s public notice of the intent to file such petition. The court may schedule a hearing on the petition, and the school district must prove by clear and convincing evidence that it qualifies for the exception sought. The Taxpayer Relief Act requires that the court rule on the petition and inform the school district of its decision no later than 55 days prior to the upcoming election. Such Act provides that the court in approving the petition shall determine the dollar amount for which the exception is granted, the tax rate increase required to fund the exception and the appropriate duration of the tax increase. If the court denies the school district s petition, such Act permits the school district to submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. 8

13 Summary and Discussion of Financial Results A summary of General Fund balance sheet and changes in fund balances are presented in Tables 3 and 4 which follow. The audited financial statements show revenues of $108,862,141 and expenditures of $107,174,265 with a surplus of $1,196,524 for the year. The beginning fund balance for was $8,432,669 and totals $9,629,193 for fiscal year ended Table 5 shows revenues and expenditures for the past five years. TABLE 3 SCHOOL DISTRICT SUMMARY OF COMPARATIVE GENERAL FUND BALANCE SHEET (Years Ended June 30) ASSETS Cash and Cash Equivalents $9,368,950 $10,902,991 $13,758,616 $18,778,749 $17,568,514 Investments Accounts Receivable 400, , , , ,830 Due from other funds ,959 Due from other governments 888,892 1,351,963 1,575,048 2,298,983 2,762,178 Other receivables 274, , , , ,459 Prepaid Items 42,624 79,002 40, ,331 0 TOTAL ASSETS $10,975,101 $12,857,323 $15,957,967 $22,276,325 $21,180,940 LIABILITIES Due to other funds $24,956 $33,684 $42,932 $59,367 $0 Accounts Payable 169, , ,140 4,465,887 4,383,251 Accrued Salaries and Benefits 7,154,503 7,655,712 8,067,945 9,304,038 7,121,044 Unearned Revenue ,294 47,452 Deferred Revenues 5,666 3,450 4,750 6,070 0 TOTAL LIABLITIES $7,355,008 $8,082,679 $8,897,767 $13,843,656 $11,551,747 FUND BALANCES Nonspendable, prepaid items $42,624 $79,002 $40,254 $144,331 $0 Unassigned 3,577,469 $4,695,642 $7,019,946 $8,288,338 $9,629,193 TOTAL FUND BALANCES $3,620,093 $4,774,644 $7,060,200 $8,432,669 $9,629,193 TOTAL LIABLITIES AND FUND BALANCES $10,975,101 $12,857,323 $15,957,967 $22,276,325 $21,180,940 Source: School District Financial Statements. 9

14 TABLE 4 HAVERFORD TOWNSHIP SCHOOL DISTRICT GENERAL FUND SUMMARY OF CHANGES IN FUND BALANCE (Years Ended June 30) Beginning Fund Balance $178,601 $3,620,093 $4,774,644 $7,060,200 $8,432,669 Revenues over (under) Expenditures 3,441,492 1,154,551 2,285,556 1,372,469 1,196,524 Ending Fund Balance $3,620,093 $4,774,644 $7,060,200 $8,432,669 $9,629,193 Source: School District Financial Statements. Revenue The School District received $108,862,141 in revenue in In , local sources contributed percent, Commonwealth sources contributed percent and federal and other sources contributed 1.06 percent of total revenue. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10

15 TABLE 5 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES AND EXPENDITURES (Years Ended June 30) REVENUES Local Sources $76,443,075 $78,887,424 $82,870,788 $86,828,149 $89,970,004 State Sources 12,529,127 13,549,631 14,486,345 16,270,449 17,742,164 Federal Sources 1,429,749 1,477,734 1,134,628 1,414,498 1,149,973 TOTAL REVENUES $90,401,951 $93,914,789 $98,491,761 $104,513,096 $108,862,141 EXPENDITURES Instruction $50,824,534 $56,089,537 $57,325,400 $62,229,929 $64,587,191 Support Services 25,679,969 26,442,181 28,255,099 29,829,970 30,738,233 Operation of Non-instructional Services 1,342,071 1,303,401 1,335,061 1,376,921 1,456,149 Facilities Acquisition, Construction and Improvement Svcs. 1,087, , ,791 1,017, ,741 Refund of Prior Years Receipts 22,145 47, ,080 19,837 Debt Service 9,480,084 9,568,926 9,290,619 9,699,727 10,141,114 TOTAL EXPENDITURES $88,436,669 $94,310,704 $96,617,996 $104,157,880 $107,174,265 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $1,965,282 ($395,915) $1,873,765 $355,216 $1,687,876 OTHER FINANCING SOURCES (USES) Proceeds from Capital Leases $1,087,866 $858,858 $411,791 $1,017,253 $231,741 Transfer In (Out) 388, , (723,093) TOTAL OTHER FINANCING SOURCES $1,476,210 $1,550,466 $411,791 $1,017,253 ($491,352) NET CHANGE IN FUND BALANCES $3,441,492 $1,154,551 $2,285,556 $1,372,469 $1,196,524 Fund Balance - Beginning $178,601 $3,620,093 $4,774,644 $7,060,200 $8,432,669 Fund Balance - Ending $3,620,093 $4,774,644 $7,060,200 $8,432,669 $9,629,193 Source: School District Financial Statements. 11

16 TABLE 6 HAVERFORD TOWNSHIP SCHOOL DISTRICT BUDGET Budget (1) Beginning Fund Balance $8,432,669 REVENUES Local Sources $92,009,607 State Sources 18,585,729 Federal Sources 1,318,401 Other Financing Sources 0 TOTAL REVENUES $111,913,737 TOTAL ESTIMATED FUND BALANCE, REVENUES & OTHER FINANCING SOURCES $120,346,406 EXPENDITURES Instructional Services $68,079,810 Support Services 32,330,101 Operation of Noninstructional Services 1,309,676 Facility Acquisition, Construction & Improvement 0 TOTAL EXPENDITURES $101,719,587 OTHER FINANCING SOURCES Debt Service $10,194,150 Interfund Transfers - Out 0 Transfers Involving Component Units 0 Budgetary Reserve 0 TOTAL OTHER FINANCING SOURCES $10,194,150 TOTAL APPROPRIATIONS $111,913,737 FUND BALANCE BEGINNING $8,432,669 FUND BALANCE - ENDING $8,432,669 (1) Budget, as adopted May 5, See "Summary and Discussion of Financial Results" herein. Source: School District Financial Statements 12

17 TAXING POWERS Subject to certain limitations by the Taxpayer Relief Act, Act No. 1 of the Special Session of 2006, as amended (see ACT 1 OF SPECIAL SESSION 2006 ( TAXPAYER RELIEF ACT ) herein), the School District is empowered by the School Code and other statutes to levy the following taxes: 1. An ad valorem tax on all property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, to be used for general school purposes. 2. Unless limited by Act 1, an unlimited ad valorem tax on all property taxable for school purposes to provide funds for: a. minimum salaries and increments for the teaching and supervisory staff; b. rentals due any municipality, authority, or non-profit corporation, or due the State Public School Building Authority; c. interest and principal on any indebtedness incurred under the Debt Act or any prior or subsequent act governing the incurrence of indebtedness of the School District; and d. amortization of bonds to finance construction of school facilities, if issued prior to the first Monday in July, An annual per capita tax on each resident over eighteen years old of not less than $1.00 and not more than $ Additional taxes levied under the Local Tax Enabling Act (Act 511 of 1965), including per capita, wage and other earned income, real estate transfer, and occupation taxes, subject to sharing with other political subdivisions authorized to levy similar taxes on the same person, property, transaction or income. A school district cannot levy these taxes in an amount which exceeds the equivalent of 12 mills on the market value of taxable real estate (such market value to be certified by the State Tax Equalization Board). All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year. ACT 1 OF SPECIAL SESSION 2006 ( TAXPAYER RELIEF ACT ) The Taxpayer Relief Act became effective June 27, 2006, as amended by Act 25 of 2011 ( The Taxpayer Relief Act or Act 1 ). Under the provisions of such Act, a school district may not, in any fiscal year, levy any tax for the support of the public schools which was not levied in the fiscal year, raise the rate of any earned income and net profits tax if already imposed under the authority of the Local Tax Enabling Act (Act 511), or increase the rate of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such exception is approved by the Pennsylvania Department of Education ( PDE ) (in the case of all other exceptions below). 1. to pay interest and principal on indebtedness incurred (i) prior to September 4, 2004, in the case of a school district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves; 2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and 3. to make payments into the State Public School Employees Retirement System when the increase in the estimated payments between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1. 13

18 Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by PDE. If a school district's petition or request to increase taxes by more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a referendum. The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the Federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio. The Act 1 Index applicable to the School District for the current and previous fiscal years (not including exceptions) are as follows: Fiscal Year Adjusted Index Source: Pennsylvania Department of Education. As required by Act 1, the board of school directors of the School District submitted a referendum question to the voters at the primary elections held on May 15, 2007 seeking voter approval allowing the school district to levy, assess and collect an earned income and net profits tax ( EIT ) or a personal income tax ( PIT ) for the purpose of annually funding homestead and farmstead exclusions from real property taxes. The proposed rate of such EIT or PIT may not exceed the rate required to provide the maximum exclusion for homestead and farmstead property allowable under Pennsylvania law, nor may it be less than the rate required to provide 50% of the maximum allowable exclusion. Nevertheless, no school district is required to propose an EIT that is greater than 1% or a PIT equivalent to an EIT of 1%. A board of school directors may submit, but is not required to submit, a further referendum question to the voters at the municipal election in 2009 or any later year seeking approval to levy or increase the rate of an EIT or a PIT for the purpose of further funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the rate which, when combined with any tax rate authorized at the 2007 primary election, is required to provide the maximum homestead and farmstead exclusions allowable under law. No such further referendum question has been submitted to the voters at the date hereof by the School District. This summary is not intended to be an exhaustive discussion of the provisions of Act 1 nor a legal interpretation of any provision of Act 1, an a prospective purchaser of the Bonds should review the full text of Act 1 as a part of any decision to purchase the Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 14

19 The Bonds are Grandfathered under the Taxpayer Relief Act The Refunded Bonds constitute indebtedness of the School District that was incurred under the Local Government Unit Debt Act (the Debt Act ) by resolution duly adopted by the Board of School Directors on September 2, 2004 for the General Obligation Bonds, Series of 2006 (the 2006 Bonds ), which 2013 Note and 2014 Note were issued to advance refund the District s 2006 Bonds, and hence the Bonds are grandfathered under the Taxpayer Relief Act. The General Obligation Bonds, Series of 2004 were issued prior to Act 72 and Act 1 and were refunded by the 2012 Bonds, and hence they are grandfathered under the Taxpayer Relief Act. The School District did not elect to become subject to the provisions of former Act 72 of 2004 ( Act 72 ) (Act 72 was repealed by the Taxpayer Relief Act) and the Bonds described in this Official Statement is a debt which was incurred by the School District under the Debt Act prior to June 27, 2006, the effective date of the Taxpayer Relief Act. Under the Taxpayer Relief Act, the School District is entitled to apply to PDE for an approval to utilize an exception to the referendum requirement, if and to the extent a tax increase greater than the Index is needed to pay principal and interest on the Bonds in any particular fiscal year (see The Taxpayer Relief Act and Budgeting Process in School Districts under the Taxpayer Relief Act herein). The Taxpayer Relief Act provides that PDE shall approve a school district s request if a review of the data demonstrates that the school district qualifies for the exception sought and the sum of the dollar amounts of all exceptions for which the school district qualifies is not more than what is necessary to balance the budget after giving effect to the revenue to be raised by the allowable increase under the Index. There can be no assurance, however, that approval will be given by PDE to utilize an exception to the referendum requirement in any future fiscal year or years. Act 130 of 2008 Act 130 of 2008 of the Commonwealth amended the Local Tax Enabling Act so as to authorize school districts levying an occupation tax to replace that occupation tax with an increased earned income tax, or if the school district has implemented a personal income tax in accordance with the Taxpayer Relief Act, an increased personal income tax, in a revenue neutral manner. To so replace an occupation tax, the board of school directors must first hold at least one public hearing on the matter and then place a binding referendum question on the ballot at a general or municipal election for approval by the voters. The School District currently does not levy an occupation tax. SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 130. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 130 NOR A LEGAL INTERPRETATION OF ANY PROVISION OF ACT 130. A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 130 AS A PART OF ANY DECISION TO PURCHASE THE BONDS. Legislation Limiting Unreserved Fund Balances Pennsylvania Act No (enacted December 23, 2003) prohibits a school district from increasing real property taxes for the school year or any subsequent school year, unless the school district has adopted a budget for such school year that includes an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set forth below: Estimated Ending Unreserved Undesignated Fund Total Budgeted Expenditures Balance as a Percentage of Total Budgeted Expenditures Less than or equal to $11,999, % Between $12,000,000 and $12,999, % Between $13,000,000 and $13,999, % Between $14,000,000 and $14,999, % Between $15,000,000 and $15,999, % Between $16,000,000 and $16,999, % Between $17,000,000 and $17,999, % Between $18,000,000 and $18,999, % Greater than or equal to $19,000, %* Estimated ending unreserved fund balance is defined in Act as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district s budget was adopted and held in that general fund accounts of the school district. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 15

20 Tax Levy Trends Table 6 which follows shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax rates for the School District and Delaware County. School District Tax Rates TABLE 6 HAVERFORD TOWNSHIP SCHOOL DISTRICT TAX RATES Real Estate Real Estate Transfer (1) (mills) (%) % % % % % % % % % % (1) Shared equally with Township Source: School District TABLE REAL PROPERTY TAX RATES (Mills on Assessed Value) District Township County Total Source: Pennsylvania Department of Community and Economic Development Real Property Tax The School District s real property tax (excluding delinquent collections) generated $85,903,113 in , or 95.5 percent of local revenue. Tax bills are dated July 1 and taxpayers who remit within 60 days receive a 2 percent discount, and those who remit subsequent to October 31 are assessed a 10 percent penalty. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16

21 The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. TABLE 8 SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA School Year Market Value Assessed Value Ratio (1) 2007 $3,430,375,400 $2,928,966, % ,935,367,700 2,936,281, % ,957,897,634 2,950,506, % ,321,970,952 2,961,814, % ,329,822,694 2,966,900, % ,426,467,246 2,988,948, % ,453,430,798 3,007,184, % ,536,450,495 3,052,418, % ,564,783,354 3,071,850, % ,577,390,212 3,099,572, % (2) Source: Pennsylvania State Tax Equalization Board and School District officials. (1) STEB ratios. (2) 2015 STEB Ratio used. SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Value Assessed Value Market Value Assessed Value Haverford Township School District $4,536,450,495 $3,052,418,323 $4,564,783,354 $3,071,850,133 Haverford Township 4,564,783,354 3,052,418,323 4,564,783,354 3,071,850,133 Delaware County 40,854,536,223 29,341,018,131 41,063,808,921 29,588,721,741 Source: Pennsylvania State Tax Equalization Board and School District officials. TABLE 10 SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential $2,663,799,962 $2,688,315,899 $2,705,459,753 $2,726,407,284 $2,747,557,648 Lots 22,970,032 21,685,451 21,214,861 19,001,309 17,166,505 Industrial 207, , , , ,420 Commercial 279,923, ,740, ,302, ,802, ,918,560 Agriculture Land Total $2,966,900,648 $2,988,948,994 $3,007,184,844 $3,052,418,323 $3,071,850,133 Source: Pennsylvania State Tax Equalization Board. 17

22 TABLE 11 SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Total Year Collections Current Prior Collections as Percent Total Flat Millage Year Years as Percent Total of Total Year Billing Rate Collections Collections (1) of Total Collections Flat Billing $55,131, $53,334,799 $1,429, % $54,764, % ,363, ,797, , % 57,785, % ,608, ,589,835 1,257, % 60,847, % ,811, ,754,539 1,206, % 61,960, % ,197, ,871,875 1,723, % 66,595, % ,526, ,158,308 1,400, % 69,558, % ,489, ,097,439 1,449, % 74,546, % ,023, ,400,639 1,402, % 76,803, % ,426, ,759,515 1,308, % 80,068, % ,496, ,675,430 1,754, % 84,429, % ,669, ,903,113 1,726, % 87,629, % (1) Includes all taxes collected for past fiscal years. Source: School District Officials. [REMAINDER OF PAGE INTENTIONALY LEFT BLANK] 18

23 follows. The ten largest real property taxpayers, together with assessed values are shown on Table 12 which TABLE 12 SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS, Taxpayer Type Assessed Value CNL Retirement MA3 Retirement Center $38,480,000 Quarry Center Shopping Center 27,172,240 Manoa Associates Shopping Mall 14,358,310 Merion Golf Club Private Golf Club 9,387,070 Ipers Wellness Center Office Building 6,266,500 Kindred Hospitals East Office Building 5,761,972 Bryn Mawr Terrace Nursing Home 5,750,000 Brandywine Senior Care Nursing Home 5,585,780 Falcon Center Complex LLC Office Building 4,651,850 Kimco KML Inc. Department Store 4,643,600 $122,057,322 Source: School District Officials. *The taxpayers represent 3.94% of the School District s STEB Assessed Value Source: School District Officials. Other Taxes Real Estate Transfer. The School District levies a tax of 1.00% of the value of real estate transfers which is shared with the municipality in which the property is located, if such municipality also levies such a tax. COMMONWEALTH AID TO SCHOOL DISTRICTS Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to statutory provisions and annual appropriation by the Pennsylvania General Assembly. The largest subsidy, the basic instructional subsidy, is allocated to all school districts based on (1) the per pupil market value of assessable real property in the school district; (2) the per pupil earned income in the school district; and (3) the school district's tax effort, as compared with the tax effort of other school districts in the Commonwealth. School districts also receive subsidies for special education, pupil transportation; vocational education, health service and debt service are also received by the school district. Current Lack of State Appropriations for Debt Service Subsidies Commonwealth law presently provides that the School District will receive, subject to state legislative appropriation, reimbursement from the Commonwealth for a portion of debt service paid on the Bonds following final approval by the Pennsylvania Department of Education ( DOE ). Commonwealth reimbursement is calculated based on the Reimbursable Percentage assigned to the Bonds by the DOE and the School District's permanent Capital Account Reimbursement Fraction ( CARF ) (9.06%) or the wealth based Market Value Aid Ratio ( MVAR ) currently (18.51%), whichever is higher. The Reimbursable Percentage is determined through a process known as the Planning and Construction Workbook or PlanCon. Based on the current PlanCon program, School District officials have estimated that the Reimbursable Percentage of the Bonds will be 16.47% (there has been no determination by the DOE). The School District's MVAR (which is higher than the CARF) is 18.51%. The product of these two factors is 3.05%, which is the estimated percentage of debt service which may be reimbursed by the Commonwealth, subject to annual appropriation. In future years, this percentage may change as the School District s MVAR changes, or as a result of future legislation regarding changes to, or even elimination of, the PlanCon program. 19

24 In May of 2016, the Commonwealth enacted appropriation legislation know as Act 25 ( Act 25 ), which contains authorization for the Commonwealth Finance Authority ( CFA ) to issue up to $2.5 billion of debt to fund PlanCon reimbursements to school districts. Act 25 also instituted a moratorium on new projects entering the PlanCon process while an advisory committee established under Act 25 considers amendments to the PlanCon reimbursement program. This new moratorium went into effect on May 15, 2016 and is scheduled to expire on June 30, On October 31, 2016, CFA issued its Revenue Bonds, Series A of 2016 (Federally Taxable) in the total amount of $758,185,000 to provide for PlanCon reimbursement owed to school districts. It is expected that proceeds of this issue will be used to provide PlanCon reimbursement that is owed to the District for past and current fiscal years. However, the District cannot be certain that any future PlanCon reimbursement will be received by PDE as the ability for CFA to issue additional bonds in the future to fund future PlanCon reimbursements owed to school districts may impact the availability of PlanCon reimbursements payable to the District. Any failure by the Commonwealth to adopt a timely budget and enact necessary spending authorizations could have a material adverse effect upon the District s anticipated receipt of PlanCon reimbursements. There can be no assurances that the District will be able to successfully apply for, be awarded, and receive sufficient PlanCon reimbursement for the costs of the any current or future projects of the District. A failure by the District to receive such reimbursement could force the District to apply other available funds, if any, toward the completion costs of the Project and may have a material adverse effect on the financial resources of the District to fund other obligations, including payment of debt service on the Bonds. Legislation has been introduced from time to time in the Pennsylvania legislature containing language that would revise or even abolish the debt service reimbursement program for Pennsylvania school districts. As of the date hereof none of these proposals have been signed into law. To the extent that any future legislation contains material changes to the PlanCon program as currently is structured, the amount of PlanCon reimbursement to the School District may be positively or negatively affected, which could materially impact the amount of local funds needed to be raised by the School District to pay debt service or its debt obligations. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 20

25 OUTSTANDING DEBT Debt Statement NONELECTORAL DEBT Table 13 which follows shows the debt of the School District of Haverford Township as of May 4, TABLE 13 SCHOOL DISTRICT DEBT STATEMENT (1) (As of May 4, 2017) Net of Reimb. Eff. Estimated Outstanding Percent (2) Reimb.* State Aid General Obligation Bonds, Series of 2017 (last maturity 2023) $21,070, % * 3.02% $20,432,731 General Obligation Bonds, Series A of 2015 (last maturity 2029) 13,535, % 2.85% 13,148,678 General Obligation Bonds, Series AA of 2015 (last maturity 2021) 4,235, % 0.00% $4,235,000 General Obligation Bonds, Series of 2013 (last maturity 2018) 170, % 3.37% 164,273 General Obligation Bonds, Series of 2012 (last maturity 2030) 1,925, % * 3.38% 1,859,865 General Obligation Bonds, Series A of 2010 (last maturity 2035) 19,460, % 3.70% 18,739,591 General Obligation Bonds, Series of 2009 (3) (last maturity 2030) 43,615, % 2.78% 42,403,222 General Obligation Bonds, Series of 2006 (last maturity 2019) 7,105, % 1.30% 7,012,677 TOTAL NONELECTORAL DEBT $111,115,000 $107,996,038 LEASE RENTAL DEBT $0 $0 TOTAL PRINCIPAL OF NONELECTORAL AND LEASE RENTAL DEBT $111,115,000 $107,996,038 *Reimbursable Percentage is estimated. (1) Includes the Bonds offered through this Official Statement. Excludes the Refunded 2012 Bonds and 2013 and 2014 Notes. (2) Reimbursable Percentage multiplied by School District s Aid Ratio of 18.51%. (3) The District approved a Parameters Resolution in December 2010 by which it approved non-electoral debt in the amount of $56,275,000 to finance a certain project to provide flexibility to the District to refinance the outstanding General Obligation Bonds, Series of 2009 (Variable Rate) (the 2009 Bonds ) as well as terminate the outstanding fixed to floating hedge swap. Although the debt relating to the refunding of the 2009 Bonds has been incurred, the new Bonds have not yet been issued and consequently the 2009 Bonds remain outstanding. If the School District determines to not refund the 2009 Bonds, it will file a Non Completion of Sale Certificate with the Department of Community and Economic Development to rescind all or a portion of the debt incurred. The 2009 Bonds are secured by an irrevocable, direct-pay letter of credit issued by TD Bank, National Association, which expires February 1,

26 SCHOOL DISTRICT BORROWING CAPACITY The borrowing capacity of the School District is calculated in accordance with provisions of the Pennsylvania Local Government Unit Debt Act (the Debt Act ), which describes the applicable debt limits for local government units, including school districts and municipalities. Under the Debt Act, the School District may incur electoral debt, which is debt that is approved by a majority of the School District s voters at either a general or special election, in an unlimited amount. Net nonelectoral debt, or debt not approved by the School District s electorate, net of state aid, may not exceed 225% of the School District s Borrowing Base. The Borrowing Base is calculated as the annual arithmetic average of Total Revenues (as defined in the Debt Act), for the three full fiscal years next preceding the date of incurring debt. Combined net nonelectoral debt and net lease rental debt (the principal amount of bonds or notes of public authorities or other governmental units to be repaid, in this case, by the School District), of the School District may not exceed 225% of the School District s Borrowing Base. The School District calculates its present borrowing base and borrowing capacity as follows: (Years Ending June 30) TOTAL REVENUES $98,491,762 $104,514,319 $108,862,141 Less: Required Deductions (a) Rental and Sinking Fund Reimbursement (b) Revenues for Self-Liquidating Debt (c) Interest Earned on Sinking Funds 59,158 49,137 32,073 (d) Grants and Gifts (e) Sales and Equipment and Non-Recurring Items 411, Total Deductions 470,949 49,137 32,073 NET REVENUES $90,309,772 $104,465,182 $108,830,068 TOTAL NET REVENUES FOR THREE YEARS $303,605,022 BORROWING BASE - AVERAGE REVENUES FOR THREE-YEAR PERIOD $101,201,674 Under the Debt Act as presently in effect, new nonelectoral debt and new lease rental debt may not be incurred if the net amount of such new nonelectoral debt and/or new lease rental debt plus all outstanding net nonelectoral debt and net lease rental debt would cause total net nonelectoral debt and net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentages to the School District s Borrowing Base produces the following products: Remaining Debt Borrowing Legal Limit Outstanding Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $233,536,926 $111,115,000 $122,421,926 Debt Service Requirements Table 14 presents overlapping indebtedness and debt ratio of the School District. After issuance of the Bonds, the principal of direct and overlapping debt of the School District will total $195,310,158. After adjustment for estimated Commonwealth aid, the local effort of direct and overlapping debt will total $192,191,195. Table 15 presents the debt service requirements on the Bonds. Table 16 presents data on the extent to which Commonwealth Aid provides coverage for debt service and lease rental requirements. The School District has never defaulted on the payment of debt service. 22

27 TABLE 14 SCHOOL DISTRICT BONDED INDEBTEDNESS AND DEBT RATIOS (As of May 4, 2017) Population (2010) 48,491 School District Assessed Valuation ( ) $3,099,572,396 School District Market Valuation ( ) $4,577,390,212 Gross Outstanding Local Effort (1) DIRECT DEBT Nonelectoral Debt $111,115,000 * $107,996,038 * Lease Rental Debt 0 0 TOTAL DIRECT DEBT $111,115,000 $107,996,038 OVERLAPPING DEBT Haverford Township, General Obligation (2) $51,750,000 $51,750,000 Delaware County General Obligation Debt (3) 32,445,158 32,445,158 TOTAL OVERLAPPING DEBT $84,195,158 $84,195,158 TOTAL DIRECT AND OVERLAPPING DEBT $195,310,158 $192,191,195 DEBT RATIOS Per Capita (2010) (48,491) $4,028 $3,963 Percent Assessed Value (3,099,572,396) 6.30% 6.20% Percent Market Value (4,577,390,212) 4.27% 4.20% (1) Gives effect to estimated future Commonwealth reimbursement of School District sinking fund payments based on the current MVAR. See COMMONWEALTH AID TO SCHOOL DISTRICTS and above table. (2) District's proportional share (100% of the estimated $51,750,000 general obligation debt of Haverford Township as of May 4, (3) District's proportional share (10.38%) of the estimated $314,696,000 general obligation debt of Delaware County as of May 4, * Includes the Bonds. Does not include Bonds/Notes being refunded. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 23

28 TABLE 15 SCHOOL DISTRICT DEBT SERVICE SCHEDULE $21,070,000 GENERAL OBLIGATION BONDS, SERIES OF 2017 Interest Annual Date Principal Rate (%) Interest Debt Service 9/15/2017 $0 $232, $232, /15/ , , /15/ , , , /15/ , , /15/2019 2,870, & , ,288, /15/ , , /15/2020 3,690, & , ,052, /15/ , , /15/2021 4,650, & , ,945, /15/ , , /15/2022 4,825, & , ,030, /15/ , , /15/2023 5,015, & , ,127, /15/ TOTAL $21,070,000 $3,856, $24,926, TABLE 16 SCHOOL DISTRICT COVERAGE OF DEBT SERVICE AND LEASE RENTAL REQUIREMENTS BY STATE AID State Aid (Budget Number) $18,585, Debt Service Requirements 9,996,373 Maximum Future Debt Service Requirements after Issuance of the Bonds 11,237,106 Coverage of Debt Service Requirements 1.86 times Coverage of Maximum Future Debt Service Requirements 1.65 times FUTURE FINANCING The District does not anticipate issuing long-term debt in the next two to three years for new capital projects. School District Employees LABOR RELATIONS There are approximately 892 employees of the School District, including 434 teachers, 38 administrators and supervisors and 420 support personnel including secretaries, maintenance staff, cafeteria staff and teacher aides. The School District s teachers are represented by the Haverford Township Education Association, an affiliate of the Pennsylvania State Education Association (PSEA), under a contract with the School District which expires in August 31, The School District believes its current labor relations with unionized personnel are good. 24

29 Pension Program School districts in Pennsylvania are required to participate in a Statewide pension program administered by the State Public School Employees Retirement System ( PSERS ). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. The system was established under the Pennsylvania Public School Employees Retirement Code (Act No. 96 of October 2, 1975, as amended). Benefits include retirement, disability, death in service, legislative mandated ad hoc cost of living adjustments, and health care insurance premium assistance to qualifying annuitants. The contribution policy is established in the Pennsylvania Public School Employee s Retirement Code and requires contributions by active members, employers, and the Commonwealth of Pennsylvania. Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent of qualifying compensation (Membership Class TC) or at 6.50 percent of qualifying compensation (Membership Class TD). Members who joined the System on or after July 22, 1983 and who were active or inactive as of July 1, 2001, and before July 1, 2011, contribute at 6.25 percent (Membership Class TC) or at 7.50 percent (Membership Class TD) of qualifying compensation. Members who joined the System after June 30, 2001 contribute at 7.50 percent of qualifying compensation (automatic Membership Class TD). For all new hires and for members who elected Class TD membership, the higher contribution rates began with service rendered on or after January 1, Members who joined the System after June 30, 2011, automatically contribute at the Membership Lass T-E rate of 7.5% of the member s qualifying compensation. All new hires after June 30, 2011, who elect Class T-F membership contribute at 10.3% of the member s qualifying compensation. Membership Class T-E and T-F are affected by a shared risk provision in Act 120 of 2010 that in future fiscal years could cause the Membership Class T-E contribution rate to fluctuate between 7.5% and 9.5% and Membership Class T-F contribution rate to fluctuate between 10.3% and 12.3%. Contributions required by employers are based upon an actuarial valuation. For the fiscal year ended June 30, 2011, the rate was 5.64 percent of covered payroll. For the fiscal year ended June 30, 2012, the rate was 8.65 percent of covered payroll. According to the provisions of Act 29 of 1994, school entities are to pay 100 percent of the required employer contribution to PSERS and the Commonwealth will reimburse the school entity its share of the employer contribution based upon the formula provided in Act 29 of 1994, but not less than one-half of the school entities contribution. The School District s contractually required contribution rate for the fiscal year ended June 30, 2015, was 20.50% and 25.0% for fiscal year ended June 30, 2016, of covered payroll, actuarially determined as an amount that, when combined with employee contributions is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions for the plan from the School District were $9,992,000 for the year ended June 30, 2015 and $13,009,000 for the year ended June 30, In June 2012, the Government Accounting Standards Board ( GASB ) issued Statement No. 68, Accounting and Financial Reporting for Pensions - An Amendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. The new accounting standard will require the School District to report in its government-wide financial statements its proportionate share of the net pension liability of the pension systems to which it contributes. GASB 68 is effective for fiscal years beginning after June 15, 2014, which, in the case of the School District, will begin with fiscal year ending June 30, The School District is currently evaluating the potential impact of the adoption of this statement on the Districtʼs Audited Financial Statements, but the exact impact has not yet been determined. Postemployment Benefits Other than Pensions (OPEB) The School District provides medical and prescription drug insurance benefits to eligible retired employees, spouses and dependent through a single-employer defined benefit plan. The benefits, benefits level, employee contribution and employer contribution are administered by School District Supervisors and can be amended by the School District through its personnel manual and union contracts. The School District s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement no. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. 25

30 The components of the School District s annual OPEB cost for the year, the amount actually contributed to the plan and changes in the School District s net OPEB obligation to the plan are as follows: Normal Cost $95,881 Amortization of unfunded actuarial accrued liability 116,011 ANNUAL REQUIRED CONTRIBUTION (ARC) 211,892 Interest on net OPEB obligation 14,382 Adjustment to ARC (22,589) ANNUAL OPEB EXPENSE 203,685 Net OPEB contributions during the year (198,023) INCREASE IN NET OPEB OBLIGATION 5,662 Net OPEB OBLIGATION BEGINNING OF YEAR $319,590 Net OPEB OBLIGATION AT END OF YEAR $325,252 Source: District audited financial statements. NO LITIGATION Upon delivery of the Bonds, the School District will deliver a certificate stating that there is no litigation pending with respect to the Bonds, and the School District will deliver a certificate and its Solicitor will render an opinion that there is no litigation pending challenging the power of the School District to issue the Bonds or any litigation, of any nature, pending or threatened against the School District that would have a material adverse impact on the financial condition of the School District, if adversely determined. APPROVALS Prior to settlement of the Bonds, approval for the School District's incurring of general obligation non-electoral debt shall have been obtained from the Department of Community and Economic Development of the Commonwealth of Pennsylvania pursuant to the Debt Act. DEFAULTS AND REMEDIES In the event of failure of the School District to pay or cause to be paid the interest on or principal of the Bonds, the holders of the Bonds shall be entitled to certain remedies provided by the Act. If the failure to pay shall continue for 30 days, holders of the Bonds shall have the right to recover the amount due by bringing an action in assumpsit in the Court of Common Pleas of the county in which the School District is located; any judgment shall have an appropriate priority upon the moneys next coming into the treasury of the School District. The Act also provides that upon a default of at least 30 days, holders of at least 25 percent of the principal amount of the Bonds may appoint a trustee to represent them. The Act provides certain other remedies in the event of default, and further qualifies the remedies herein described. Tax Exemption-Opinion of Bond Counsel TAX MATTERS The Internal Revenue Code of 1986, as amended (the "Code") contains provisions relating to the tax-exempt status of interest on obligations issued by governmental entities which apply to the Bonds. These provisions include, but are not limited to, requirements relating to the use and investment of the proceeds of the Bonds and the rebate of certain investment earnings derived from such proceeds to the United States Treasury Department on a periodic basis. These and other requirements of the Code must be met by the School District subsequent to the issuance and delivery of the Bonds in order for interest thereon to be and remain excludable from gross income for purposes of federal income taxation. The School District has made covenants to comply with such requirements. In the opinion of Bond Counsel, interest on the Bonds is not includable in gross income for purposes of federal income taxation under existing statutes, regulations, rulings and court decisions. The opinion of Bond Counsel is subject to the condition that the School District comply with all applicable federal income tax law requirements that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon continues to be excluded from gross income. Failure to comply with certain of such requirements could cause the interest on the Bonds to be so includable in gross income retroactive to the date of issuance of the Bonds. The School District has covenanted to comply with all such 26

31 requirements. Interest on the Bonds is not treated as an item of tax preference under Section 57 of the Code for purposes of the individual and corporate alternative minimum taxes; however, under the Code, to the extent that interest on the Bonds is a component of a corporate holder's "adjusted current earnings," a portion of that interest may be subject to the corporate alternative minimum tax. Bond Counsel expresses no opinion regarding other federal tax consequences relating to the Bonds or the receipt of interest thereon. See discussion of "Alternative Minimum Tax," "Branch Profits Tax," "S Corporations with Passive Investment Income," "Social Security and Railroad Retirement Benefits," "Deduction for Interest Paid by Financial Institutions to Purchase or Carry Tax-Exempt Obligations," and "Property or Casualty Insurance Company", "Reportable Payments and Back-up Witholding" and "Accounting Treatment of Original Issue Discount and Amortizable Bond Premium" below. In the opinion of Bond Counsel, under the laws of the Commonwealth of Pennsylvania as enacted and construed on the date hereof, the Bonds, and the interest thereon are free from taxation for state and local purposes within the Commonwealth of Pennsylvania, but such exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or assessed directly on the Bonds or the interest thereon. Profits, gains or income derived from the sale, exchange, or other disposition of the Bonds are subject to state and local taxation within the Commonwealth of Pennsylvania. Specifically, the Bonds are exempt from personal property taxes in Pennsylvania and interest on the Bonds is exempt from the Pennsylvania personal income tax and the Pennsylvania corporate net income tax. Alternative Minimum Tax The Code includes, for purposes of the corporate alternative minimum tax, a preference item consisting of, generally, seventy-five percent (75%) of the excess of a corporation's "adjusted current earnings" over its "alternative minimum taxable income" (computed without regard to this particular preference item and the alternative tax net operating loss deduction). Thus, to the extent that tax-exempt interest (including interest on the Bonds) is a component of a corporate holder's "adjusted current earnings," a portion of that interest may be subject to the alternative minimum tax. Branch Profits Tax Under the Code, foreign corporations engaged in a trade or business in the United States will be subject to a "branch profits tax" equal to thirty percent (30%) of the corporation's "dividend equivalent amount" for the taxable year. The term "dividend equivalent amount" includes interest on tax-exempt obligations. S Corporations with Passive Investment Income Section 1375 of the Code imposes a tax on the income of certain small business corporations for which an S Corporation election is in effect, and that have "passive investment income." For purposes of Section 1375 of the Code, the term "passive investment income" includes interest on the Bonds. This tax applies to an S Corporation for a taxable year if the S Corporation has Subchapter C earnings and profits at the close of the taxable year and has gross receipts, more than twenty-five percent (25%) of which are "passive investment income." Thus, interest on the Bonds may be subject to federal income taxation under Section 1375 of the Code if the requirements of that provision are met. Social Security and Railroad Retirement Benefits Under Section 86 of the Code, certain Social Security and Railroad Retirement benefits (the "benefits") may be includable in gross income. The Code provides that interest on tax-exempt obligations (including interest on the Bonds) is included in the calculation of "modified adjusted gross income" in determining whether a portion of the benefits received are to be includable in gross income of individuals. Deduction for Interest Paid by Financial Institutions to Purchase or Carry Tax-Exempt Obligations The Code, subject to limited exceptions not applicable to the Bonds, denies the interest deduction for indebtedness incurred or continued to purchase or carry tax-exempt obligations, such as the Bonds. With respect to banks, thrift institutions and other financial institutions, the denial to such institutions is one hundred percent (100%) for interest paid on funds allocable to the Bonds and any other tax-exempt obligations acquired after August 7, Property or Casualty Insurance Company The Code also provides that a property or casualty insurance company may also incur a reduction, by a specified portion of its tax-exempt interest income, of its deduction for losses incurred. 27

32 Reportable Payments and Backup Withholding Under 2006 amendments to the Internal Revenue Code, payments of interest on the Bonds will be reported to the Internal Revenue Service by the payor on Form 1099 unless the Bondholder is an "exempt person" under Section 6049 of the Code. A Bondholder who is not an exempt person may be subject to "backup withholding" at a specified rate prescribed in the Code if the Bondholder does not file Form W-9 with the payor advising the payor of the Bondholder s taxpayer identification number. Bondholders should consult with their brokers regarding this matter. The payor will report to the Bondholders and to the Internal Revenue Service for each calendar year the amount of any "reportable payments" during such year and the amount of tax, if any, with respect to payments made on the Bonds. Accounting Treatment of Amortizable Bond Premium The Bonds maturing on September 15, 2019 through and including September 15, 2023, are hereinafter referred to as the "Premium Bonds." An amount equal to the excess of the initial public offering price of a Premium Bond set forth on the inside cover page over its stated redemption price at maturity constitutes premium on such Premium Bond. A purchaser of a Premium Bond must amortize any premium over such Premium Bond s term using constant yield principles, based on the purchaser s yield to maturity. As premium is amortized, the purchaser s basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Premium Bonds, whether at the time of initial issuance or subsequent thereto, should consult their own tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning Premium Bonds. INTEREST RATE SWAP AGREEMENT OF THE SCHOOL DISTRICT The School District entered into an interest rate swap agreement (the Swap ) with Royal Bank of Canada (the Counterparty ) with respect to a portion of the principal amount of the 2009 Bonds which will terminate on March 1, 2030 (the final maturity of the Bonds), unless terminated sooner in accordance with its terms. The notional amount of the Swap was $35,000,000 (the notional amount will reduce from time on dates and in amounts corresponding with the scheduled reduction of the outstanding principal amount of the 2009 Bonds), and pursuant to the terms of the Swap, the School District will pay interest at a fixed rate of 3.759% on the notional amount, in exchange for the Counterparty s agreement to pay interest at a floating rate equal to the Securities Industry and Financial Markets Association Municipal Swap Index ( SIFMA ) on the notional amount, with payments due monthly on the first business day of each month, from whichever party owes a payment on a net basis. The Swap will be subject to early termination at such time as there are no longer any 2009 Bonds outstanding. The School District has pledged its full faith, credit and taxing power for the budgeting, appropriation and payments due under the Swap from the School District. The Swap was authorized by a resolution of the Board of School Directors of the School District adopted in accordance with the provisions of the Act, including specifically the amendments to the Act made by Pennsylvania Act No In accordance with the provisions of the Act and the terms of the Swap, the Swap may be terminated at the option of the School District at anytime without cause, but may not be terminated at the option of the Counterparty without cause, and the periodic scheduled payments due under the Swap and debt service on the Bonds shall be senior in right and priority to any termination payments due under the Swap. There are risks embedded in the Swap including, but not limited to, basis risk, counterparty risk, tax risk, credit risk, termination risk and liquidity risk. If a significant negative outcome were to occur from any of these risks or others, it may have a material adverse effect on the School District. The Royal Bank of Canada, the Counterparty, is the parent company of RBC Capital Markets, LLC, the Underwriter. 28

33 SECONDARY MARKET DISCLOSURE General. The School District has covenanted for the benefit of the Holders of the Bonds in a Continuing Disclosure Agreement dated the date of issuance and delivery of the Bonds ( the "Disclosure Agreement") a form of which is attached hereto as Appendix C to (a) provide notices of the occurrence of certain enumerated events; and (b) provide certain financial information and operating data relating to the School District by not later than the first day of the eighth calendar month immediately following the end of the School District's fiscal year, e.g., by not later than February 1 of each year, commencing February 1, 2018 (the "Annual Report"). The Annual Report and the notices of significant events, both summarized below, will be filed by the School District with the Electronic Municipal Market Access System ("EMMA") maintained by the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in the Annual Report or the notices of significant events is summarized below. These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12, as amended (the "Rule"). Annual Reports. The School District's Annual Report filed with EMMA shall contain or incorporate by reference the following information with respect to the relevant fiscal year: the financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting principles for local government units and audited in accordance with generally accepted auditing standards; a copy of the budget for the current fiscal year; the total assessed value and market value of all taxable real estate for the current fiscal year; the real property tax collection results for the most recent fiscal year, including (a) the real estate levy imposed (expressed both as a millage rate and an aggregate dollar amount), (b) the dollar amount of real estate taxes collected that represented current collections (expressed both as a percentage of such fiscal year s levy and as an aggregate dollar amount), (c) the amount of real estate taxes collected that represented taxes levied in prior years (expressed as an aggregate dollar amount), and (d) the total amount of real estate taxes collected (expressed both as a percentage of the current year s levy and as an aggregate dollar amount); a list of the ten (10) largest taxpayers and, for each, the total assessed value of real estate for the current fiscal year; and the taxes and millage rates imposed for the current fiscal year Notices of Significant Events. Upon the occurrence of any of the following notice events, the School District shall in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events, file with EMMA notice of such occurrence: (1) principal and interest payment delinquencies; (2) non payment-related defaults, if material; (3) unscheduled draws on 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; (6) adverse tax opinions or events affecting the tax status of the Bonds; (7) modifications to rights of Holder, if material; (8) Bond calls (other than mandatory sinking fund redemptions), if material, and tender offers; (9) defeasances of Bonds; (10) release, substitution, or sale of property securing repayment of any Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the School District; (13) the consummation of a merger, consolidation, or acquisition involving the School District or the sale of all or substantially all of the assets of the School 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, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; or (15) failure to provide annual financial information as required. 29

34 Accounting Standards. The financial statements described above shall be audited in accordance with generally accepted accounting principles applicable in the preparation of financial statements of the School District as such principles are from time to time promulgated by the Financial Accounting Standards Board, the Governmental Accounting Standards Board, or such other body recognized as authoritative by the American Institute of Certified Public Accountants or any successor body ("GAAP"), and shall also comply with applicable federal and state auditing statutes, regulations, standards and/or guidelines. The School District may from time to time modify its accounting principles to the extent necessary or desirable to comply with changes in either GAAP or applicable federal and state statutes, regulations, standards and/or guidelines. Audited financial statements of the School District not submitted as part of the Annual Report shall be provided to EMMA if and when available to the School District, and in any event not more than thirty (30) days after receipt thereof from the School District's auditors. In the event that audited financial statements are not submitted as part of the Annual Report, the School District shall provide in lieu thereof unaudited financial statements meeting the description set forth above. Termination of Reporting Obligation. The School District's obligations under the Disclosure Agreement shall terminate upon (a) the legal defeasance, prior redemption or payment in full of all of the Bonds or (b) the assumption by a successor Obligated Person of all of the obligations of the prior Obligated Person both under the Disclosure Agreement and under the Bonds. Amendments. Notwithstanding any other provision of the Disclosure Agreement, the School District may modify or amend the Disclosure Agreement. Under the current SEC interpretation of the Rule, the following preconditions must be satisfied: (a) the amendment is being made in connection with a change of circumstances that arises from a change in legal requirements, change in law, change in the identity, nature or status of the School District, or change in the type of business conducted by the School District; (b) the Disclosure Agreement, as amended, would have complied with the requirements of the Rule as of the date of issuance of the relevant Bonds, after taking into account any amendment or interpretations of the Rule, as well as any change in circumstances; and (c) the amendment does not materially adversely effect the interests of Holder as determined either by a party unaffiliated with the School District (such as the Paying Agent or nationally recognized bond counsel) or by an approving vote of a majority of Holders. To the extent required by the Rule, the School District shall disclose in the next Annual Report the amendment and its impact on the information being provided. Defaults. In the event of a failure of the School District to comply with any provision of the Disclosure Agreement, the Paying Agent, any Participating Underwriter or any Holder may take such actions as may be necessary and appropriate, including seeking a writ of mandamus or specific performance by court order to cause the School District to comply with its obligations under the Disclosure Agreement. A default under the Disclosure Agreement shall not be deemed an Event of Default under the Resolution or the Bonds, and the sole remedy under the Disclosure Agreement in the event of any failure of the School District to comply with the Disclosure Agreement shall be an action to compel performance, provided, however, that nothing in the Disclosure Agreement shall limit any Holder's rights under applicable federal securities law. The School District failed to timely file certain of the operating data relating to the School District for the fiscal year ending June 30, While the information was filed, it was not filed timely. A notice regarding the School District's failure to file certain of the operating data relating to the School District for the fiscal years ending June 30, 2013 was separately filed by the School District on EMMA. Further, the School District has adopted procedures on continuing disclosure to ensure that future filings of the Annual Reports and material event notices will be accomplished within all required time periods. RATING Moody s Investors Service have assigned an underlying rating of Aa3. Such rating reflect only the view of the rating agency and any explanation of this rating may only be obtained from Moody s. Generally, rating agencies base their ratings on information and materials supplied to them and on their own investigations, studies and assumptions. There is no assurance that such ratings, once obtained, will remain for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies if, in their judgment, circumstances so warrant. Any such downward change or withdrawal of the rating assigned to the Bonds by Moody s may have an adverse effect on the market prices of the Bonds. 30

35 UNDERWRITING RBC Capital Markets, LLC (the Underwriter ) has agreed, subject to certain conditions, to purchase the Bonds from the School District at an aggregate price of $23,112,457.90, which includes an underwriting discount of $121, and an original issue premium of $2,163, The Underwriter's obligations are subject to certain conditions precedent, however, the Underwriter will be obligated to purchase all such Bonds if any such Bonds are purchased. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. The Underwriter has provided the following information for inclusion in this Official Statement: The Underwriter and their respective affiliates are full service financial institutions engaged in various activities, that may include securities trading, commercial and investment banking, municipal advisory, brokerage and asset management. In the ordinary course of business, the Underwriter and their respective affiliates may actively trade debt and if applicable equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its affiliates may engage in transactions for its own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Issuer. The Underwriter and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Issuer. The Underwriter does not make a market in credit default swaps with respect to municipal securities at this time but may do so in the future. LEGAL OPINION The Bonds are offered when, as and if issued subject to the approving legal opinion of Saul Ewing LLP, Bond Counsel, to be furnished upon delivery of the Bonds. Certain legal matters will be passed upon for the School District by Catania & Parker LLP, Media, Pennsylvania, School District Solicitor and for the Underwriter by their Limited Scope Underwriter s Counsel, McNees Wallace & Nurick LLC, Lancaster, Pennsylvania. FINANCIAL ADVISOR The School District has retained PFM Financial Advisors LLC, Malvern, Pennsylvania, as financial advisor (the Financial Advisor ) in connection with the preparation, authorization and issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement or Official Statement. PFM Financial Advisors LLC is an independent advisory firm and is not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities. Changes in Federal Law OTHER MATTERS From time to time, there are presidential proposals, proposals by various federal committees and legislative proposals in Congress that, if enacted, could alter or amend the tax matters referred to herein or adversely affect the marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposals may be enacted or whether if enacted such proposals would apply to bonds issued prior to enactment. In addition, regulatory or other actions are from time to time announced or proposed which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Bonds. It cannot be predicted whether any such regulatory or other actions will be implemented or whether the Bonds would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulations or other potential changes in law. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulations or other potential changes in law. 31

36 MISCELLANEOUS This Official Statement has been prepared under the direction of the School District by PFM Financial Advisors LLC, Malvern, Pennsylvania, in its capacity as Financial Advisor to the School District. The information contained in this Official Statement has been obtained from the School District and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Bonds, the Resolution, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof and reference is made to the complete documents, copies of which will be furnished by the School District or the Financial Advisor upon request. The information assembled in this Official Statement is not to be construed to be a contract with holders of the Bonds. The School District has authorized the distribution of this Official Statement. SCHOOL DISTRICT OF HAVERFORD TOWNSHIP Delaware County, Pennsylvania By: /s/ Denis A. Gray, Esq. President of the Board of School Directors 32

37 APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION RELATING TO THE COUNTY OF DELAWARE

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39 Population Table A-l which follows shows recent population trends for the School District, Delaware County and the Commonwealth of Pennsylvania. The School District s population decreased between 1990 and 2000 by approximately 2.7%, losing approximately 1,350 residents during that period and stayed the same between 2000 and Table A-2 shows 2010 age composition and average number of persons per household in Delaware County and for the State. TABLE A-1 RECENT POPULATION TRENDS School District 49,848 48,498 48,491 Delaware County 547, , ,979 Pennsylvania 11,881,643 12,281,054 12,702,379 Source: U.S. Bureau of the Census. AGE COMPOSITION 2010 Median Persons Per Age Years Years Years Household School District/ Township Delaware County Pennsylvania Source: U.S. Census Bureau, Employment Overall employment data is not compiled for the School District, but such data are compiled for the Philadelphia Metropolitan Statistical Area ( MSA ). Table A-3 shows the distribution of employment in the Philadelphia MSA for December Top 10 Employers in Delaware County Company Boeing Company Prospect CCMC LLC Delaware County United Parcel Service Inc. Villanova University Amerihealth Mercy Services LLC Wawa Inc. SAP of America Inc. Federal Government Elwyn Type of Business Manufacturing Health Care Government Transportation and Warehousing Education Finance and Insurance Retail Store Management of Companies and Enterprises Government Human Services Source: Center for Workforce and Analysis, 3rd Quarter A-1

40 TABLE A-3 DISTRIBUTION OF EMPLOYMENT (Philadelphia Metropolitan Statistical Area) 2016* Total Nonfarm 2,920,500 2,821,000 2,777,300 2,748,600 2,725,500 Total Private 2,576,200 2,486,100 2,441,700 2,410,500 2,393,600 Goods Producing 297, , , , ,100 Service-Providing 2,622,900 2,529,600 2,491,900 2,466,100 2,443,400 Private Service Providing 2,278,600 2,194,700 2,156,400 2,128,000 2,111,500 Mining, Logging, and Construction 113, , , ,600 99,500 Manufacturing 183, , , , ,600 Durable Goods 95,900 94,200 94,300 95,100 96,400 Non-Durable Goods 87,900 87,100 86,300 84,800 86,200 Trade 545, , , , ,600 Wholesale Trade 121, , , , ,100 Retail Trade 314, , , , ,900 Transportation 109,000 98,900 95,400 92,500 90,600 Information 45,800 46,500 46,500 47,800 49,200 Financial Activities 212, , , , ,500 Professional and Business Services 471, , , , ,800 Education and Health Services 628, , , , ,200 Leisure and Hospitality 255, , , , ,400 Other Services 119, , , , ,800 Government 344, , , , ,900 Source: Center for Workforce Information & Analysis as of December Table A-4 shows recent trends in employment and unemployment for Delaware County and the State. The unemployment rate for Delaware County has been lower than that for the State during the period shown. RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT* * Delaware County Civilian Labor Force (000) Employment (000) Unemployment (000) Unemployment Rate Pennsylvania Civilian Labor Force (000) Employment (000) Unemployment (000) Unemployment Rate * As of December Source: Center for Workforce Information and Analysis. A-2

41 Income The data on Table A-5 shows recent trends in per capita income for Delaware County and Pennsylvania over the period. Transportation TABLE A-5 RECENT TRENDS IN PER CAPITA INCOME* Township/School District $20,566 $29,749 $39,818 Delaware County 17,210 25,040 32,067 Pennsylvania 14,068 20,880 27,049 Source: U.S. Census Bureau *Income is defined by the Bureau of the Census as the sum of wage and salary income, non-farm self-employment income, net self-employment income, Social Security and Railroad retirement income, public assistance income, interest, dividends, pensions, etc. before deductions for personal income taxes, Social Security, etc. Suburban commuter points are accessible by both SEPTA bus and trolley systems. Major highways convenient to the community include U.S. l, U.S. 30 (Lancaster Pike), and Interstate 476 (The Blue Route). The Philadelphia International Airport is located fewer than fifteen miles from the School District and provides both private and commercial, domestic and international passenger and freight service to all air accessible destinations. Several hundred motor carriers serve the County and Consolidated Rail Corporation (CONRAIL) and CSX Inc. (B&O) provide full freight service. The County is served by three commuter lines connecting the County with the City of Philadelphia and other suburban areas. Utilities Electric and gas service to the School District s commercial and residential users is provided by Exelon. Water service is furnished by the Philadelphia Suburban Water Company and the Chester Water Authority. Sewage service is provided by nine municipal authorities and by the Delaware County Regional Water Quality Control Authority (DELCORA). Telephone service is provided by Verizon. Higher Education Residents of the School District benefit from a number of cultural and economic advantages provided by the many educational institutions, both public and private, near the School District. Institutions of higher learning in Delaware County include: Haverford College, Swarthmore College, Villanova University, Widener University, Cabrini College, Neumann College, Cheyney University of Pennsylvania, Delaware Community College, and the Brandywine Campus of Pennsylvania State University. Tourism Federal, state, county and municipal governments participate in open-space programs within and near Delaware County. The major federal park within the County is the Tinicum National Environmental Center, which is primarily a wildlife and bird sanctuary. State lands encompass historic sites such as Brandywine Battlefield, Penn Memorial Landing Stone and Governor Printz Park. The largest recreational facility in the County is the 2,566-acre Ridley Creek State Park. County properties are primarily wooded areas or open fields, while municipal parks are generally playgrounds and small community parks. Various private parks, such as the 700-acre Tyler Arboretum, are located throughout the County. The County s numerous camping and golfing facilities include the Merion Golf Club in Haverford Township. A wide range of cultural facilities is offered throughout the School District and the surrounding County, including the Franklin Mint s Museum of Medallic Art, the Brandywine River Museum and the County Institute of Science. Other cultural facilities include the Hedgerow Theatre, one of the oldest repertory theatres in America, the Community Arts Center in Wallingford and the Rose Tree Summer Festival, a free outdoor music and theatre festival in Upper Providence Township. In addition, twelve colleges and universities, located within the County, offer a broad range of cultural activities for the general public. A-3

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43 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE SCHOOL DISTRICT

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45 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP ANNUAL FINANCIAL REPORT Year Ended June 30, 2016 C e r t i fi e d P u b l i c A c c o u n t a n t s a n d B u s i n e s s C o n s u l t a n t s

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47 INTRODUCTORY SECTION

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49 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP TABLE OF CONTENTS YEAR ENDED JUNE 30, 2016 Page Introductory Section Table of Contents 1 Financial Section Independent Auditors Report 3 Management s Discussion and Analysis (Unaudited) 6 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 12 Statement of Activities 13 Fund Financial Statements Governmental Funds Balance Sheet 14 Reconciliation of Total Governmental Funds Balances to Net Position of Governmental Activities 15 Statement of Revenues, Expenditures and Changes in Fund Balances 16 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 17 Proprietary Fund Statement of Net Position 19 Statement of Revenues, Expenses and Changes in Net Position 20 Statement of Cash Flows 21 Fiduciary Funds Statement of Fiduciary Net Position 23 Statement of Changes in Fiduciary Net Position

50 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP TABLE OF CONTENTS YEAR ENDED JUNE 30, 2016 Page Notes to the Basic Financial Statements 25 Required Supplementary Information Budgetary Comparison Schedule 51 Notes to the Budgetary Comparison Schedule 52 Schedule of the School District s Proportionate Share of the Net Pension Liability 53 Schedule of the School District Contributions 54 Postemployment Benefits Other Than Pension Funding Progress 55 Independent Auditors 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 56 Independent Auditors Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance With the Uniform Guidance 58 Supplementary Information - Major Federal Award Programs Audit Schedule of Expenditures of Federal and Certain State Awards 61 Notes to the Schedule of Expenditures of Federal and Certain State Awards 63 Schedule of Findings and Questioned Costs 64 Summary Schedule of Prior Audit Findings

51 FINANCIAL SECTION

52 PO Box 680, Oaks, PA Fax: Willowbrook Lane, West Chester, PA Fax: Maillie LLP Independent Auditors Report To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund and the aggregate remaining fund information of the School District of Haverford Township as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District of Haverford Township s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions Certified Pu b lic Acc oun t a n ts and B u s iness Co n s ult ant s

53 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the School District of Haverford Township as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter For the year ended June 30, 2016, the School District of Haverford Township adopted new accounting guidance, implementing Governmental Accounting Standards Board Statement No. 72, Fair Value Measurement and Application. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 6 through 11, budgetary comparison information on pages 51 and 52, schedule of the school district s proportionate share of the net pension liability on page 53, schedule of school district contributions on page 54 and postemployment benefits other than pension funding progress on page 55 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do no express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District of Haverford Township s basic financial statements. The schedule of expenditures of federal and certain state awards, as required by audit requirements of the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements

54 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania The schedule of expenditures of federal and certain state awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal and certain state awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2016, on our consideration of the School District of Haverford Township s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District of Haverford Township s internal control over financial reporting and compliance. Oaks, Pennsylvania November 10,

55 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 The School District of Haverford Township has prepared the following discussion and analysis to assist the reader in focusing on significant financial issues, provide an overview of the District s financial activity, identify changes in the District s financial position, identify any material deviations from the financial plan (the approved budget) and identify individual fund issues or concerns. HIGHLIGHTS In , school districts were required to include the district s proportionate share of the state s pension liability (PSERS) in the statement of net position. The state pension liability attributable to the district was $167,543,000 as of June 30, The District s total net position increased by $309,915 to a total of ($136,937,695). Governmental net position increased by $432,289, and the business-type net position decreased by $122,374. State subsidies and federal grants accounted for $18,892,137 or 17.4% of total District revenues. State revenues include $2,103,881 of pass through funds from the property tax relief program which reduces local tax effort by providing taxpayers a credit, funded from state gaming fund proceeds, towards real estate tax assessments. The increase in net position was primarily attributable to an increase in local real estate tax collections, primarily in transfer and delinquent tax collections and assessment increases resulting from new development. GOVERNMENT-WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its overall activities. These statements include all the assets and liabilities of the District (except for Fiduciary Funds held in trust for student purposes) using the accrual basis of accounting similar to the accounting used by private sector corporations. All of the current year s revenues and expenses are taken into consideration regardless of when cash is received or paid. These two statements report the District s net position and changes during the fiscal year. The change in net position provides the reader a tool to assist in determining whether the District s financial health is improving or deteriorating. The reader will need to consider other financial factors such as the District s property tax base, current property tax laws, student enrollment growth and facility conditions in arriving at a conclusion regarding the overall health of the District. The government-wide financial statements of the School District are divided into two categories: Governmental Activities: All of the School District s basic services are included here, such as instruction, administration and community services. Property taxes and state and federal subsidies and grants finance most of these activities. Business-Type Activities: The School District operates a food service operation and charges fees to staff and students to cover the costs of the food service operation. The food service function is also subsidized through state and federal subsidies. FUND LEVEL FINANCIAL STATEMENTS The remaining statements are fund financial statements that focus on individual parts of the School District s operations in more detail than the government-wide statements. The Governmental Funds statements tell how the School District s general services were financed in the short term, as well as what remains for future spending. Proprietary Fund statements offer short- and long-term financial information about the activities that the School District operates like a business, our Food Service Fund

56 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 Fiduciary Funds statements provide information about financial relationships where the School District acts solely as a trustee or agent for the benefit of others. Governmental Funds: Most of the District s activities are reported in Governmental Funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending in future periods. These funds are reported using the modified accrual accounting method, which measures cash and other financial assets that can readily be converted to cash. The Governmental Funds statements provide a detailed short-term view of the District s operations and the services it provides. Proprietary Fund: The Food Service Fund is the District s Proprietary Fund and is the same as the business-type activities that are reported in the government-wide statements. Fiduciary Funds: The School District is the trustee, or fiduciary, for some funds. All of the District s fiduciary activities are reported in a separate statement of fiduciary net position. We exclude these activities from the District s other financial statements because these assets cannot be used to finance District operations

57 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 GOVERNMENT-WIDE STATEMENTS Statements of Net Position The following table reflects the condensed statements of net position. Table 1 Condensed Statements of Net Position June 30, 2016 and Governmental Business-Type Governmental Business-Type Activities Activities Totals Activities Activities Totals ASSETS Current and other assets $ 22,427,715 $ 108,909 $ 22,536,624 $ 24,275,138 $ 249,831 $ 24,524,969 Capital assets 127,795, , ,975, ,585, , ,771,678 TOTAL ASSETS 150,223, , ,511, ,860, , ,296,647 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding, net 587, , , ,940 Deferred outflows of resources, pension activity 17,377, ,000 17,609,000 10,764, ,000 10,908,000 Interest hedge swap 8,376,472-8,376,472 6,252,268-6,252,268 TOTAL DEFERRED OUTFLOWS OF RESOURCES 26,341, ,000 26,573,026 17,668, ,000 17,812,208 LIABILITIES Current and other liabilities 12,287, ,182 12,391,253 14,891, ,770 15,057,387 Long-term liabilities 298,389,142 2,212, ,601, ,719,078 1,961, ,680,078 TOTAL LIABILITIES 310,676,213 2,316, ,992, ,610,695 2,126, ,737,465 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources, pension activity 1,017,000 13,000 1,030,000 10,479, ,000 10,619,000 NET POSITION Net investment in capital assets 6,736, ,630 6,916,223 5,147, ,670 5,334,558 Unrestricted (141,865,645) (1,988,273) (143,853,918) (140,709,229) (1,872,939) (142,582,168) TOTAL NET POSITION $ (135,129,052) $ (1,808,643) $ (136,937,695) $ (135,561,341) $ (1,686,269) $ (137,247,610) - 8 -

58 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 Statements of Activities Table 2 Condensed Statements of Changes in Net Position Years Ended June 30, 2016 and Governmental Business-Type Governmental Business-Type Activities Activities Totals Activities Activities Totals REVENUES Program revenues $ 13,769,075 $ 1,843,386 $ 15,612,461 $ 12,800,119 $ 1,828,948 $ 14,629,067 General revenues Property taxes 87,892,924-87,892,924 84,835,463-84,835,463 Other taxes 1,605,048-1,605,048 1,410,084-1,410,084 Grants, subsidies and contributions not restricted to specific programs 5,232,116-5,232,116 5,089,543-5,089,543 Rentals 94,126-94, , ,455 Investment earnings 66, ,192 52, ,185 Miscellaneous 35,712-35,712 31,773-31,773 TOTAL REVENUES 108,695,087 1,843, ,538, ,360,534 1,829, ,189,570 EXPENSES Instruction 69,843,117-69,843,117 67,519,231-67,519,231 Instructional student support 14,114,280-14,114,280 13,585,301-13,585,301 Administration and finance 5,148,681-5,148,681 4,913,647-4,913,647 Operation and maintenance of plant services 8,825,235-8,825,235 8,597,205-8,597,205 Pupil transportation 4,676,348-4,676,348 4,655,686-4,655,686 Student activities 1,341,706-1,341,706 1,274,031-1,274,031 Community services 218, , , ,923 Interest on long-term debt 4,094,900-4,094,900 4,402,668-4,402,668 Food service - 1,965,866 1,965,866-1,866,813 1,866,813 TOTAL EXPENSES 108,262,798 1,965, ,228, ,159,692 1,866, ,026,505 CHANGE IN NET POSITION $ 432,289 $ (122,374) $ 309,915 $ (799,158) $ (37,777) $ (836,935) The District s reliance upon local tax revenues is demonstrated by the graph below: State, 16.3% Sources of Revenue Federal, 1.1% Local, 82.6% - 9 -

59 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 THE DISTRICT FUNDS Governmental Funds As of year-end, the Governmental Funds reported a combined fund balance of $9,629,193, which compares to a prior year balance of $8,767,021. The increase of $862,172 was attributable to a reduction in the Capital Project Fund balance of $334,352 and a $1,196,524 fund balance increase in the General Fund. The General Fund unassigned fund balance is $9,629,193 compared to $8,288,338 in The increase in unassigned fund balance was attributable to real estate tax gains of approximately $1,355,000 resulting from property development, transfer taxes and delinquent tax collections. Cost containment was relatively stable with expenditures $261,000 greater than budget or.2% higher than total budgeted expenditures. Several of the Governmental Funds are capital expenditure oriented and, therefore, may reflect capital expenditures (which are reflected in the current financial resource-based fund financial statements) as a spending of a portion of available net position. The General Fund experienced a $1,196,524 net increase in fund balance. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The District s property, plant and equipment with useful lives of more than one year are stated at historical cost and comprehensively reported in the government-wide financial statements. Proprietary Fund capital assets are also reported in their fund financial statements. For the year ended June 30, 2016, the District had $127,795,420 in capital assets, less depreciation. The additions and retirement, less depreciation, were ($3,789,588) and construction in progress was $0. For the year ended June 30, 2016, food service had $179,630 in capital assets, less depreciation. More detailed information about capital assets can be found in Note F to the financial statements. Debt Administration In the government-wide statements, outstanding debt is reported as liabilities. For the year ended June 30, 2016, the District had $118,813,000 in general obligation bonds and notes, of which $5,886,000 is due within one year. Additional information on the District s bonds and notes payable can be found in Note I to the basic financial statements. FACTORS EXPECTED TO HAVE AN EFFECT ON FUTURE OPERATIONS Act 1 of 2006 legislation, effective June 27, 2006, limits District real estate tax increases to a State mandated index which was 1.9% for In 2011, Act 25 eliminated six allowable referendum exceptions. The remaining exceptions provide for tax increases above the index for school construction, special education expenditures and retirement contributions if certain conditions are met

60 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP MANAGEMENT S DISCUSSION AND ANALYSIS (Unaudited) YEAR ENDED JUNE 30, 2016 REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the School District s finances and to show the School District s accountability for the funds it receives and disburses. If you have questions about this report or to request additional financial information, please contact the Business Office at 50 East Eagle Road, Havertown, PA

61 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF NET POSITION JUNE 30, 2016 Governmental Business-Type Activities Activities Totals ASSETS Cash and cash equivalents $ 17,568,514 $ 18,934 $ 17,587,448 Taxes receivable 1,638,605-1,638,605 Internal balances 43,959 (43,959) - Due from other governments 2,762,178 62,934 2,825,112 Other receivables 414,459 14, ,122 Inventories - 56,337 56,337 Capital assets Land and land improvements 3,008,584-3,008,584 Buildings and building improvements 183,255, ,255,249 Furniture, equipment and vehicles 15,068, ,930 15,980,024 Accumulated depreciation (73,536,507) (732,300) (74,268,807) TOTAL ASSETS 150,223, , ,511,674 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding, net 587, ,554 Deferred outflows of resources, pension activity 17,377, ,000 17,609,000 Interest hedge swap 8,376,472-8,376,472 TOTAL DEFERRED OUTFLOWS OF RESOURCES 26,341, ,000 26,573,026 LIABILITIES Accounts payable 4,389,321 40,233 4,429,554 Accrued salaries and benefits 7,121,044 27,522 7,148,566 Accrued interest 735, ,324 Unearned revenue 41,382 36,427 77,809 Long-term liabilities Portion due or payable within one year Bonds and notes payable 5,886,000-5,886,000 Capital leases payable 507, ,839 Portion due or payable after one year Bonds and notes payable 115,760, ,760,381 Capital leases payable 615, ,077 Compensated absences 1,587,121-1,587,121 Interest hedge swap 8,376,472-8,376,472 Net pension liability 165,331,000 2,212, ,543,000 Net OPEB obligation 325, ,252 TOTAL LIABILITIES 310,676,213 2,316, ,992,395 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources, pension activity 1,017,000 13,000 1,030,000 NET POSITION Net investment in capital assets 6,736, ,630 6,916,223 Unrestricted (141,865,645) (1,988,273) (143,853,918) TOTAL NET POSITION $ (135,129,052) $ (1,808,643) $ (136,937,695) See accompanying notes to the basic financial statements

62 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions GOVERNMENTAL ACTIVITIES Instruction Regular programs $ 44,864,566 $ 46,618 $ 4,656,696 $ - Special programs 22,512,313-4,387,538 - Vocational education programs 491, Other instructional programs 647, ,721 - Higher education programs 1,327, Support services Pupil personnel services 5,485, ,685 - Instructional staff services 3,601, ,138 - Administration services 5,148, ,434 - Pupil health services 2,470, ,580 - Business services 1,029,693-82,085 - Operation and maintenance of plant services 8,825, ,110 - Student transportation services 4,676,348-1,635,088 - Central services 1,384,105-97,778 - Other services 142, Operation of non-instructional services Student activities 1,341, ,531 - Community services 218, Interest on long-term debt 4,094, ,073 TOTAL GOVERNMENTAL ACTIVITIES 108,262,798 46,618 13,690,384 32,073 BUSINESS-TYPE ACTIVITIES Food service 1,965,866 1,321, ,292 - TOTAL BUSINESS-TYPE ACTIVITIES 1,965,866 1,321, ,292 - TOTAL SCHOOL DISTRICT ACTIVITIES $ 110,228,664 $ 1,367,712 $ 14,212,676 $ 32,073 GENERAL REVENUES Taxes Property taxes, levied for general purposes Public utility taxes Real estate transfer taxes Grants and contributions not restricted to specific programs Rentals Investment earnings Miscellaneous TOTAL GENERAL REVENUES CHANGE IN NET POSITION NET POSITION AT BEGINNING OF YEAR NET POSITION AT END OF YEAR See accompanying notes to the basic financial statements.

63 Net (Expense) Revenue and Changes in Net Position Governmental Business-Type Activities Activities Totals $ (40,161,252) $ - $ (40,161,252) (18,124,775) - (18,124,775) (491,664) - (491,664) (495,798) - (495,798) (1,327,055) - (1,327,055) (4,621,134) - (4,621,134) (3,190,189) - (3,190,189) (4,707,247) - (4,707,247) (2,164,951) - (2,164,951) (947,608) - (947,608) (8,285,125) - (8,285,125) (3,041,260) - (3,041,260) (1,286,327) - (1,286,327) (142,805) - (142,805) (1,225,175) - (1,225,175) (218,531) - (218,531) (4,062,827) - (4,062,827) (94,493,723) - (94,493,723) - (122,480) (122,480) - (122,480) (122,480) (94,493,723) (122,480) (94,616,203) 87,892,924-87,892,924 95,837-95,837 1,509,211-1,509,211 5,232,116-5,232,116 94,126-94,126 66, ,192 35,712-35,712 94,926, ,926, ,289 (122,374) 309,915 (135,561,341) (1,686,269) (137,247,610) $ (135,129,052) $ (1,808,643) $ (136,937,695)

64 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2016 Total Capital Governmental General Fund Project Funds Funds ASSETS Cash and cash equivalents $ 17,568,514 $ - $ 17,568,514 Taxes receivable 391, ,830 Due from other funds 43,959-43,959 Due from other governments 2,762,178-2,762,178 Other receivables 414, ,459 TOTAL ASSETS $ 21,180,940 $ - $ 21,180,940 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 4,383,251 $ - $ 4,383,251 Unearned revenue 41,382-41,382 Accrued salaries and benefits 7,121,044-7,121,044 Refundable deposit for building use 6,070-6,070 TOTAL LIABILITIES 11,551,747-11,551,747 FUND BALANCES Unassigned 9,629,193-9,629,193 TOTAL LIABILITIES AND FUND BALANCES $ 21,180,940 $ - $ 21,180,940 See accompanying notes to the basic financial statements

65 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP RECONCILIATION OF TOTAL GOVERNMENTAL FUNDS BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2016 TOTAL GOVERNMENTAL FUNDS BALANCES $ 9,629,193 Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. These assets consist of: Land and land improvements 3,008,584 Buildings and building improvements 183,255,249 Furniture, equipment and vehicles 15,068,094 Accumulated depreciation (73,536,507) Deferred charges on refunding in governmental activities are not financial resources and therefore are not reported in the funds. Deferred inflows and outflows of resources related to pension activities are not financial resources and therefore not reported in the governmental funds. 587,554 16,360,000 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: Accrued interest (735,324) Bonds and notes payable (121,646,381) Capital leases payable (1,122,916) Compensated absences (1,587,121) Net pension liability (165,331,000) Net OPEB obligation (325,252) Some of the School District s revenues will be collected after yearend but are not available soon enough to pay for the current period s expenditures and therefore are deferred in the funds. 1,246,775 NET POSITION OF GOVERNMENTAL ACTIVITIES $ (135,129,052) See accompanying notes to the basic financial statements

66 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2016 Total Capital Governmental General Fund Project Funds Funds REVENUES Local sources $ 89,970,004 $ 396 $ 89,970,400 State sources 17,742,164-17,742,164 Federal sources 1,149,973-1,149,973 TOTAL REVENUES 108,862, ,862,537 EXPENDITURES Current Instruction 64,587,191-64,587,191 Support services 30,738,233-30,738,233 Operation of non-instructional services 1,456,149-1,456,149 Capital Facilities acquisition, construction and improvement services 231,741 1,057,841 1,289,582 Refund of prior year revenues 19,837-19,837 Debt service Debt service cost 329, ,993 Principal 4,610,000-4,610,000 Interest 5,201,121-5,201,121 TOTAL EXPENDITURES 107,174,265 1,057, ,232,106 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,687,876 (1,057,445) 630,431 OTHER FINANCING SOURCES (USES) Proceeds from capital leases 231, ,741 Transfers in - 723, ,093 Transfers out (723,093) - (723,093) TOTAL OTHER FINANCING SOURCES (USES) (491,352) 723, ,741 NET CHANGE IN FUND BALANCES 1,196,524 (334,352) 862,172 FUND BALANCES AT BEGINNING OF YEAR 8,432, ,352 8,767,021 FUND BALANCES AT END OF YEAR $ 9,629,193 $ - $ 9,629,193 See accompanying notes to the basic financial statements

67 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS FORWARD Capital outlays are reported in Governmental Funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeds capital outlays in the current period. Because some property taxes will not be collected for several months after the School District s fiscal year ends, they are not considered as available revenues in the Governmental Funds. Unavailable tax revenues increased by this amount this year. Issuance of bonds and notes is a revenue in the Governmental Funds, but the proceeds increase long-term liabilities in the statement of net position. Repayment of bonds, notes and capital lease principal is an expenditure in the Governmental Funds, but the repayment reduces long-term liabilities in the statement of net position. Also, Governmental Funds report the effect of premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This is the net effect of these differences in the treatment of long-term debt and related items. In the statement of activities, certain operating expenses-- compensated absences (vacations and sick time) and special termination benefits (retirement)--are measured by the amounts earned during the year. In the Governmental Funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). The net change in the liability for the net OPEB obligation is reported in the government-wide statements but not in the Governmental Funds statements. $ 862,172 (4,253,070) (167,450) 6,872,344 (268,446) (5,662) SUBTOTAL ADJUSTMENTS FORWARD $ 2,177,

68 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS FORWARDED $ 862,172 SUBTOTAL ADJUSTMENTS FORWARDED 2,177,716 Some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in Governmental Funds: Accrued interest not reflected in Governmental Funds 62,401 Pension plan expense (2,670,000) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 432,289 See accompanying notes to the basic financial statements

69 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF NET POSITION PROPRIETARY FUND JUNE 30, 2016 Enterprise Fund Food Service Fund ASSETS CURRENT ASSETS Cash and cash equivalents $ 18,934 Due from other governments 62,934 Other receivables 14,663 Inventories 56,337 TOTAL CURRENT ASSETS 152,868 CAPITAL ASSETS Furniture and equipment 911,930 Accumulated depreciation (732,300) TOTAL CAPITAL ASSETS 179,630 TOTAL ASSETS 332,498 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - pension activity 232,000 LIABILITIES Accounts payable 40,233 Accrued salaries and benefits 27,522 Unearned revenue 36,427 Due to other funds 43,959 Long-term liabilities Net pension liability 2,212,000 TOTAL LIABILITIES 2,360,141 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - pension activity 13,000 NET POSITION Net investment in capital assets 179,630 Unrestricted (1,988,273) TOTAL NET POSITION $ (1,808,643) See accompanying notes to the basic financial statements

70 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUND YEAR ENDED JUNE 30, 2016 Enterprise Fund Food Service Fund OPERATING REVENUES Daily sales $ 823,727 Catering, vending and other 497,367 TOTAL OPERATING REVENUES 1,321,094 OPERATING EXPENSES Cost of sales 758,817 Salaries 724,030 Employee benefits and payroll taxes 425,083 Purchased property services 26,540 Depreciation 29,282 Other operating expenses 2,114 TOTAL OPERATING EXPENSES 1,965,866 OPERATING LOSS (644,772) NONOPERATING REVENUES Interest and investment revenue 106 State subsidies 150,483 Federal subsidies 371,809 TOTAL NONOPERATING REVENUES 522,398 CHANGE IN NET POSITION (122,374) NET POSITION AT BEGINNING OF YEAR (1,686,269) NET POSITION AT END OF YEAR $ (1,808,643) See accompanying notes to the basic financial statements

71 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED JUNE 30, 2016 Enterprise Fund Food Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,311,888 Payments to employees (1,141,141) Payments to suppliers (645,947) NET CASH USED BY OPERATING ACTIVITIES (475,200) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Facility acquisition, construction and improvements (22,242) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Federal sources 312,654 State sources 154,663 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 467,317 CASH FLOWS FROM INVESTING ACTIVITIES Earnings on investments 106 NET DECREASE IN CASH AND CASH EQUIVALENTS (30,019) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 48,953 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 18,

72 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED JUNE 30, 2016 Enterprise Fund Food Service Fund RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES Operating loss $ (644,772) Adjustments to reconcile operating loss to net cash used by operating activities Depreciation 29,282 Pension expense 36,000 Donated foods 79,606 Increase (decrease) in Due from other funds 103,326 Other receivables (13,783) Inventories (3,271) Increase (decrease) in Accounts payable (38,137) Accrued salaries and benefits (28,028) Unearned revenue 4,577 NET CASH USED BY OPERATING ACTIVITIES $ (475,200) SUPPLEMENTAL DISCLOSURES Noncash activities Donated foods $ 79,606 See accompanying notes to the basic financial statements

73 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2016 Scholarship and Trust Funds Agency Funds ASSETS Cash and cash equivalents $ 13,726 $ 625,671 Due from other funds 127,629 - TOTAL ASSETS 141,355 $ 625,671 LIABILITIES Due to other funds - $ 127,629 Due to student organizations - 498,042 TOTAL LIABILITIES - $ 625,671 NET POSITION Held in trust for benefits and other purposes $ 141,355 See accompanying notes to the basic financial statements

74 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2016 Scholarship and Trust Funds ADDITIONS Contributions $ 50,854 Investment earnings 227 TOTAL ADDITIONS 51,081 DEDUCTIONS Scholarships awarded and fees paid 57,480 CHANGE IN NET POSITION (6,399) NET POSITION AT BEGINNING OF YEAR 147,754 NET POSITION AT END OF YEAR $ 141,355 See accompanying notes to the basic financial statements

75 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the School District of Haverford Township (the School District ) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the School District s accounting policies are described below. Reporting Entity The accompanying basic financial statements comply with the provisions of GASB Statement No. 61, The Financial Reporting Entity: Omnibus, in that the financial statements include all organizations, activities and functions for which the School District is financially accountable. Financial accountability is defined as the appointment of a voting majority of a component unit s board and either (1) the School District s ability to impose its will over a component unit or (2) the possibility that the component unit will provide a financial benefit or impose a financial burden on the School District. In addition, component units can be 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. This report presents the activities of the School District of Haverford Township. The School District is not a component unit of another reporting entity nor does it have any component units. Basis of Presentation and Accounting Government-Wide Financial Statements - The statement of net position and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government, except for Fiduciary Funds. The statements distinguish between those activities of the School District that are governmental and those that are considered business-type activities. The government-wide statements are prepared using the economic resources measurement focus and the accrual basis of accounting. This is the same approach used in the preparation of the Proprietary Fund financial statements but differs from the manner in which Governmental Funds financial statements are prepared. Governmental Funds financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements for Governmental Funds. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The government-wide statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the School District and for each function or program of the School District s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and therefore clearly identifiable to a particular function

76 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the School District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the School District. As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Fund Financial Statements - Fund financial statements report detailed information about the School District. The focus of Governmental and Proprietary Funds financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Fiduciary Funds are reported by fund type. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All Governmental Funds are accounted for using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School District considers revenues to be available if they are collected within 60 days of the end of the fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments are recorded only when payment is due. The financial statements for Governmental Funds are a balance sheet, which generally includes only current assets and current liabilities, and a statement of revenues, expenditures and changes in fund balances, which reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. The Proprietary Fund is accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of this fund are included on the statement of net position. The statement of revenues, expenses and changes in net position presents increases (i.e., revenues) and decreases (i.e., expenses) in net position. The statement of cash flows provides information about how the School District finances and meets the cash flow needs of its proprietary activities. The Proprietary Fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the Proprietary Fund s principal ongoing operations. The principal operating revenues of the School District s Enterprise Fund are food service charges. Operating expenses for the Enterprise Fund include cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses

77 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fiduciary Funds are reported using the economic resources measurement focus. When both restricted and unrestricted resources are available for use, it is the School District s policy to use restricted resources first, then unrestricted resources as they are needed. Revenue Recognition In applying the susceptible to accrual concept under the modified accrual basis, certain revenue sources are deemed both measureable and available (i.e., collectible within the current year or within 60 days from year-end and available to pay obligations of the current period). This includes property taxes, interest earnings, real estate transfer taxes and certain fees for services. Revenues for state and federally funded projects are recognized at the time the expenditures are made or when received in advance. Fund Accounting The School District uses funds to maintain its financial records during the fiscal year. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain School District functions or activities. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The various funds of the School District are grouped into the categories governmental, proprietary and fiduciary. Governmental Funds General Fund - The General Fund is used to account for all financial resources except those required to be accounted for in another fund. The General Fund balance is available for any purpose provided it is expended or transferred according to the general laws of Pennsylvania. Capital Project Funds - Capital Project Funds are used to account for financial resources to be used for the acquisition and construction of capital equipment and improvements in accordance with the applicable general obligation bond agreements. Proprietary Fund Enterprise Fund - The Enterprise Fund (Food Service Fund) is used to account for operations (1) that are financed and operated in a manner similar to private business enterprises--where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges or (2) where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes

78 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fiduciary Funds Trust and Agency Funds - Trust and Agency Funds are used to account for assets held by the School District in a trustee capacity or as an agent for individuals. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Trust Funds are used to account for the resources of the various scholarships whose sole purpose is to provide annual scholarships to particular students as prescribed by donor stipulations. The Agency Funds account for the assets held as an agent for the various student activities and retirees escrow. Cash and Cash Equivalents The School District s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Short-Term Interfund Receivables/Payables During the course of operations, transactions may occur between individual funds for goods provided or services rendered. These receivables and payables are classified as due from other funds or due to other funds on the Governmental Funds balance sheet. Short-term interfund loans are classified as interfund receivables/payables. These amounts are eliminated in the statement of net position, except for amounts due between governmental and business-type activities, which, when present, are shown as internal balances. Allowance for Doubtful Accounts The School District believes that all receivables are collectible. Therefore, an allowance for doubtful accounts is not needed. Inventories and Prepaid Items Inventory of food and milk in the Food Service Fund consists of supplies purchased and donated foods received from the federal government. The donated foods are valued at their fair market value in accordance with the Manual of Accounting for Pennsylvania School Systems - Food Service Fund. Food and supplies are carried at cost using the first-in, firstout method. Inventories of Governmental Funds are recorded as expenditures when consumed rather than when purchased. Inventories on government-wide financial statements are presented at the lower of cost or market on a first-in, first out method and are expensed when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements

79 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets Capital assets, which include property, plant, equipment and construction in progress, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The School District defines a capital asset as an asset with an initial, individual cost equal to or greater than $5,000 or purchased with debt proceeds and must also have an estimated useful life in excess of one year. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Interest incurred during the construction of capital assets utilized by the Enterprise Fund is also capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Property, plant and equipment of the School District are depreciated using the straight-line method over the following estimated useful lives: Years Buildings and building improvements Furniture and equipment 5-10 Long-Term Obligations In the government-wide financial statements and Proprietary Fund Type in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund Type statement of net position. Bond/note premiums and discounts are deferred and amortized over the life of the bonds and notes. Bonds/notes payable are reported net of the applicable bond premium or discount. Bond/note issuance costs are recognized during the period in which they were incurred. In the fund financial statements, Governmental Funds recognize bond/note premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The School District has three items that qualify for reporting in this category. They are the interest hedge swap reported in the government-wide statement of net position, the deferred charge on refunding reported in the government-wide statement of net position and the deferred outflow related to pension activity, reported in the governmentwide statement of net position and the proprietary fund statement of net position

80 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The School District has one item that qualifies for reporting in this category. Accordingly, the item, deferred inflows related to pension activity, is reported in the government-wide statement of net position and the proprietary fund statement of net position. Compensated Absences The School District accounts for compensated absences by complying with GASB Statement No. 16, Accounting for Compensated Absences. This statement requires a liability be reported for certain compensated absences as the benefits are earned by employees instead of when they are paid. Vacation benefits are accrued as a liability as the benefits are earned if the employees rights to receive compensation are attributable to services already rendered and it is probable that the School District will compensate the employees for the benefits through paid time off or some other means. Sick leave benefits are accrued as a liability using the termination method. An accrual for earned sick leave is made to the extent that it is probable that benefits will result in termination payments. The liability is an estimate based on the School District s past experience of making termination payments. The entire compensated absence liability is reported on the government-wide financial statements. For the Governmental Funds, the current portion of unpaid compensated absences is the amount that is normally expected to be paid using expendable available financial resources. In the Enterprise Fund, the entire amount of compensated absences is reported as a fund liability. Net Position Net position represents the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any borrowing used for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on its 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

81 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) GASB Statement No. 54 The District previously adopted GASB Statement No. 54, which redefined how fund balances of the Governmental Funds are presented in the financial statements. Fund balances are classified as follows: Nonspendable - Amounts that cannot be spent either because they are not in a spendable form or because they are legally or contractually required to be maintained intact. Restricted - Amounts that can be spent only for specific purposes because of state or federal laws or externally imposed conditions by grantors or creditors. Committed - Amounts that can be used only for specific purposes determined by a formal resolution by the Board of School Directors. This includes the budget reserve account. Assigned - Amounts that are intended to be used for a specific purpose, as expressed by the Board of School Directors or by an official or body to which the Board of School Directors delegates the authority. Unassigned - All amounts not included in other spendable classifications. The details of the fund balances are included in the Governmental Funds balance sheet (page 14). As discussed in Note A, restricted funds are used first as appropriate, followed by committed resources and then assigned resources, to the extent that expenditure authority has been budgeted by the Board of School Directors. The School District does reserve the right to first reduce unassigned fund balance to defer the use of these other classified funds. In the event that unassigned fund balance becomes zero, then assigned and committed fund balances are used in that order. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Budgetary Process An operating budget is adopted prior to the beginning of each year for the General Fund on a modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally required

82 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Pennsylvania School Code dictates specific procedures relative to adoption of the School District s budget and reporting of its financial statements, specifically: The School District, before levying annual school taxes, is required to prepare an operating budget for the succeeding fiscal year. The School District is required to publish notice by advertisement, at least once in two newspapers of general circulation in the municipality in which it is located, and within 15 days of final action, that the proposed budget has been prepared and is available for public inspection at the administrative office of the School District. Notice that public hearings will be held on the proposed operating budget must be included in the advertisement; such hearings are required to be scheduled at least ten days prior to when final action on adoption is taken by the Board. Legal budgetary control is maintained at the sub-function/major object level. The Pennsylvania School Code allows the Board to make budgetary transfers between major function and major object code only within the last nine months of the fiscal year, unless there is a two-thirds majority of the Board approving the transfer. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the financial statements is presented at or below the level of budgetary control and includes the effect of approved budget amendments. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts in the Pennsylvania Department of Education s 2028 Report when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all budget transfers. Recent Accounting Pronouncement-GASB 72 In February 2015, the GASB issued Statement No.72, Fair Value Measurement and Application, which establishes general principles for measuring fair value and standards of accounting and financial reporting for assets and liabilities measured at fair value. The School District has implemented Statement No. 72 as of June 30,

83 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE B - CASH AND INVESTMENTS Cash Custodial Credit Risk - Custodial credit risk is the risk that, in the event of a bank failure, the School District s deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. The carrying value is $18,226,845. As of June 30, 2016, $18,475,772 of the School District s bank balance of $18,975,772 was exposed to custodial credit risk as follows: Uninsured and collateral held by pledging bank s trust department not in the School District s name $ 18,475,772 Interest Rate Risk - The School District s investment policy limits investment maturities in accordance with the Commonwealth of Pennsylvania School Code as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk - State law permits the School District to invest funds in the following types of investments: Obligations of (1) the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, (2) the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth, or (3) any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision. The School District s investment policy does not further limit its investment choices. Fair Value Measurement - The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The School District has no investments to be classified within the fair value hierarchy as of June 30, NOTE C - REAL ESTATE TAXES The School Board is authorized by state law to levy property taxes for School District operations, capital improvements and debt service. Property taxes are based on assessed valuations of all taxable real property within the School District. Taxes are levied on July 1 and payable in the following periods: Discount period... July 1 to August 31-2% of gross levy Face period... September 1 to October 31 Penalty period... October 31 to collection - 10% of gross levy Lien date Last day of February

84 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE C - REAL ESTATE TAXES (Continued) The School District taxes are billed and collected by the local elected tax collector. Property taxes attach as an enforceable lien on property as of July 1. NOTE D - RECEIVABLES Receivables at June 30, 2016, consisted of taxes, other revenue and intergovernmental grants and entitlements. The real estate taxes receivable account represents real estate transfer taxes and prior year uncollected tax levies. All receivables are considered fully collectible due to the ability to lien property for the nonpayment of taxes, the stable condition of state programs and the current year guarantee of federal funds. A summary of receivables by fund is as follows: General Fund Food Service Fund Real estate taxes $ 391,830 $ - Federal subsidies 11,633 56,984 State subsidies 2,750,545 5,950 Other revenue 414,459 14,663 $ 3,568,467 $ 77,597 NOTE E - INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2016, is as follows: Due to/from Other Funds Receivable Fund Payable Fund Amount General Fund Food Service Fund $ 43,959 Scholarship and Trust Funds Agency Funds 127,629 $ 171,588 Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances

85 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE E - INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (Continued) Interfund Transfers Transfer In Transfer Out Amount Capital Project Fund General Fund $ 723,093 Funds are transferred from the general fund to pay for capital projects. NOTE F - CAPITAL ASSETS A summary of changes in capital assets is as follows: Balance Balance June 30, 2015 Increases Decreases June 30, 2016 GOVERNMENTAL ACTIVITIES Capital assets being depreciated Land and land improvements $ 2,950,289 $ 58,295 $ - $ 3,008,584 Buildings and building improvements 182,103,908 1,151, ,255,249 Furniture, equipment and vehicles 14,166, ,879-15,068,094 TOTAL CAPITAL ASSETS BEING DEPRECIATED 199,220,412 2,111, ,331,927 Accumulated depreciation Land and land improvements (2,121,432) (28,504) - (2,149,936) Buildings and building improvements (53,928,706) (4,447,504) - (58,376,210) Furniture, equipment and vehicles (11,585,266) (1,425,095) - (13,010,361) TOTAL ACCUMULATED DEPRECIATION (67,635,404) (5,901,103) - (73,536,507) TOTAL CAPITAL ASSETS BEING DEPRECIATED, net 131,585,008 (3,789,588) - 127,795,420 GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, net 131,585,008 (3,789,588) - 127,795,420 BUSINESS-TYPE ACTIVITIES Capital assets being depreciated Furniture and equipment 889,688 22, ,930 Accumulated depreciation (703,018) (29,282) - (732,300) BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, net 186,670 (7,040) - 179,630 CAPITAL ASSETS, net $ 131,771,678 $ (3,796,628) $ - $ 127,975,050 Depreciation expense was charged to governmental functions as follows: Instruction $ 3,938,102 Support services 1,874,215 Operation of non-instructional services 88,786 $ 5,901,

86 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE G - LEASES Capital Leases The School District has entered into lease agreements, as lessee, for financing the acquisition of various equipment and vehicles. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Equipment $ 3,607,509 Accumulated depreciation (2,575,870) $ 1,031,639 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2016, are as follows: Year Ending June 30, Amount 2017 $ 530, , , ,953 1,163,103 Amount representing interest (40,187) PRESENT VALUE OF MINIMUM LEASE PAYMENTS $ 1,122,

87 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE G - LEASES (Continued) Operating Leases The School District leases copiers and computer equipment under noncancelable operating leases. Total costs for such leases were approximately $118,046 for the year ended June 30, Future minimum lease payments for these leases are as follows: Year Ending June 30, Amount 2017 $ 258, , , , ,386 $ 512,035 NOTE H - BONDS AND NOTES PAYABLE The School District issues school revenue bonds and general obligation bonds and notes to provide funds for acquisition and construction of major capital facilities. General obligation bonds and notes are direct obligations and pledge the full faith and credit of the School District. These bonds and notes generally are issued as 20-year serial bonds with equal amounts of principal maturing each year. Annual debt service requirements to maturity for school revenue bonds and general obligation bonds and notes are as follows: Year Ending Total Debt June 30, Principal Interest Service 2017 $ 5,886,000 $ 4,069,145 $ 9,955, ,267,000 4,112,346 10,379, ,519,000 3,858,924 10,377, ,638,000 3,589,468 10,227, ,238,000 3,403,106 10,641, to ,230,000 13,451,428 53,681, to ,535,000 4,923,756 45,458, to ,500, ,949 6,046,949 $ 118,813,000 $ 37,955,122 $ 156,768,

88 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE I - CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the year ended June 30, 2016, was as follows: Interest Rate Maturity Date GOVERNMENTAL ACTIVITIES BONDS AND NOTES PAYABLE (Note H) General Obligation Bonds and Notes Series of % to 5.50% 3/15/2019 Series of 2009 Variable 3/1/2030 Series of 2010A 3.22% to 6.00% 3/1/2035 Series of % to 2.50% 3/15/2024 Series of % to 3.00% 3/15/2018 Series of % 3/15/2023 Series of % 3/15/2024 Series of 2015A.550% to 5.00% 3/15/2029 Series of 2015AA 1.50% to 4.00% 3/15/2021 Deferred amounts Issuance discount Issuance premium TOTAL BONDS AND NOTES PAYABLE CAPITAL LEASES COMPENSATED ABSENCES (Note M) INTEREST HEDGE SWAP NET PENSION LIABILITY NET OPEB OBLIGATION BUSINESS-TYPE ACTIVITIES NET PENSION LIABILITY TOTAL LONG-TERM LIABILITIES

89 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2015 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year $ 13,545,000 $ - $ (3,140,000) $ 10,405,000 $ 3,300,000 44,320,000 - (345,000) 43,975, ,000 20,995,000 - (755,000) 20,240, ,000 9,905,000 - (190,000) 9,715, ,000 2,295,000 - (1,045,000) 1,250,000 1,080,000 5,663,000 - (108,000) 5,555, ,000 9,900,000 - (2,000) 9,898,000 55,000 13,545,000 - (5,000) 13,540,000 5,000 4,235, ,235,000 - (66,101) - 7,341 (58,760) - 3,396,117 - (503,976) 2,892, ,733,016 - (6,086,635) 121,646,381 5,886,000 1,509, ,741 (618,354) 1,122, ,839 1,318, ,446-1,587,121-6,252,268 2,124,204-8,376, ,586,000 18,745, ,331, ,590 5, ,252 - $ 283,719,078 $ 21,375,053 $ (6,704,989) $ 298,389,142 $ 6,393,839 $ 1,961,000 $ 251,000 $ - $ 2,212,000 $

90 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE J - DERIVATIVE INSTRUMENTS GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments The School District previously adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. Upon implementation of this statement, the School District was required to record these derivative instruments in the government-wide financial statements. In order to implement this statement, the School District had to evaluate each of the two derivatives to determine if the financial instruments effectively hedge risks utilizing the methods defined under GASB Statement No. 53. The accounting for recording these derivative instruments is different for derivative instruments that are determined to be effective versus those that are determined to be ineffective. For those derivative instruments that are determined to be effective, the derivative asset or liability is recorded in the statement of net position, and a corresponding deferred inflow or outflow will be recorded in the statement of net position as well. For those derivative instruments that are determined to be ineffective, the derivative outflow or inflow is recorded in the statement of net position; however, the change in fair value of the instrument will be reported in the investment revenue (expense) classification in the statement of activities. Hedge accounting under GASB Statement No. 53 terminates if the hedge is no longer effective based on the qualitative and quantitative methods. If the hedged asset or liability is sold or retired or if the government s entity is re-exposed to the hedged financial risk, hedge accounting will no longer apply. Once the hedge no longer qualifies for hedge accounting, the fair value changes are recorded as investment gain or loss. Derivative Instruments Interest Rate Hedge Swap - Series of The Interest Rate Hedge Swap on the Series of 2009 General Obligation Variable Rate Demand Bonds became active on January 28, 2009, with the refunding of the Series of 2008 General Obligation Variable Rate Demand Bonds. Under this agreement, the School District will pay a fixed rate of interest equal to 3.759% and receive in exchange a variable rate of interest equal to the USD-SIFMA Municipal Swap Index rate, reset weekly. The variable rate received by the School District will be used by the School District to offset the variable rate interest on its 2009 Bonds thereby making the interest rate on the 2009 Bonds synthetically fixed on a net basis through the 2009 Swap. The net fixed rate of interest on the bonds is 4.759%. As of June 30, 2016, the counterparty was rated AA- by Standard & Poor s, Aa3 by Moody s Investors Service and AA by Fitch

91 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE J - DERIVATIVE INSTRUMENTS (Continued) The objectives, terms and values of the derivative outstanding at the end of the period are summarized as follows: Fair Market Value of Derivative at June 30, 2016 Positive Type Objective (Negative) INTEREST RATE HEDGE SWAP Hedge changes in cash flows 2009 pay-fixed interest rate swap on Series of 2009 Bonds $ (8,376,472) The derivative instrument activity during the reporting period and balances at the end of the period are summarized as follows: Change in Fair Value for the Period Ended June 30, 2016 Classification Amount INTEREST RATE HEDGE SWAP Cash flow hedges, 2008 payfixed interest rate swaps Deferred outflow $ (2,124,204) Fair Value at June 30, 2016 Fair Value Positive Notional Classification (Negative) Amount INTEREST RATE HEDGE SWAP Cash flow hedges, 2008 payfixed interest rate swaps Debt $ (8,376,472) $ 35,000,000 Fair Market Value Determination - The fair value of the interest rate swap was estimated using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve, correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on the swaps.

92 Amount of Notional Bonds Amount as of Outstanding at June 30, 2016 June 30, 2016 Effective Date Termination Date Terms $ 35,000,000 $ 43,975,000 January 28, 2009 March 1, 2030 Pay 3.759%, receive variable rate equal to USD-SIFMA Municipal Swap Index, reset weekly

93 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE J - DERIVATIVE INSTRUMENTS (Continued) Evaluation of Effectiveness and Recording of Derivative - The School District evaluated the hedge effectiveness for the interest rate swap described previously under the methods as defined by GASB Statement No. 53. The interest rate swap for the Series of 2008 was determined to be effective under the dollar-offset method. Under the dollar-offset method, the School District divides the changes in the fair value of the derivative by the changes in fair value of the hedgeable item. This evaluation may be made using changes in the current period or on a life-to-date basis. The result of the calculation must fall within 80% to 125% in order for the derivative to be considered effective. The derivative described previously was determined to be effective, and the fair market value of the interest rate swap was a negative $(8,376,472) as of June 30, Therefore, pursuant to GASB Statement No. 53, the instrument was recorded in the government-wide statement of net position as a long-term liability and a corresponding deferred outflow was recorded. Risks Associated With Interest Rate Hedge Swaps Credit Risk - As of June 30, 2016, the School District is not exposed to credit risk since the Interest Rate Hedge Swap has a negative value and therefore is a liability. However, should interest rates change and the net fair market value of the Interest Rate Hedge Swap become positive, the School District would be subject to credit risk in the amount of the net fair market value. Interest Rate Risk - As of June 30, 2016, the School District is exposed to interest rate risk on its pay-fixed, receive-variable interest rate swap, as the USD-SIFMA Municipal Index decreases, the School District s net payment on the swap increases. Basis Risk - The School District is exposed to basis risk on its pay-fixed interest rate swap hedging instrument because the variable-rate payments received by the School District on these hedging derivative instruments are based on the USD-SIFMA Municipal Index and the School District pays on its hedged variable-rate debt a tax-exempt rate based on the weekly SIFMA Municipal Swap Index. If the relationship between USD-SIFMA and the variable rate on the associated bonds converge, then the overall synthetic fixed rate would change. Termination Risk - The School District or its counterparty may terminate a derivative instrument if the other party fails to perform under the terms of the contract. If this were to occur, the School District would be exposed to the variable remarketing rate on the bonds. If the Interest Rate Hedge Swap is terminated, the bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of termination, the Interest Rate Hedge Swap has a negative fair value, the School District would be liable to the counterparty for a payment equal to the Interest Rate Hedge Swap s fair market value. As of June 30, 2016, the Interest Rate Hedge Swap had a negative fair value equal to $8,376,472 on the associated Series of 2009 variable rate bonds

94 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE K - FAIR VALUE MEASUREMENTS The School District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active market for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The School District has the following recurring fair value measurements as of June 30, 2016: Significant Other Observable Inputs (Level 2) Investments by fair value level Hedging derivative instruments interest hedge swap $ 8,376,472 Derivative instruments classified in Level 2 of the fair value hierarchy are valued using a market approach that considers benchmark interest rates and relevant future market conditions. NOTE L - DEFEASED DEBT In prior years, certain bonds were defeased in substance by placing an amount in irrevocable trusts to provide for all future debt service payments on the refunded bonds. Accordingly, the trust account assets and the liability for the in-substance defeased bonds are not included in the School District s financial statements. As of June 30, 2016, the School District has defeased debt outstanding of $43,615,

95 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN Summary of Significant Accounting Policies Pensions - For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the fiduciary net position of the Public School Employees Retirement System (PSERS) and additions to/deductions from PSERS s fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. General Information About the Pension Plan Plan Description - PSERS is a governmental cost-sharing multi-employer defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at Benefits Provided - PSERS provides retirement, disability and death benefits. Members are eligible for monthly retirement benefits upon reaching (a) age 62 with at least one year of credited service; (b) age 60 with 30 or more years of credited service; or (c) 35 or more years of service regardless of age. Act 120 of 2010 (Act 120) preserves the benefits of existing members and introduced benefit reductions for individuals who become new members on or after July 1, Act 120 created two membership classes, Membership Class T-E (Class T-E) and Membership Class T-F (Class T-F). To qualify for normal retirement, Class T-E and Class T-F members must work until age 65 with a minimum three years of service or attain a total combination of age and service that is equal to or greater than 92 with a minimum of 35 years of service. Benefits are generally equal to 2% or 2.5%, depending on membership class, of the member s final average salary (as defined in the Code) multiplied by the number of years of credited service. For members whose membership started prior to July 1, 2011, after completion of five years of service, a member s right to the defined benefits is vested and early retirement benefits may be elected. For Class T-E and Class T-F members, the right to benefits is vested after ten years of service

96 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN (Continued) Participants are eligible for disability retirement benefits after completion of five years of credited service. Such benefits are generally equal to 2% or 2.5%, depending upon membership class, of the member s final average salary (as defined in the Code) multiplied by the number of years of credited service, but not less than one-third of such salary nor greater than the benefit the member would have had at normal retirement age. Members over normal retirement age may apply for disability benefits. Death benefits are payable upon the death of an active member who has reached age 62 with at least one year of credited service (age 65 with at least three years of credited service for Class T-E and Class T-F members) or who has at least five years of credited service (ten years for Class T-E and Class T-F members). Such benefits are actuarially equivalent to the benefit that would have been effective if the member had retired on the day before death. Contributions Members Contributions Active members who joined the System prior to July 22, 1983, contribute at 5.25% (Membership Class T-C) or at 6.50% (Membership Class T-D) of the member s qualifying compensation. Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25% (Membership Class T-C) or at 7.50% (Membership Class T-D) of the member s qualifying compensation. Members who joined the System after June 30, 2001 and before July 1, 2011, contribute at 7.50% (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with services rendered on or after January 1, Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T-E rate of 7.5% (base rate) of the member s qualifying compensation. All new hires after June 30, 2011, who elect Class T-F membership, contribute at 10.3% (base rate) of the member s qualifying compensation. Membership Class T-E and Class T-F are affected by a shared risk provision in Act 120 of 2010 that in future fiscal years could cause the Membership Class T-E contribution rate to fluctuate between 7.5% and 9.5% and the Membership Class T-F contribution rate to fluctuate between 10.3% and 12.3%. Employer Contributions The School District s contractually required contribution rate for the fiscal year ended June 30, 2016, was 25.0% of covered payroll, actuarially determined as an amount that, when combined with employee contributions is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the plan from the School District were $13,009,000 for the year ended June 30,

97 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN (Continued) Pension Liabilities, Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the School District reported a liability of $167,543,000 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by rolling forward the System s total pension liability as of June 30, 2014 to June 30, The School District s proportion of the net pension liability was calculated utilizing the employer s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2015, the School District s proportion was %, which was an increase of % from its proportion measured as of June 30, For the year ended June 30, 2016, the School District recognized pension expense of $15,715,000. At June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources GOVERNMENTAL ACTIVITIES Difference between expected and actual experience $ - $ 682,000 Net difference between projected and actual investment earnings - 335,000 Changes in proportions 4,494,000 - Difference between employer contributions and proportionate share of total contributions 46,000 - Contributions subsequent to the measurement date 12,837,000 - $ 17,377,000 $ 1,017,000 BUSINESS-TYPE ACTIVITIES Difference between expected and actual experience $ - $ 9,000 Net difference between projected and actual investment earnings - 4,000 Changes in proportions 59,000 - Difference between employer contributions and proportionate share of total contributions 1,000 - Contributions subsequent to the measurement date 172,000 - $ 232,000 $ 13,

98 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN (Continued) $13,009,000 reported as deferred outflows of resources related to pensions resulting from School District contributions subsequent to the measurement date will be recognized as a reduction of the new pension liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending Governmental Business-Type June 30, Activities Activities 2017 $ 272,000 $ 4, ,000 4, ,000 4, ,706,000 36,000 $ 3,522,000 $ 48,000 Actuarial Assumptions - The total pension liability as of June 30, 2015, was determined by rolling forward the System s total pension liability as of the June 30, 2014 actuarial valuation to June 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Cost Method - Entry Age Normal - level % of pay. Investment Return - 7.5%, includes inflation at 3.00%. Salary Increases - Effective average of 5.50%, which reflects an allowance for inflation of 3.00, real wage growth of 1% and merit or seniority increases of 1.50%. Mortality rates were based on the RP-2000 Combined Healthy Annuitant Table (male and female) with age set back three years for both males and females. For disabled annuitants, the RP-2000 Combined Disabled Tables (male and female) with age set back seven years for males and three years for females

99 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN (Continued) The actuarial assumptions used in the June 30, 2014 valuation were based on the experience study that was performed for the five-year period ending June 30, The recommended assumption changes based on this experience study were adopted by the Board at its March 11, 2011 Board meeting and were effective beginning with the June 30, 2011 actuarial valuation. The long-term expected rate of return on plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The plan s policy in regard to the allocation of invested plan assets is established and may be amended by the Board. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension. Long-Term Expected Target Real Rate Asset Class Allocation of Return Public markets global equity 22.5% 4.8% Private markets (equity) 15.0% 6.6% Private real estate 12.0% 4.5% Global fixed income 7.5% 2.4% U.S. long treasuries 3.0% 1.4% TIPS 12.0% 1.1% High yield bonds 6.0% 3.3% Cash 3.0% 0.7% Absolute return 10.0% 4.9% Risk parity 10.0% 3.7% MLPs/Infrastructure 5.0% 5.2% Commodities 8.0% 3.1% Financing (LIBOR) -14.0% 1.1% 100.0% The above was the Board s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30,

100 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE M - PENSION PLAN (Continued) Discount Rate - The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at contractually required rates, actuarially determined. Based on those assumptions, the plan s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the School District s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.50%) or one percentage point higher (8.50%) than the current rate: Current 1% Discount 1% Decrease Rate Increase 6.50% 7.50% 8.50% School District's proportionate share of the net pension liability $ 206,514,000 $ 167,543,000 $ 134,789,000 Pension Plan Fiduciary Net Position - Detailed information about PSERS s fiduciary net position is available in the PSERS Comprehensive Annual Financial Report which can be found on the System s website at NOTE N - COMPENSATED ABSENCES Sick Pay School District employees who are required to work on a 12-month schedule are credited with vacation and sick time at rates which vary with length of service or job classification. Vacation and sick time may be taken or accumulated within certain limits and is paid prior to retirement or termination at the employee s current rate of pay. The liability to current employees is estimated and will change since unused vacation and sick time will be paid at the rate of pay in effect at the time of separation. These accumulated leaves are recorded in the period taken or as an accrued expenditure in the fiscal year of separation. Termination compensation payable in future years is $1,541,064. In addition, also included in compensated absences is $46,057 of future payments for obligations due under the School District s early retirement incentive plan

101 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE O - RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. It is the policy of the School District to purchase commercial insurance for the risks of loss to which it is exposed, including workers compensation and employee health and accident insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three years. NOTE P - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) Plan Description The School District provides medical and prescription drug insurance benefits to eligible retired employees, spouses and dependents through a single-employer defined benefit plan. The benefits, benefits level, employee contribution and employer contribution are administered by School District Supervisors and can be amended by the School District through its personnel manual and union contracts. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a stand-alone financial report. The activity of the plan is reported in the School District s General Fund. Annual OPEB Cost and Net OPEB Obligation The School District s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The components of the School District s annual OPEB cost for the year, the amount actually contributed to the plan and changes in the School District s net OPEB obligation to the plan are as follows: Normal cost $ 95,881 Amortization of unfunded actuarial accrued liability 116,011 ANNUAL REQUIRED CONTRIBUTION (ARC) 211,892 Interest on net OPEB obligation 14,382 Adjustment to ARC (22,589) ANNUAL OPEB EXPENSE 203,685 Net OPEB contributions during the year (198,023) INCREASE IN NET OPEB OBLIGATION 5,662 Net OPEB obligation at beginning of year 319,590 NET OPEB OBLIGATION AT END OF YEAR $ 325,

102 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2016 NOTE P - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (Continued) Percentage of Annual Annual OPEB Cost Net OPEB Year OPEB Cost Contributed Obligation 2014 $ 157, % $ 313, , % 319, , % 325,252 Funded Status and Funding Progress As of July 1, 2014, the actuarial accrued liability for benefits was $1,641,302 and the actuarial value of assets was $0, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $45,770,680, and the ratio of the UAAL to the covered payroll was 3.59%. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information on page 55, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2014 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer s own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 6.5% initially, reduced by decrements of.5% to a rate of 5.5% in Rates gradually decrease from 5.3% in 2017 to 4.2% in The actuarial value of assets was determined using techniques that reduce the effects of short-term volatility in actuarial liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The UAAL is being amortized as a level percentage of projected payroll on an open basis over a period not to exceed 30 years

103 REQUIRED SUPPLEMENTARY INFORMATION

104 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED JUNE 30, 2016 Variance With Actual Final Budget Budgeted Amounts Amounts Positive Original Final GAAP Basis (Negative) REVENUES Local sources $ 88,643,472 $ 88,643,318 $ 89,970,004 $ 1,326,686 State sources 17,097,779 17,498,565 17,742, ,599 Federal sources 1,293,401 1,292,586 1,149,973 (142,613) TOTAL REVENUES 107,034, ,434, ,862,141 1,427,672 EXPENDITURES Instruction Regular programs 41,905,028 42,045,691 41,485, ,258 Special programs 20,694,346 20,681,205 20,783,865 (102,660) Vocational education programs 474, , ,408 11,001 Other instructional programs 585, , ,695 (12,287) Nonpublic school programs 20, Adult education programs 1,251,305 1,251,305 1,250, Support services Pupil personnel 4,992,490 4,992,890 5,033,008 (40,118) Instructional staff 3,560,875 3,613,065 3,354, ,840 Administration 4,741,728 4,762,966 4,618, ,466 Pupil health 2,005,195 2,017,936 2,291,350 (273,414) Business 1,032,514 1,032,514 1,001,756 30,758 Operation and maintenance of plant services 8,302,708 8,300,708 8,223,621 77,087 Pupil transportation services 4,390,248 4,390,248 4,570,827 (180,579) Central and other services 1,553,000 1,581,962 1,529,612 52,350 Other support services 111, , ,334 (3,973) Operation of non-instructional services Student activities 1,091,234 1,091,235 1,250,177 (158,942) Community services 195, , ,972 (10,972) Facilities acquisition, construction and improvement services ,741 (231,741) Debt service 10,126,634 10,126,634 10,141,114 (14,480) Refund of prior year revenues ,837 (19,837) TOTAL EXPENDITURES 107,034, ,260, ,174,265 86,272 EXCESS OF REVENUES OVER EXPENDITURES - 173,932 1,687,876 1,513,944 OTHER FINANCING SOURCES Proceeds from capital leases , ,741 Transfers out - - (723,093) (723,093) Budgetary reserve - 56,386 - (56,386) TOTAL OTHER FINANCING SOURCES (USES) - 56,386 (491,352) (547,738) NET CHANGE IN FUND BALANCE - 230,318 1,196, ,206 FUND BALANCE AT BEGINNING OF YEAR 8,432,669 8,432,669 8,432,669 - FUND BALANCE AT END OF YEAR $ 8,432,669 $ 8,662,987 $ 9,629,193 $ 966,206 See accompanying notes to the budgetary comparison schedule

105 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE BUDGETARY COMPARISON SCHEDULE YEAR ENDED JUNE 30, 2016 NOTE A - BUDGETARY INFORMATION Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. An annual appropriated budget is adopted for the General Fund. All annual appropriations lapse at fiscal year-end. Project-length financial plans are adopted for all Capital Project Funds. The School District follows these procedures in establishing the budgetary data reflected in the financial statements: 1. Prior to March 1, the Business Manager submits to the School Board a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted at the School District offices to obtain taxpayer comments. 3. Prior to July 1, the budget is legally enacted through passage of an ordinance. 4. The Business Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the School Board. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund. 6. Budgeted amounts are as originally adopted or as amended by the School Board. All budget amounts presented in the accompanying required supplementary information reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions to the annual budgets during the year). NOTE B - EXCESS OF EXPENDITURES OVER APPROPRIATIONS Excess expenditures were funded by various revenues that were over budget in the General Fund and fund balance carried over from the prior year

106 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SCHEDULE OF THE SCHOOL DISTRICTʼS PROPORTIONATE SHARE OF THE NET PENSION LIABILITY LAST TWO FISCAL YEARS SCHOOL DISTRICT'S PROPORTION OF THE NET PENSION LIABILITY (ASSET) % % SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET) $ 167,543,000 $ 148,547,000 SCHOOL DISTRICT'S COVERED-EMPLOYEE PAYROLL $ 49,766,024 $ 47,889,410 SCHOOL DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET) AS A PERCENTAGE OF ITS COVERED-EMPLOYEE PAYROLL % % THE PLAN'S FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 45.64% 57.24%

107 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SCHEDULE OF SCHOOL DISTRICT CONTRIBUTIONS LAST TWO FISCAL YEARS CONTRACTUALLY REQUIRED CONTRIBUTION $ 13,009,000 $ 9,992,000 CONTRIBUTIONS IN RELATION TO THE CONTRACTUALLY REQUIRED CONTRIBUTION 13,009,000 9,992,000 CONTRIBUTION (EXCESS) DEFICIENCY $ - $ - SCHOOL DISTRICT'S COVERED-EMPLOYEE PAYROLL $ 52,036,000 $ 53,632,817 CONTRIBUTIONS AS A PERCENTAGE OF COVERED-EMPLOYEE PAYROLL 25.00% 18.63%

108 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP POSTEMPLOYMENT BENEFITS OTHER THAN PENSION FUNDING PROGRESS YEAR ENDED JUNE 30, 2016 (b) (f) Entry A ge UAAL as a (a) Actuarial (c) (d) Percentage Valuation Actuarial Accrued Unfunded Funded (e) of Covered Date Value of Liability AAL (UAAL) Ratio Covered Payroll July 1, Assets (AAL) (b)-(a) (a)/(b) Payroll (c)/(e) 2010 $ - $ 1,751,513 $ 1,751, % $ 40,464, % ,138,391 1,138, % 43,303, % ,641,302 1,641, % 45,770, %

109 PO Box 680, Oaks, PA Fax: Willowbrook Lane, West Chester, PA Fax: Maillie LLP Independent Auditors 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 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the School District of Haverford Township as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District of Haverford Township s basic financial statements, and have issued our report thereon dated November 10, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the School District of Haverford Township s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District of Haverford Township s internal control. Accordingly, we do not express an opinion on the effectiveness of the School District of Haverford Township s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control 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 material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified Certified Pu b lic Acc oun t a n ts and B u s iness Co n s ult ant s

110 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Compliance and Other Matters As part of obtaining reasonable assurance about whether the School District of Haverford Township s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Oaks, Pennsylvania November 10,

111 PO Box 680, Oaks, PA Fax: Willowbrook Lane, West Chester, PA Fax: Maillie LLP Independent Auditors Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards in Accordance with Uniform Guidance To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Report on Compliance for Each Major Federal Program We have audited the School District of Haverford Township s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the School District of Haverford Township s major federal programs for the year ended June 30, The School District of Haverford Township s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of the School District of Haverford Township s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District of Haverford Township s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District of Haverford Township s compliance

112 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Opinion on Each Major Federal Program In our opinion, the School District of Haverford Township complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Report on Internal Control Over Compliance Management of the School District of Haverford Township is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District of Haverford Township s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District of Haverford Township s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified

113 To the Board of School Directors School District of Haverford Township Havertown, Pennsylvania Report on Schedule of Expenditures of Federal Awards Required By the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the School District of Haverford Township as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District of Haverford Township s basic financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance) and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the financial statements as a whole. Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Oaks, Pennsylvania November 10,

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115 SUPPLEMENTARY INFORMATION - MAJOR FEDERAL AWARD PROGRAMS AUDIT

116 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND CERTAIN STATE AWARDS YEAR ENDED JUNE 30, 2016 Federal Pass-Through Grant Period Source CFDA Grantor s Beginning/ Federal Grantor/Pass-Through Grantor/Program Title Code Number Number Ending Dates U.S. DEPARTMENT OF EDUCATION Passed through the Pennsylvania Department of Education Title I - Improving Basic Programs I July 1, 2013 to September 30, 2014 Title I - Improving Basic Programs I July 1, 2014 to September 30, 2015 Title I - Improving Basic Programs I July 1, 2015 to September 30, 2016 Total Title I Title II - Improving Teacher Quality I July 1, 2014 to September 30, 2015 Title II - Improving Teacher Quality I July 1, 2015 to September 30, 2016 Total Title II Title III - Language Instruction I July 1, 2014 to June 30, 2015 Passed through the Delaware County Intermediate Unit Individual Disability Education Act I N/A July 1, 2015 to June 30, 2016 Individual Disability Education Act I N/A July 1, 2015 to June 30, 2016 Total Special Education Cluster TOTAL FORWARD U.S. DEPARTMENT OF PUBLIC WELFARE Passed through the Pennsylvania Department of Public Welfare Medical Assistance ACCESS - Administrative Claiming I N/A July 1, 2014 to September 30, 2015 Medical Assistance ACCESS - Administrative Claiming I N/A July 1, 2015 to September 30, 2016 Total Medicaid Cluster TOTAL FORWARD U.S. DEPARTMENT OF AGRICULTURE Passed through the Pennsylvania Department of Education National School Lunch Program, Federal I N/A July 1, 2014 to September 30, 2015 National School Lunch Program, Federal I N/A July 1, 2015 to September 30, 2016 SUBTOTAL FORWARD

117 Accrued or Accrued or Program Total (Deferred) (Deferred) Passed or Award Received Revenue at Revenue Revenue at Through To Amount for the Year July 1, 2015 Recognized Expenditures June 30, 2016 Sub-Recipients $ 215,895 $ 142,242 $ 142,242 $ - $ - $ - $ - 232,943 48,570 3,332 46,584 46,584 1, , , , ,146 (28,116) - 411, , , ,730 (26,770) - 109,827 (85) (85) , ,923-96,206 96,206 (12,717) - 108,838 (85) 96,206 96,206 (12,717) (549) - 786, , , , ,301 4,301-4,301 4, , , , ,311, ,489 1,125,958 1,125,958 (40,036) - 28,558 6,620 6, ,015 13,728-24,015 24,015 10,287-20,348 6,620 24,015 24,015 10,287-20,348 6,620 24,015 24,015 10,287 - N/A 73,689 73, N/A 225, , ,579 54,449 - $ 298,819 $ 73,689 $ 279,579 $ 279,579 $ 54,449 $

118 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND CERTAIN STATE AWARDS YEAR ENDED JUNE 30, 2016 Federal Pass-Through Grant Period Source CFDA Grantor s Beginning/ Federal Grantor/Pass-Through Grantor/Program Title Code Number Number Ending Dates U.S. DEPARTMENT OF EDUCATION TOTAL FORWARDED U.S. DEPARTMENT OF PUBLIC WELFARE TOTAL FORWARDED U.S. DEPARTMENT OF AGRICULTURE Passed through the Pennsylvania Department of Education SUBTOTAL FORWARDED National School Breakfast Program, Federal I N/A July 1, 2014 to September 30, 2015 National School Breakfast Program, Federal I N/A July 1, 2015 to September 30, 2016 Passed through the Pennsylvania Department of Agriculture National School Lunch Program I N/A July 1, 2015 to June 30, 2016 Total Child Nutrition Cluster TOTAL U.S. DEPARTMENT OF AGRICULTURE TOTAL FEDERAL AWARDS Footnotes: (A) Total amount of foods received from Department of Agriculture. (B) Beginning inventory at July 1, (C) Total amount of foods used. (D) Ending inventory at June 30, Source Codes: I = Indirect funding See accompanying notes to the schedule of expenditures of federal and certain state awards.

119 Accrued or Accrued or Passed Program Total (Deferred) (Deferred) Through or Award Received Revenue at Revenue Revenue at To Sub- Amount for the Year July 1, 2015 Recognized Expenditures June 30, 2016 Recipients $ 1,311,483 $ 145,489 $ 1,125,958 $ 1,125,958 $ (40,036) $ - 20,348 6,620 24,015 24,015 10, ,819 73, , ,579 54,449 - N/A 3,746 3, N/A 10,089-12,624 12,624 2,535 - N/A 79,119 (A) (4,486) (B) 79,606 79,606 (C) (3,999) (D) - 391,773 72, , ,809 52, ,773 72, , ,809 52,985 - $ 1,723,604 $ 225,058 $ 1,521,782 $ 1,521,782 $ 23,236 $

120 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AND CERTAIN STATE AWARDS YEAR ENDED JUNE 30, 2016 NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal and certain state awards includes the federal grant activity of the School District of Haverford Township and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the audit requirements of the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the presentation of, the basic financial statements. NOTE B - DONATED FOOD Nonmonetary assistance is reported in the schedule of expenditures of federal and certain state awards at the fair market value of the food received and disbursed. Donated food was valued according to cost estimates provided by the U.S.D.A. At June 30, 2016, the School District had donated food of $3,999 in inventory. NOTE C INDIRECT COST RATES The School District has not elected to use the 10% de minimis indirect cost rate as allowed in Uniform Guidance, Section

121 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 A. SUMMARY OF AUDITORS RESULTS 1. The auditors report expresses an unmodified opinion on the financial statements of the School District of Haverford Township. 2. No significant deficiencies relating to the audit of the financial statements are reported in the Independent Auditors 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. 3. No instances of noncompliance material to the financial statements of the School District of Haverford Township were disclosed during the audit. 4. No significant deficiencies relating to the audit of the major federal award programs are reported in the Independent Auditors Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with Uniform Grant Guidance. 5. The auditors report on compliance for the major award programs for the School District of Haverford Township expresses an unmodified opinion. 6. There were no audit findings that are required to be reported in accordance with the Uniform Grant Guidance. 7. The programs tested as major programs were: Program CFDA IDEA , The threshold used for distinguishing Types A and B programs was $750, The School District of Haverford Township was determined to be a low risk auditee. B. FINDINGS - FINANCIAL STATEMENTS AUDIT None. C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS AUDIT None

122 SCHOOL DISTRICT OF HAVERFORD TOWNSHIP SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2016 None

123 APPENDIX C FORM OF CONTINUING DISCLOSURE AGREEMENT

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125 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement dated June 5, 2017 (including any future amendments or supplements hereto, collectively, the Disclosure Agreement ) is executed and delivered by the School District of Haverford Township (as more fully defined below, the Issuer ) in connection with the issuance of its $21,070,000 General Obligation Bonds, Series of 2017 dated June 5, The Issuer, intending to be legally bound, hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Holder from time-to-time of the Bonds (as defined below) and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. Unless the context clearly requires otherwise, the following capitalized terms shall have the meanings set forth below: Additional Bonds shall mean any indebtedness of the Issuer issued subsequent to the 2017 Bonds which the Issuer has declared in writing to be covered by this Disclosure Agreement. No such written declaration shall be considered an amendment to this Disclosure Agreement for purposes of Section 8 hereof. Annual Filing Date shall mean the first (1 st ) day of the eighth (8 th ) calendar month immediately following the end of the Issuer s fiscal year. Annual Financial Information shall mean the following: (i) the Issuer s audited financial statements for the most recently completed fiscal year prepared in accordance with Section 6 of this Disclosure Agreement; (ii) (iii) a copy of the budget for the current fiscal year; the taxes and millage rates imposed for the current fiscal year; (iv) the real property tax collection results for the most recent fiscal year, including (a) the real estate levy imposed (expressed both as a millage rate and an aggregate dollar amount), (b) the dollar amount of real estate taxes collected that represented current collections (expressed both as a percentage of such fiscal year s levy and as an aggregate dollar amount), (c) the amount of real estate taxes collected that represented taxes levied in prior years (expressed as an aggregate dollar amount), and (d) the total amount of real estate taxes collected (expressed both as a percentage of the current year s levy and as an aggregate dollar amount); (v) a list of the ten (10) largest real estate taxpayers and, for each, the total assessed value of real estate for the current fiscal year; and (vi) for the current fiscal year. the total assessed value and market value of all taxable real estate

126 Annual Report shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. Bonds shall mean the 2017 Bonds and Additional Bonds, if any. EMMA shall mean the Electronic Municipal Market Access System maintained by the MSRB at which serves as the sole nationally recognized municipal securities information repository under the Rule. Holder means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. Insurer shall mean an issuer of a municipal bond insurance policy, if any, with respect to any Additional Bonds. Issuer shall mean the School District of Haverford Township, Delaware County, Pennsylvania or any successor Obligated Person that assumes either by operation by law or by contract both (i) the obligation to pay debt service on the Bonds and (ii) the obligations of the Issuer under this Disclosure Agreement. MSRB shall mean the Municipal Securities Rulemaking Board, or any successor organization. Notice Event shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. Obligated Person shall have the meaning set forth in the Rule, provided that the sole objective criteria used to select the Obligated Person shall be the entity obligated to repay all debt service with respect to the relevant Bonds. Official Statement shall mean the final Official Statement relating to the 2017 Bonds or a Series of Additional Bonds, as applicable. Participating Underwriter shall mean any of the original underwriters of any Series of Bonds required to comply with the Rule in connection with offering of such Bonds. Repository shall mean each nationally recognized municipal securities information repository under the Rule. As of the date hereof, the Securities and Exchange Commission has appointed the MSRB through EMMA to act as the sole Repository. Any information filed in connection with this Disclosure Agreement shall be filed with EMMA at any State Repository and any future Repository as may be required under the Rule. 2

127 Rule shall mean Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as heretofore amended, and as such Rule may be hereafter amended from time-to-time. State Repository shall mean any public or private repository or entity designated by the Commonwealth of Pennsylvania as a state information repository for the purpose of the Rule and with which the Issuer is legally required to file the Annual Report. Currently, there is no State Repository in Pennsylvania. The list of state information repositories maintained by the United States Securities and Exchange Commission shall be conclusive as to the existence of a State Repository Bonds shall mean the Issuer s $21,070,000 aggregate principal amount General Obligation Bonds, Series of 2017 dated June 5, Section 3. Provision of Annual Reports. (a) The Issuer shall not later than the Annual Filing Date, commencing with the fiscal year ending June 30, 2016, provide to the MSRB via EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided however that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report. (b) If the Issuer is unable to provide the Annual Report to the Repository by the date required in subsection (a), a Notice Event pursuant to Section 5(a)(15) shall be deemed to have occurred and the Issuer shall report to the Repository electronically in accordance with the provisions of Section 5(b) hereof. (c) Audited financial statements of the Issuer not submitted as part of the Annual Report shall be provided to the Repository, if and when available to the Issuer, and in any event not more than thirty (30) days after receipt thereof from the Issuer s auditors. In the event that audited financial statements are not submitted as part of the Annual Report, the Issuer shall provide in lieu thereof, when available, unaudited financial statements for the relevant fiscal year. (d) The Issuer shall promptly provide written notice of any change in its fiscal year to the MSRB and to each Repository. Section 4. Content of Annual Reports. (a) The Issuer s Annual Report shall contain or incorporate by reference the Annual Financial Information including audited financial statements with respect to the relevant fiscal year. (b) Any or all Annual Financial Information may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to any Repository or the Securities and Exchange 3

128 Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. (c) If any Annual Financial Information can no longer be generated because the operations to which such information relates have been materially changed or discontinued, a statement to that effect shall satisfy the obligations of the Issuer under this Section 4, provided however that the Issuer shall, to the greatest extent feasible, provide in lieu thereof similar information with respect to any substitute or replacement operations. Section 5. Reporting of Notice Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non payment-related defaults, if material; 3. Unscheduled draws on 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; 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of Holder, if material; 8. Bond calls (other than mandatory sinking fund redemptions), if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of any Bonds, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the Issuer (for the purposes of the event identified in subsection 5(a)(12), the 4

129 event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer); 13. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, 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; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and 15. Failure to provide annual financial information as required. (b) Upon the occurrence of a Notice Event, the Issuer shall file a notice of such occurrence with the MSRB via EMMA in a timely manner not in excess of ten (10) Business Days after the occurrence of the Notice Event. Section 6. Accounting Standards. The financial statements described in Section 4(a) above shall be audited in accordance with generally accepted accounting principles applicable in the preparation of financial statements of the Issuer as promulgated by the Financial Accounting Standards Board, the Governmental Accounting Standards Board, or such other body recognized as authoritative by the American Institute of Certified Public Accountants or any successor body, as applicable ( GAAP ), and shall also comply with applicable federal and state auditing statutes, regulations, standards and/or guidelines. The Issuer may from time-to-time modify its accounting principles to the extent necessary or desirable to comply with changes in either GAAP or applicable federal and state statutes, regulations, standards and/or guidelines. Any such modification of accounting standards or principles to conform to changes in either GAAP or applicable federal or state auditing statutes, regulations, standards or guidelines shall not constitute an amendment to this Disclosure Agreement within the meaning of Section 8 hereof, but such modifications shall be disclosed in the first Annual Report to be provided subsequent to such modifications. Section 7. Termination of Reporting Obligation. The Issuer s obligations under this Disclosure Agreement shall terminate upon (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or (b) the assumption by a successor Obligated Person of all of the 5

130 obligations of the prior Obligated Person both hereunder and under the Bonds. The prior Issuer shall provide timely written notice to each Repository of any termination of its obligations hereunder. Section 8. Amendments. (a) Notwithstanding any other provision of this Disclosure Agreement, the Issuer may modify or amend this Disclosure Agreement. The Issuer acknowledges and agrees that the current SEC interpretation of the Rule requires satisfaction of the following preconditions for any amendment: (i) the modification or amendment is being made in connection with a change of circumstances that arises from a change in legal requirements, change in law, change in the identity, nature or status of the Issuer, or change in the type of business conducted by the Issuer; (ii) this Disclosure Agreement, as amended, would have complied with the requirements of the Rule as of the date of issuance of the relevant Bonds, after taking into account any amendment or interpretations of the Rule, as well as any change in circumstances; and (iii) the modification or amendment does not materially adversely affect the interests of Holders, as determined either by a party unaffiliated with the Issuer (such as the Paying Agent or nationally recognized bond counsel) or by an approving vote of a majority of Holders. (b) The Issuer shall report any modification or amendment of this Disclosure Agreement as required by the Rule. To the extent required by the Rule, the Issuer shall include as a component of the first Annual Report to be provided subsequent to the relevant amendment, a copy of the amendment, together with a notice explaining in narrative form both (i) the reasons for the amendment and (ii) the impact of the change in the type of operating data or financial information being provided. To the extent required by the Rule, if the amendment relates to changes in accounting principles to be followed in preparing financial statements, the first Annual Report to be provided subsequent to the relevant amendment shall also include a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles and a qualitative (and to the extent reasonably feasible, quantitative) discussion of the differences in the accounting principles and the impact of the change in the accounting principles upon the presentation of the financial information. Written notice of any such change in accounting principles shall be provided in a timely fashion to each Repository. (c) Neither a supplement to this Disclosure Agreement to declare that it is applicable to Additional Bonds or a modification of accounting principles or standards pursuant to Section 6 shall be considered an amendment for purposes of this Section 8. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including disclaimers or any other information in any Annual Report or notice of occurrence of a Notice Event, in addition to that which is required by this Disclosure Agreement. If the Issuer 6

131 chooses to include any information in any Annual Report or notice of occurrence of a Notice Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Notice Event. Section 10. Submission of Information to the MSRB. The information required to be disclosed pursuant to this Disclosure Agreement shall be submitted to the MSRB through EMMA. Subject to future changes in submission rules and regulations, such submissions shall be provided to the MSRB, through EMMA, in portable document format ( PDF ) files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means. Such PDF files shall be word-searchable (allowing the user to search for specific terms used within the document through a search or find function available in a software package). Subject to future changes in submission rules and regulations, at the time that such information is submitted through EMMA, the Issuer shall also provide to the MSRB information necessary to accurately identify the category of information being provided and other identifying descriptions required by MSRB rules and regulations. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Paying Agent, any Participating Underwriter or any Holder may take such actions as may be necessary and appropriate, including seeking a writ of mandamus or specific performance by court order to cause the Issuer to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Bonds or any document relating to the Bonds, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer to comply with this Disclosure Agreement shall be an action to compel performance; provided however that nothing herein shall limit any Holder s rights under applicable federal securities law. Section 12. Severability. In case any section or provision of this Disclosure Agreement or any covenant, stipulation, obligation, agreement, or action, or any part thereof, made, assumed, entered into or taken under this Disclosure Agreement, or any application thereof, is for any reason held to be illegal or invalid or is at any time inoperable, such illegality, invalidity or inoperability shall not affect the remainder thereof or any other section or provision or the Disclosure Agreement, or any other covenant, stipulation, obligation, agreement, act or action, or part thereof, made, assumed, entered into or taken under this Disclosure Agreement, which shall at the time by construed and enforced as if such illegal or invalid or inoperable portion were not contained therein. Section 13. Entire Agreement. This Disclosure Agreement contains the entire agreement of the Issuer with respect to the subject matter hereof and supersedes all prior arrangements and understandings with respect thereto, provided however that this Disclosure Agreement shall be interpreted and construed with reference to and in pari materia with the Rule. 7

132 Section 14. Captions. The captions or headings herein shall be solely for convenience of reference and shall in no way define, limit or describe the scope or intent of any provisions or sections hereof. Section 15. Beneficiaries. This Disclosure Agreement is being entered into solely for the benefit of the Participating Underwriters and Holders from time-to-time of the Bonds, and nothing in this Disclosure Agreement expressed or implied is intended to or shall be construed to give to any other person or entity any legal or equitable right, remedy or claim under or in respect of this Disclosure Agreement or any covenants, conditions or provisions contained herein. Section 16. Governing Law. This Disclosure Agreement shall be deemed to be a contract made under the laws of the Commonwealth of Pennsylvania, and all provisions hereof shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania, without reference to the choice of law principles thereof. 8

133 IN WITNESS WHEREOF, the SCHOOL DISTRICT OF HAVERFORD TOWNSHIP has caused this Disclosure Agreement to be duly executed as of the day and year first above written. SCHOOL DISTRICT OF HAVERFORD TOWNSHIP By: President, Board of School Directors By: Secretary 9

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135 APPENDIX D FORM OF BOND COUNSEL OPINION

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137 [PROPOSED FORM OF OPINION OF BOND COUNSEL] SCHOOL DISTRICT OF HAVERFORD TOWNSHIP (Delaware County, Pennsylvania) $21,070,000 GENERAL OBLIGATION BONDS, SERIES OF 2017 OPINION, 2017 TO THE PURCHASERS OF THE ABOVE-CAPTIONED BONDS: We have acted as bond counsel to the School District of Haverford Township (the School District ) in connection with the issuance of its $21,070,000 General Obligation Bonds, Series of 2017, dated the date of delivery of the Bonds (the Bonds ). The Bonds are being issued to currently refund a portion of the School District s outstanding General Obligation Bonds, Series of 2012 and all of its outstanding General Obligation Note, Series of 2013 and General Obligation Note, Series of 2014 (collectively, the Refunded Obligations ) and pay the costs of issuing the Bonds. In such capacity, we have examined such law and such certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion. Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been duly authorized and executed by the School District, and are valid, binding and enforceable general obligations of the School District /08/2017 D E L AW AR E M AR Y L AN D M ASS AC H U S E T T S NE W J E RSE Y NE W Y O R K PE N NS Y L V AN I A WAS H I N GT O N, D C A DELAWARE LIMITED LIABILITY PARTNERSHIP