Cupertino Union School District

Transcription

1 Cupertino Union School District Continuing Disclosure Annual Report Fiscal Year Ended June 30, 2015 Cupertino Union School District Vista Drive Cupertino, California Disseminated by: Keygent LLC

2 Cupertino Union School District 2015 Continuing Disclosure Annual Report Table of Contents I. Introduction... 1 II. Audited Financial Statements... 1 III. Adopted Budget... 1 IV. Assessed Valuation... 1 V. Secured Tax Charges and Delinquencies... 2 VI. Largest Local Secured Taxpayers... 2 VII. Continuing Disclosure Requirements... 3 Appendix A: Audited Financial Statements for Fiscal Year Ended June 30, A-1 Appendix B: Adopted Budget for Fiscal Year Ended June 30, B-1

3 Cupertino Union School District 2015 Continuing Disclosure Annual Report I. Introduction The Cupertino Union School District ( District ) hereby provides its continuing disclosure annual report pursuant to the Continuing Disclosure Agreements in connection with the following financings for the fiscal year ended June 30, 2015 ( Annual Report ): Base CUSIP Financing General Obligation Bonds Election of 2001, Series C General Obligation Refunding Bonds General Obligation Bonds Election of 2001, Series D General Obligation Refunding Bonds Series A General Obligation Refunding Bonds Series B General Obligation Bonds Election of 2001 Series E Election of 2012 General Obligation Bonds, Series A General Obligation Refunding Bonds, Series A (Crossover) General Obligation Refunding Bonds, Series B Election of 2012 General Obligation Bonds, Series B II. Audited Financial Statements The District s audited financial statements for the fiscal year ended June 30, 2015 are attached hereto as Appendix A. III. Adopted Budget The District s adopted budget for the fiscal year ended June 30, 2016 is attached hereto as Appendix B. IV. Assessed Valuation Below is the assessed valuation of taxable property in the District for the and fiscal years. Fiscal Year Local Secured Utility Unsecured Total $ 31,702,805,197 $ - $ 1,064,315,679 $ 32,767,120, $ 34,277,293,346 $ - $ 1,313,692,179 $ 35,590,985,525 Source: California Municipal Statistics, Inc. 1

4 Cupertino Union School District 2015 Continuing Disclosure Annual Report V. Secured Tax Charges and Delinquencies Below are the secured tax charges and delinquencies in the District for the and fiscal years. Fiscal Year Secured Tax Charge (1) Amount Delinquent June 30 % Delinquent June $ 15,734, $ 85, % $ 17,123, $ 69, % (1) Bond debt service levy only. Source: California Municipal Statistics, Inc. VI. Largest Local Secured Taxpayers Below are the largest local secured taxpayers in the District for the and fiscal years, as measured by secured assessed valuation, the amount of their respective taxable value and their percentage of total secured assessed value. Property Owner Primary Land Use Assessed Valuation % of Total (1) 1. Apple Computer Inc. Office Building $ 881,136, % 2. Park Kiely REIT Inc. Apartments 285,107, Agilent Technologies Inc. Manufacturing 244,670, Campus Holdings Inc. Office Building 244,621, Heidelberg Cement Inc. Industrial 161,606, Mission West Properties LP II Office Building 127,777, SVF Cupertino City Center Corporation Office Building 122,955, Cupertino Property Devel I LLC Apartments 100,941, Cupertino City Center Buildings Office Building 91,342, Tishman Speyer Archstone Apartments 91,054, Vallco Shopping Mall LLC Shopping Center 90,161, Cupertino Gateway Partners LLC Office Building 85,184, Villa Serra Apts. Apartments 78,981, Sobrato Interests Industrial 72,343, BVK Perimeter Square Retail LLC Office Building 66,122, SFERS Real Est Corp UU Apartments 64,056, CH Cupertino Owner LLC Shopping Center 59,677, CPT Stevens Creek Central LLC Shopping Center 59,315, Cupertino Village LP Shopping Center 57,388, Main Street Cupertino Aggregator LLC Mixed Use Development 57,325, $ 3,041,770, % (1) Local Secured Assessed Valuation: $31,702,805,197. Source: California Municipal Statistics, Inc. 2

5 Cupertino Union School District 2015 Continuing Disclosure Annual Report Property Owner Primary Land Use Assessed Valuation % of Total (1) 1. Apple Computer Inc. Office Building $ 1,004,411, % 2. Campus Holding Inc. Office Building 465,662, Vallco Property Owner LLC Shopping Center 315,500, Park Kiely REIT Inc. Apartments 290,454, Agilent Technologies Inc. Manufacturing 210,000, Heidelberg Cement Inc. Industrial 194,375, BVK Perimeter Square Retail LLC Office Building 168,296, Main Street Cupertino Aggregator LLC Office Building 145,220, Mission West Properties LP II Office Building 130,330, SVF Cupertino City Center Corp. Office Building 125,412, Richard T. Peery, Trustee Office Building 113,483, Cupertino Property Development I & II LLC Apartments 112,284, Cupertino Gateway Partners LLC Office Building 96,879, Tishman Speyer Archstone Apartments 93,161, Cupertino City Center Buildings Office Building 91,508, I&G Direct Real Estate 21 & 27 LP Office Building 83,767, Villa Serra Apts. Apartments 80,623, Labrador Cascades LLC Apartments 69,469, Cupertino Village LP Shopping Center 67,450, SFERS Real Est. Corp. UU Apartments 65,336, $ 3,923,627, % (1) Local Secured Assessed Valuation: $34,277,293,346. Source: California Municipal Statistics, Inc. VII. Continuing Disclosure Requirements Below are the official statement cover pages of the long-term debt referenced in Section I of this Annual Report and excerpts of the Continuing Disclosure Agreements. ******** 3

6 NEW ISSUE-BOOK-ENTRY ONLY BANK QUALIFIED Insured Ratings: Moody s: Aaa Standard & Poor s: AAA Underlying Ratings: Moody s: Aa2 Standard & Poor s: AA In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ( Bond Counsel ), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See LEGAL MATTERS Tax Exemption herein. Dated: Date of Delivery $9,999, CUPERTINO UNION SCHOOL DISTRICT (SANTA CLARA COUNTY, CALIFORNIA) General Obligation Bonds Election of 2001, Series C Due: August 1, as shown on inside cover Issuance. The Cupertino Union School District General Obligation Bonds, Election of 2001, Series C (the Bonds ), consisting of $9,625,000 amount of Current Interest Bonds and $374, initial principal amount of Capital Appreciation Bonds, are being issued by the Board of Supervisors of the County of Santa Clara (the County ) on behalf of the Cupertino Union School District (the District ). The Bonds were authorized at a special election of the registered voters of the District held on June 5, 2001, which authorized the issuance of $80,000,000 principal amount of general obligation bonds for the purpose of financing the addition and modernization of school facilities. The Bonds are the third series of bonds to be issued under this authorization, after the issuance of the bonds, there will be $10,000, of unused authorization remaining. The District currently has $121,617,087 of general obligation bonds outstanding under this and other previous authorizations. Security. The Board of Supervisors of the County has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the Bonds. The District s previously issued general obligation bonds are similarly secured by tax levies. See SOURCES OF PAYMENT FOR THE BONDS. Redemption. The Bonds are subject to redemption prior to maturity as described herein. See THE BONDS Redemption. Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers will not receive physical certificates representing their interests in the Bonds. See THE BONDS Book-Entry Only System. Payments. Interest with respect to the Current Interest Bonds accrues from the date of delivery and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2008, by check mailed to the person in whose name the Bond is registered. The Capital Appreciation Bonds are dated the date of delivery and accrete interest from such date, compounded semiannually on February 1 and August 1 of each year, commencing February 1, 2008 and will be payable only upon maturity. Payments of principal and interest, or Accreted Value, on the Bonds will be paid by U.S. Bank National Association, as Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. Bond Insurance. The scheduled payment of principal of (or in the case of Capital Appreciation Bonds, the accreted value) and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Bonds by MBIA Insurance Corporation. See MUNICIPAL BOND INSURANCE herein. 22AUG MATURITY SCHEDULE (See inside cover) Cover Page. This cover page contains information for quick reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire Official Statement to obtain information essential in making an informed investment decision. The Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California. Certain legal matters also will be passed upon for the District by Jones Hall as Disclosure Counsel to the District. It is anticipated that the Bonds will be available for delivery to Cede & Co., as nominee of The Depository Trust Company, on or about September 12, 2007 in New York, New York. UBS Investment Bank This Official Statement is dated August 23,

7 audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the District is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the District shall send a notice to the Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in substantially the form attached as Exhibit A. (c) (i) (ii) The Dissemination Agent shall: determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and if the Dissemination Agent is other than the District, file a report with the District certifying that the Annual Report has been provided under this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) (b) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed under Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. To the extent not contained in the audited financial statements filed under the preceding clause (a), the Annual Report shall contain information showing: (i) (ii) (iii) (iv) (v) (vi) the average daily attendance in District schools by grade level for the preceding fiscal year and for the current budget year; pension plan contributions made by the District for the preceding fiscal year and for the current budget year; aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the end of the preceding fiscal year; description of amount of general fund revenues and expenditures which have been budgeted for the current fiscal year, together with audited actual budget figures for the preceding fiscal year; the District s total revenue limit for the preceding fiscal year and for the current budget year; property tax collection delinquencies for the District, for the most recently completed Fiscal Year, if the District is no longer a participant in the County of Santa Clara's Teeter Plan; and D-2 5

8 (vii) current fiscal year assessed valuation of taxable properties in the District, including assessed valuation of the top ten properties. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Section 5. Reporting of Significant Events. (a) Under the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults. (3) Unscheduled draws 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-exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the District determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the District shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Bond Resolution. Section 6. Termination of Reporting Obligation. The District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Alternative Method of Filing. In lieu of filing an Annual Report with each Repository under Section 3 or a notice of a Listed Event under Section 5, the District or the Dissemination Agent may make such filing through the internet filing system which is maintained at DisclosureUSA.org (or such other central filing system as is approved by the Securities and Exchange Commission), in which event such filing need not also be made by the District or the Dissemination Agent directly with any Repository. Section 8. Dissemination Agent. The District may (but is not required to), from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: D-3 6

9 NEW ISSUE BOOK-ENTRY ONLY BANK QUALIFIED RATINGS: Moody s: Aa2 Standard & Poor s: AA In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings and the Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "LEGAL MATTERS Tax Exemption" herein. $4,998, Cupertino Union School District (Santa Clara County, California) 2010 General Obligation Bonds Election of 2001, Series D Dated: Date of Delivery $13,490,000 Cupertino Union School District (Santa Clara County, California) 2010 General Obligation Refunding Bonds Due: August 1, as shown on inside cover Issuance. The Cupertino Union School District 2010 General Obligation Bonds, Election of 2001, Series D (the "Series D Bonds") and 2010 General Obligation Refunding Bonds (the Refunding Bonds and, with the Series D Bonds, the Bonds ), are being issued by the Cupertino Union School District (the "District"). The Series D Bonds were authorized at a special election of the registered voters of the District held on June 5, 2001, which authorized the issuance of $80,000,000 principal amount of general obligation bonds for the purpose of financing the addition and modernization of school facilities. The Series D Bonds are the fourth series of bonds to be issued under this authorization, after the issuance of the Series D Bonds, there will be $5,002, of unused authorization remaining. The District currently has $119,879,624 of general obligation bonds outstanding under this and other previous authorizations. The proceeds of the Refunding Bonds will be used to refund prior general obligation bonds of the District. Security. The Board of Supervisors of the County of Santa Clara (the County ) has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the Bonds. The District s previously issued general obligation bonds are similarly secured by tax levies. See SOURCES OF PAYMENT FOR THE BONDS. Redemption. The Bonds are subject to redemption prior to maturity as described herein. See THE BONDS Redemption. Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers will not receive physical certificates representing their interests in the Bonds. See THE BONDS Book-Entry Only System. Payments. Interest with respect to the Current Interest Bonds accrues from the date of delivery and is payable semiannually on February 1 and August 1 of each year, commencing August 1, 2010, by check mailed to the person in whose name the Bond is registered. The Capital Appreciation Bonds are dated the date of delivery and accrete interest from such date, compounded semiannually on February 1 and August 1 of each year, commencing August 1, 2010 and will be payable only upon maturity. Payments of principal and interest, or Accreted Value, on the Bonds will be paid by U.S. Bank National Association, as Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. MATURITY SCHEDULE (See inside cover) Cover Page. This cover page contains information for quick reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire Official Statement to obtain information essential in making an informed investment decision. The Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California. Certain legal matters also will be passed upon for the District by Jones Hall as Disclosure Counsel to the District and by Nossaman, Gunther, Knox & Elliott, Irvine, California, as counsel to the Underwriter. It is anticipated that the Bonds will be available for delivery to Cede & Co., as nominee of The Depository Trust Company, on or about April 14, 2010 in New York, New York. This Official Statement is dated March 30,

10 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this Disclosure Certificate ) is executed and delivered by the Cupertino Union School District (the District ) in connection with the issuance of $4,998, aggregate principal amount of Cupertino Union School District (Santa Clara County, California) 2010 General Obligation Bonds, Election of 2001, Series D Bonds and $13,490,000 aggregate principal amount of Cupertino Union School District (Santa Clara County, California) 2010 Refunding General Obligation Bonds (collectively, the Bonds ). The Bonds are being issued pursuant to Resolutions adopted by the Board of Education of the District on March 9, 2010, respectively (the Bond Resolutions ). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Annual Report Date means the date that is nine months after the end of the District's fiscal year (currently March 31 based on the District s fiscal year end of June 30). Dissemination Agent means any Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. As of the date of this Disclosure Certificate, the District has not appointed a Dissemination Agent. Listed Events means any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. Official Statement means the final official statement executed by the District in connection with the issuance of the Bonds. Participating Underwriter means Piper Jaffray & Co., the original underwriter of the Bonds, required to comply with the Rule in connection with offering of the Bonds. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. D-1 E-1 8

11 Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2011 with the report for the fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Participating Underwriter. (c) (i) (ii) With respect to each Annual Report, the Dissemination Agent shall: determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and if the Dissemination Agent is other than the District, file a report with the District, certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following documents and information: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, the Annual Report shall contain information showing: (i) the average daily attendance in District schools on an aggregate basis for the preceding fiscal year; D-2 E-2 9

12 (ii) (iii) (iv) (v) (vi) aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the end of the preceding fiscal year; description of amount of general fund revenues and expenditures which have been budgeted for the current fiscal year, together with audited actual budget figures for the preceding fiscal year; the District s total revenue limit for the preceding fiscal year; prior fiscal year total secured property tax levy and collections, showing current collections as a percent of the total levy, if the District is not a participant in the Teeter Plan; and current fiscal year assessed valuation of taxable properties in the District, and top ten taxpayers for the current fiscal year. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the District shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on the MSRB s Internet web site or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Principal and interest payment delinquencies. (2) Non payment related defaults. (3) Unscheduled draws 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 exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall as soon as possible determine if such event would be material under applicable Federal securities law. D-3 E-3 10

13 NEW ISSUE - BOOK-ENTRY ONLY Ratings: Moody s: Aa1 Standard & Poor s: AA See RATINGS herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. See "LEGAL MATTERS Tax Exemption" herein. $21,090,000 Cupertino Union School Distric (Santa Clara County, California) 2011 General Obligation Refunding Bonds Series A $14,640,000 Cupertino Union School Distric (Santa Clara County, California) 2011 General Obligation Refunding Bonds Series B $4,995, Cupertino Union School District (Santa Clara County, California) 2011 General Obligation Bonds Election of 2001 Series E Dated: Date of Delivery Due: August 1, as shown on inside cover Issuance. The Cupertino Union School District 2011 General Obligation Refunding Bonds, Series A (the "Series A Bonds") and the 2011 General Obligation Refunding Bonds, Series B (the Series B Bonds and, with the Series A Bonds, the Refunding Bonds ), are being issued by the Cupertino Union School District (the "District") pursuant to certain provisions of the California Government Code and resolutions of the Board of Trustees of the District adopted on October 26, 2010 (the Refunding Bond Resolutions ) for the purpose of refunding certain outstanding issues of general obligation bonds of the District The Cupertino Union School District, 2011 General Obligation Bonds, Election of 2011, Series E (the "Series E Bonds," and together with the Refunding Bonds, the Bonds ) are being issued pursuant to certain provisions of the California Government Code and a resolution of the Board of Trustees of the District adopted on January 24, 2011 (the New Money Resolution ) for the purpose of financing improvements to educational facilities as authorized by District voters at an election held on June 5, See THE BONDS The Financing Plan. Security. The Board of Supervisors of the County of Santa Clara (the County ) has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the Bonds. The District has other issues of general obligation bonds outstanding which are similarly secured by tax levies. See SOURCES OF PAYMENT FOR THE BONDS. Redemption. The Bonds are subject to redemption prior to maturity as described herein. See THE BONDS Redemption. Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers will not receive physical certificates representing their interests in the Bonds. See THE BONDS Book-Entry Only System. Payments. The Bonds will be issued as Current Interest Bonds and as Capital Appreciation Bonds, as identified on the inside front cover. Interest on the Current Interest Bonds accrues from the date of delivery and is payable semiannually on February 1 and August 1 of each year, commencing August 1, 2011, and is payable by check mailed to the person in whose name the Bond is registered. Interest on the Capital Appreciation Bonds accretes from the date of delivery, and compounds semiannually on each February 1 and August 1, commencing August 1, 2011, and is payable upon maturity. Payments of principal of and interest on (or accreted value of) the Bonds will be paid by U.S. Bank National Association, as Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. See THE BONDS Description of the Bonds. Maturity Schedule (See inside cover) Cover Page. This cover page contains information for quick reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire Official Statement to obtain information essential in making an informed investment decision. The Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California. Certain legal matters also will be passed upon for the District by Jones Hall as Disclosure Counsel to the District and by Nossaman LLP, Irvine, California, as counsel to the Underwriter. It is anticipated that the Series A Bonds and the Series E Bonds will be available for delivery to Cede & Co., as nominee of The Depository Trust Company, on or about March 24, 2011, in New York, New York. It is anticipated that the Series B Bonds will be available for delivery to Cede & Co., as nominee of The Depository Trust Company, on or about May 3, 2011, in New York, New York. This Official Statement is dated February 24,

14 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this Disclosure Certificate ) is executed and delivered by the Cupertino Union School District (the District ) in connection with the issuance of $21,090,000 aggregate principal amount of Cupertino Union School District (Santa Clara County, California) 2011 General Obligation Refunding Bonds, Series A, $14,640,000 aggregate principal amount of Cupertino Union School District (Santa Clara County, California) 2011 General Obligation Refunding Bonds, Series B and $4,995, aggregate principal amount of Cupertino Union School District (Santa Clara County, California) General Obligation Bonds, 2001 Election, Series E (collectively, the Bonds ). The Bonds are being issued pursuant to Resolutions adopted by the Board of Education of the District on October 26, 2010 and January 24, 2011, respectively (the Bond Resolutions ). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Annual Report Date means the date that is nine months after the end of the District's fiscal year (currently March 31 based on the District s fiscal year end of June 30). Dissemination Agent means any Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. As of the date of this Disclosure Certificate, the District has not appointed a Dissemination Agent. Listed Events means any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. Official Statement means the final official statement executed by the District in connection with the issuance of the Bonds. Participating Underwriter means Piper Jaffray & Co., the original underwriter of the Bonds, required to comply with the Rule in connection with offering of the Bonds. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. D-1 12

15 Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2012 with the report for the fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Participating Underwriter. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) (ii) determine each year prior to the Annual Report Date the thenapplicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and if the Dissemination Agent is other than the District, file a report with the District, certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following documents and information: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, the Annual Report shall contain information showing: (i) the average daily attendance in District schools on an aggregate basis for the preceding fiscal year; D-2 13

16 (ii) (iii) (iv) (v) (vi) aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the end of the preceding fiscal year; description of amount of general fund revenues and expenditures which have been budgeted for the current fiscal year, together with audited actual budget figures for the preceding fiscal year; the District s total revenue limit for the preceding fiscal year; prior fiscal year total secured property tax levy and collections, showing current collections as a percent of the total levy, if the District is not a participant in the Teeter Plan; and current fiscal year assessed valuation of taxable properties in the District, and top ten taxpayers for the current fiscal year. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the District shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on the MSRB s Internet web site or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) The District shall give or cause to be given, notice of the occurrence of any of the following Listed 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-exempt status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. D-3 14

17 NEW ISSUE FULL BOOK-ENTRY RATINGS: Ratings: Moody s: Aa1 ; Standard & Poor s: AA (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. (See TAX MATTERS herein with respect to tax consequences relating to the Bonds.) Dated: Date of Delivery $50,000,000 CUPERTINO UNION SCHOOL DISTRICT (Santa Clara County, California) Election of 2012 General Obligation Bonds, Series A Due: August 1, as shown on inside cover This cover page contains certain information for general reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Cupertino Union School District (Santa Clara County, California) Election of 2012 General Obligation, Series A (the Bonds ) were authorized at an election of the registered voters of the Cupertino Union School District (the District ) held on June 5, 2012, at which the requisite 55% or more of the persons voting on a proposition submitted thereto voted to authorize the issuance and sale of $220,000,000 aggregate principal amount of general obligation bonds of the District. The Bonds are being issued to finance the repair, upgrading, acquisition, construction and equipping of certain District property and facilities, and to pay the costs of issuing the Bonds. The Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of Santa Clara County is empowered and obligated to annually levy ad valorem property taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Bonds when due. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers of the Bonds ( Beneficial Owners ) will not receive certificates representing their interest in the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds will be issued as current interest bonds. Interest on the Bonds accrues from the date of delivery of the Bonds (the Date of Delivery ), and is payable semiannually on February 1 and August 1 of each year, commencing February 1, Payments of principal of principal and interest on the Bonds will be made by U.S. Bank National Association, as the designated Paying Agent, Bond Registrar and Transfer Agent, to DTC for subsequent disbursement to DTC Participants (defined herein) who will remit such payments to the Beneficial Owners of the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds are not subject to optional redemption prior to their stated maturity dates. Maturity Schedule* (See inside front cover) The Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel to the District. Certain matters will be passed on for the Underwriter by Nossaman, LLP, Irvine, California. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of Cede & Co., as nominee of The Depository Trust Company, in New York, New York, on or about October 11, Dated: September 20,

18 State Repository shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the District s fiscal year (presently ending June 30), commencing with the report for the Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. 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 Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) Not later than thirty (30) days (nor more than sixty (60) days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repository to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a), the District shall send a notice to the Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repository of Failure to File an Annual Report. (c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder, stating the date it was provided and listing all the Repository to which it was provided. SECTION 4. Content and Form of Annual Reports. (a) The District s Annual Report shall contain or include by reference the following: 1. The audited financial statements of the District for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Material financial information and operating data with respect to the District of the type included in the Official Statement in the following categories (to the extent not included in the District s audited financial statements): (a) (b) State funding and property tax revenues received by the District for the last completed fiscal year; average daily attendance of the District for the last completed fiscal year; 16

19 (c) (d) outstanding District indebtedness; summary financial information on revenues, expenditures and fund balances for the District s general fund reflecting adopted budget for the current fiscal year; (e) assessed valuation of taxable property within the District, for the current completed fiscal year; (f) secured ad valorem tax charges and delinquencies within the District, to the extent that the County is no longer on the Teeter Plan. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference. (b) The Annual Report shall be filed in an electronic format, and accompanied by identifying information, prescribed by the Municipal Securities Rulemaking Board SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5(a), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of 10 business days after the occurrence of the event: 1. principal and interest payment delinquencies. 2. tender offers. 3. defeasances. 4. rating changes. 5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, or Notices of Proposed Issue (IRS Form 5701-TEB). 6. unscheduled draws on the debt service reserves reflecting financial difficulties. 7. unscheduled draws on credit enhancement reflecting financial difficulties. 8. substitution of the credit or liquidity providers or their failure to perform. 9. bankruptcy, insolvency, receivership or similar event (within the meaning of the Rule) of the District. For the purposes of the event identified in this Section 5(a)(9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District 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 District, or if such jurisdiction has been assumed by leaving the existing governmental 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 17

20 NEW ISSUE FULL BOOK-ENTRY Ratings: Moody s: Aa1 ; S&P: AA (See MISCELLANEOUS Ratings ) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. (See TAX MATTERS herein with respect to tax consequences relating to the Bonds.) $35,485,000 CUPERTINO UNION SCHOOL DISTRICT (Santa Clara County, California) 2013 General Obligation Refunding Bonds, Series A (2013 Crossover) Dated: Date of Delivery Due: August 1, as shown below This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire official statement to obtain information essential to the making of an informed investment decision. Capitalized terms used in this cover page and not otherwise defined shall have the meanings set forth herein. The Cupertino Union School District (Santa Clara County, California) 2013 General Obligation Refunding Bonds, Series A (2013 Crossover) (the Bonds ), in the aggregate principal amount of $35,485,000 are being issued by the Cupertino Union School District (the District ) (i) to currently refund on a crossover basis the outstanding Cupertino Union School District (Santa Clara County, California) General Obligation Bonds, Election of 2001, Series B and (ii) to pay the costs associated with the issuance of the Bonds. Prior to August 1, 2013 (the Crossover Date ), the Bonds shall be secured by and payable solely from proceeds of the Bonds deposited into an escrow fund established therefor. From and after the Crossover Date, the Bonds shall, without any further action on the part of the District or the Owners or Beneficial Owners of the Bonds, constitute general obligations of the District payable solely from ad valorem property taxes. From and after such Crossover Date, the Board of Supervisors of Santa Clara County shall be empowered and obligated to annually levy ad valorem property taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Bonds when due.. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (collectively referred to herein as DTC ). Purchasers of the Bonds (the Beneficial Owners ) will not receive physical certificates representing their interests in the Bonds. The Bonds will be dated as of their date of delivery (the Date of Delivery ). Interest on the Bonds accrues from the Date of Delivery and is payable semiannually on February 1 and August 1 of each year (each, a Bond Payment Date ), commencing August 1, The Bonds will be issued as fully registered Bonds in denominations of $5,000 principal amount or any integral multiple thereof. Payments of principal of and interest on the Bonds will be made by U.S. Bank National Association, as the designated paying agent, bond registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement to DTC Participants (defined herein) who will remit such payments to the Beneficial Owners of the Bonds. The Bonds are subject to optional redemption prior to their stated maturity dates as further described herein. Maturity (August 1) Principal Amount MATURITY SCHEDULE Base CUSIP : $35,485,000 Serial Bonds Interest Rate Yield CUSIP 2022 $2,115, % 1.930% A ,450, A ,420, (1) A ,940, (1) A ,515, (1) A ,045, (1) A73 (1) Yield to call at par on August 1, The Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel to the District. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of Cede & Co., as nominee of The Depository Trust Company, in New York, New York, on or about June 13, Dated: May 22, 2013 CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the Underwriter nor the District is responsible for the selection or correctness of the CUSIP numbers set forth herein. 18

21 Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. 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 Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) Not later than 30 days (nor more than 60 days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than 15 Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repository to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a), the District shall send a notice to the Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repository of Failure to File an Annual Report. (c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder, stating the date it was provided. SECTION 4. Content and Form of Annual Reports. (a) The District s Annual Report shall contain or include by reference the following: 1. The audited financial statements of the District for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Material financial information and operating data with respect to the District of the type included in the Official Statement in the following categories (to the extent not included in the District s audited financial statements): (A) (B) (C) (D) State funding received by the District for the last completed fiscal year; Average daily attendance of the District for the last completed fiscal year; Outstanding District indebtedness; Summary financial information on revenues, expenditures and fund balances for the District s general fund reflecting adopted budget for the current fiscal year. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by 19

22 NEW ISSUE FULL BOOK-ENTRY Ratings: Moody s: Aa1 ; S&P: AA (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See TAX MATTERS herein with respect to tax consequences relating to the Bonds. Dated: Date of Delivery $22,320,000 CUPERTINO UNION SCHOOL DISTRICT (Santa Clara County, California) 2013 General Obligation Refunding Bonds, Series B Due: August 1, as shown on inside cover This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Cupertino Union School District (Santa Clara County, California) 2013 General Obligation Refunding Bonds, Series B in the aggregate principal amount of $22,320,000 (the Bonds ), are being issued by the Cupertino Union School District (the District ) to (i) advance refund a portion of the District s General Obligation Bonds Election of 2001, Series C (the Series 2001C Bonds ), (ii) currently refund a portion of the District s 2005 General Obligation Refunding Bonds (the 2005 Refunding Bonds ), (iii) pay the costs associated with the issuance of the Bonds s. The Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of Santa Clara County is empowered and obligated to annually levy ad valorem property taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Bonds when due. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (collectively referred to herein as DTC ). Purchasers of the Bonds (the Beneficial Owners ) will not receive certificates representing their interest in the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds will be dated as of their date of delivery. Interest on the Bonds accrues from the date of delivery (the Date of Delivery ) and is payable semiannually on February 1 and August 1 of each year (each, a Bond Payment Date ), commencing August 1, The Bonds will be issued as fully registered Bonds in denominations of $5,000 principal amount or any integral multiple thereof. Payments of principal of and interest on the Bonds will be made by U.S. Bank National Association, as the designated Paying Agent, Bond Registrar and Transfer Agent (the Paying Agent ), to DTC for subsequent disbursement to DTC Participants (defined herein) who will remit such payments to the Beneficial Owners of the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds are subject to optional redemption prior to their stated maturity dates as further described herein. Maturity Schedule (see inside front cover) The Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel to the District. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of Cede & Co., as nominee of The Depository Trust Company, in New York, New York, on or about June 13, Dated: May 22,

23 SECTION 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than eight months after the end of the District s fiscal year (presently ending June 30), commencing with the report for the Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. 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 Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) Not later than 30 days (nor more than 60 days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than 15 Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repository to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a), the District shall send a notice to the Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repository of Failure to File an Annual Report. (c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder, stating the date it was provided. SECTION 4. Content and Form of Annual Reports. (a) The District s Annual Report shall contain or include by reference the following: 1. The audited financial statements of the District for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Material financial information and operating data with respect to the District of the type included in the Official Statement in the following categories (to the extent not included in the District s audited financial statements): (A) (B) (C) (D) State funding received by the District for the last completed fiscal year; Average daily attendance of the District for the last completed fiscal year; Outstanding District indebtedness; Summary financial information on revenues, expenditures and fund balances for the District s general fund reflecting adopted budget for the current fiscal year. 21

24 NEW ISSUE FULL BOOK-ENTRY RATINGS: Ratings: Moody s: Aa1 ; Standard & Poor s: AA+ (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. (See TAX MATTERS herein with respect to tax consequences relating to the Bonds.) Dated: Date of Delivery $99,995,000 CUPERTINO UNION SCHOOL DISTRICT (Santa Clara County, California) Election of 2012 General Obligation Bonds, Series B Due: August 1, as shown on inside cover This cover page contains certain information for general reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Cupertino Union School District (Santa Clara County, California) Election of 2012 General Obligation, Series B (the Bonds ) were authorized at an election of the registered voters of the Cupertino Union School District (the District ) held on June 5, 2012, at which the requisite 55% or more of the persons voting on a proposition submitted thereto voted to authorize the issuance and sale of $220,000,000 aggregate principal amount of general obligation bonds of the District. The Bonds are being issued to finance the repair, upgrading, acquisition, construction and equipping of certain District property and facilities, and to pay the costs of issuing the Bonds. The Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of Santa Clara County is empowered and obligated to annually levy ad valorem property taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Bonds when due. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers of the Bonds ( Beneficial Owners ) will not receive certificates representing their interest in the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds will be issued as current interest bonds. Interest on the Bonds accrues from the date of delivery of the Bonds (the Date of Delivery ), and is payable semiannually on February 1 and August 1 of each year, commencing August 1, Payments of principal of principal and interest on the Bonds will be made by U.S. Bank National Association, as the designated Paying Agent, Bond Registrar and Transfer Agent, to DTC for subsequent disbursement to DTC Participants (defined herein) who will remit such payments to the Beneficial Owners of the Bonds. See THE BONDS Book-Entry Only System herein. The Bonds are subject to optional redemption prior to their stated maturity dates as described herein. MATURITY SCHEDULE (See inside front cover) The Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel to the District. Certain matters will be passed on for the Underwriter by Katten Muchin Rosenman LLP, New York, New York. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of Cede & Co., as nominee of The Depository Trust Company, in New York, New York, on or about April 10, BofA Merrill Lynch Dated: March 25,

25 State Repository shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the District s fiscal year (presently ending June 30), commencing with the report for the Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. 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 Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) Not later than thirty (30) days (nor more than sixty (60) days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repository to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a), the District shall send a notice to the Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repository of Failure to File an Annual Report. (c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder, stating the date it was provided and listing all the Repository to which it was provided. SECTION 4. Content and Form of Annual Reports. (a) The District s Annual Report shall contain or include by reference the following: 1. The audited financial statements of the District for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Material financial information and operating data with respect to the District of the type included in the Official Statement in the following categories (to the extent not included in the District s audited financial statements): (a) (b) State funding and property tax revenues received by the District for the last completed fiscal year; average daily attendance of the District for the last completed fiscal year; 23

26 (c) (d) outstanding District indebtedness; summary financial information on revenues, expenditures and fund balances for the District s general fund reflecting adopted budget for the current fiscal year; (e) assessed valuation of taxable property within the District, for the current completed fiscal year; (f) secured ad valorem tax charges and delinquencies within the District, to the extent that the County is no longer on the Teeter Plan. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference. (b) The Annual Report shall be filed in an electronic format, and accompanied by identifying information, prescribed by the Municipal Securities Rulemaking Board SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5(a), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of 10 business days after the occurrence of the event: 1. principal and interest payment delinquencies. 2. tender offers. 3. defeasances. 4. rating changes. 5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, or Notices of Proposed Issue (IRS Form 5701-TEB). 6. unscheduled draws on the debt service reserves reflecting financial difficulties. 7. unscheduled draws on credit enhancement reflecting financial difficulties. 8. substitution of the credit or liquidity providers or their failure to perform. 9. bankruptcy, insolvency, receivership or similar event (within the meaning of the Rule) of the District. For the purposes of the event identified in this Section 5(a)(9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District 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 District, or if such jurisdiction has been assumed by leaving the existing governmental 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 24

27 Cupertino Union School District 2015 Continuing Disclosure Annual Report This Annual Report is provided solely pursuant to the District s Continuing Disclosure Agreements in connection with the above referenced financings. The filing of this Annual Report does not constitute or imply any representation (i) that all of the information provided is material to investors, (ii) regarding any other financial, operating or other information about the District or the above referenced financings, or (iii) that no changes, circumstances or events have occurred since the end of the fiscal year to which this Annual Report relates (other than as contained in this Annual Report), or any other date specified with respect to any of the information contained in this Annual Report, or that no other information exists, which may have a bearing on the security for the above referenced financings or an investor s decision to buy, sell, or hold the above referenced financings. No statement in this Annual Report should be construed as a prediction or representation about future financial performance of the District. Certain demographic information set forth in this Annual Report, which was obtained from California Municipal Statistics, Inc., is believed by the District to be reliable, but has not been independently verified by the District and is not guaranteed as to accuracy by the District. There can be no assurance as to the accuracy of such information and inquiries concerning the scope and methodology of procedures carried out to complete such information should be directed to California Municipal Statistics, Inc. Dated: February 22, 2016 CUPERTINO UNION SCHOOL DISTRICT /s/ Chris Jew Chris Jew Chief Business Officer 25

28 Cupertino Union School District 2015 Continuing Disclosure Annual Report Appendix A: Audited Financial Statements for Fiscal Year Ended June 30, 2015 A-1

29 CUPERTINO UNION SCHOOL DISTRICT ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015

30 CUPERTINO UNION SCHOOL DISTRICT TABLE OF CONTENTS FOR THE YEAR ENDED JUNE 30, 2015 FINANCIAL SECTION Independent Auditor s Report 2 Management's Discussion and Analysis 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 14 Statement of Activities 15 Fund Financial Statements Governmental Funds - Balance Sheet 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 18 Governmental Funds - Statement of Revenues, Expenditures, and Changes in Fund Balances 19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 21 Proprietary Fund - Statement of Net Position 23 Proprietary Fund - Statement of Revenues, Expenses, and Changes in Fund Net Position 24 Proprietary Fund - Statement of Cash Flows 25 Fiduciary Fund - Statement of Net Position 26 Notes to Financial Statements 27 REQUIRED SUPPLEMENTARY INFORMATION General Fund - Budgetary Comparison Schedule 59 Schedule of the District's Proportionate Share of the Net Pension Liability 60 Schedule of District Pension Contributions 61 SUPPLEMENTARY INFORMATION Schedule of Expenditures of Federal Awards 63 Local Education Agency Organization Structure 64 Schedule of Average Daily Attendance 65 Schedule of Instructional Time 66 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements 67 Schedule of Financial Trends and Analysis 68 Combining Statements - Non-Major Governmental Funds Combining Balance Sheet 69 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 70 Note to Supplementary Information 71 INDEPENDENT AUDITOR S REPORTS 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 74 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the OMB Circular A Report on State Compliance 78 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Summary of Auditor s Results 81 Financial Statement Findings 82 Federal Awards Findings and Questioned Costs 83 State Awards Findings and Questioned Costs 84 Summary Schedule of Prior Audit Findings 85

31 FINANCIAL SECTION 1

32 This page left blank intentionally.

33 INDEPENDENT AUDITOR'S REPORT Board of Trustees Cupertino Union School District Cupertino, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Cupertino Union School District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District'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. Auditor's 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; and Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting issued by the California Education Audit Appeals Panel as regulations. 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 auditor's 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 District'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 District'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. 2

34 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Cupertino Union School District, as of June 30, 2015, 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 - Change in Accounting Principles As discussed in Note 1 to the financial statements, in 2015, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions. 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 required supplementary information, such as management's discussion and analysis, budgetary comparison schedule, schedule of the District s proportionate share of the net pension liability, and schedule of the District pension contribution, 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 not 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 Cupertino Union School District's basic financial statements. The Schedule of Expenditures of Federal Awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the other supplementary information as listed on the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards and other supplementary information as listed in the table of contents 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 supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 3

35 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 30, 2015, on our consideration of the Cupertino Union School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 Cupertino Union School District's internal control over financial reporting and compliance. Palo Alto, California November 30,

36 CUPERTINO UNION SCHOOL DISTRICT Management s Discussion and Analysis DISTRICT PROFILE THE MISSION OF THE CUPERTINO UNION SCHOOL DISTRICT IS TO PROVIDE A CHILD-CENTERED ENVIRONMENT THAT CULTIVATES CHARACTER, FOSTERS ACADEMIC EXCELLENCE, AND EMBRACES DIVERSITY. DISTRICT FAMILIES, COMMUNITY, AND STAFF JOIN AS PARTNERS TO DEVELOP CREATIVE, EXEMPLARY LEARNERS WITH THE SKILLS AND ENTHUSIASM TO CONTRIBUTE TO A CONSTANTLY CHANGING GLOBAL SOCIETY. The Cupertino Union School District (CUSD) was established in The District operates twenty elementary schools, and five middle schools. The District serves over 19,000 K-8 students in a 26-square mile area that includes the City of Cupertino and portions of five other cities in California s Silicon Valley. The student population is richly diverse. FINANCIAL HIGHLIGHTS Local Control Funding Formula School District The District has been a revenue limit school district since its inception. A revenue limit school district is a district whose local property tax revenues are less than the state calculated revenue limit amount and the state therefore back-fills the difference. Starting , the State changed its funding calculation to Local Control Funding Formula (LCFF). The LCFF combined principal apportionment and previous flexed categorical program into one funding. In , the District has not met its target entitlement. The composition of the District s sources of General fund revenue can be illustrated in Chart - 1: Other State 6.18% Chart - 1 Cupertino Union School District General Fund Revenue Sources FY Other Local 14.20% Other Sources 1.66% Federal 2.58% State Aid 22.32% Property Tax 53.05% 5

37 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, Results of Operations As of June 30, 2015, the District s general fund, excluding the on-behalf payment made by the State, recorded total revenue of $166,241,265 and total expenditures of $173,441,149, resulting in an ending fund balance of $21,111,791. Of this amount, $5,200,171 is the required three percent statutory reserves and $6,000,000 is the additional reserves for future downturn, with the remaining balance of $1,854,419 in available one-time reserves. Other components of the ending fund balance include $374,945 reserved for working capital, $2,670,884 restricted for categorical programs and $5,011,372 for various school and program carryovers. The total general fund revenues of $166,241,265 are from the following sources: 75.38% local control funding formula (53.05% property tax and 22.33% state aid), 2.58% federal programs, 6.18% state programs, 14.2% local revenue (parcel tax, interest, rental and fees), 1.66% other sources of special education revenue passed-through from SELPA II and the inter-fund transfer-in. Local Control Funding Formula In fiscal year the District s Local Control Funding Formula funding was $123,080,617, increased $10,121,713 from prior year's $112,958,904. The LCFF funding model provides the following base grants for grade levels: $7,740 for K-3, $7,116 for 4-6, and $7,328 for 7-8. LCFF also provides the 20% supplemental grant and 50% concentration grant if qualified. The supplemental and concentration grant increases are calculated based on the percentage of total enrollment accounted for by English learners, free and reduced-price meal program eligible students and foster youth. The LCFF funding includes the following: COLA %, ADA (average daily attendance) - 18,908.02, and gap funding rate %. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts - management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District: The first two statements are government-wide financial statements that provide both short-term and longterm information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District s operations in more detail than the government-wide statements. The governmental funds statements tell how basic services like regular and special education were financed in the short term as well as what remains for future spending. Proprietary fund statements offer financial information about the activities the District operates on a cost reimbursement basis, such as the self-insurance fund. Fiduciary fund statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others to whom the resources belong. Fiduciary fund activity is excluded from the government-wide financial statements. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the District s general fund budget, both the adopted and final version, with year-end actual results. 6

38 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 Government-wide Financial Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the District s assets and liabilities. All of the current year s revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid. The two government-wide statements report the District s net position and how they have changed. Net position - the difference between the District s assets and liabilities - is one way to measure the District s financial health or position. Over time, increases or decreases in the District s net position are an indicator of whether its financial position is improving or deteriorating, respectively. To assess the overall health of the District, one needs to consider additional factors such as the economy of the State, and hence, the State s budget, the local economy, which could impact student enrollment and the condition of school buildings and other facilities. Fund Financial Statements The fund financial statements provide more detailed information about the District s most significant funds not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs: Some funds are required by State law and by bond covenants. The District establishes other funds to control and manage money for particular purposes (like repaying its long-term debt) or to show that it is properly using certain revenues (like federal grants). The District has three kinds of funds: Governmental funds - Most of the District s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps one determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional long-term focus of the Government-wide statements, we provide reconciliations between the governmental funds statements and the government-wide statements that explain the relationships (or differences) between them. Proprietary funds - Services for which the District charges a fee are generally reported in proprietary funds. Proprietary funds are reported in the same way as the government-wide statements, i.e., using full accrual accounting. Internal service funds (one kind of proprietary fund) are used to report activities that provide supplies and services for the District s other programs and activities. The District currently has one internal service fund - the self-insurance fund. Fiduciary funds - The District is the trust, or fiduciary, for assets that belong to others, such as the private purpose trust and student funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes, and by those to whom the assets belong. All of the District s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the government-wide financial statements because the District cannot use these assets to finance its operations. 7

39 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net Position As of June 30, 2015, the District s combined net position decreased by 10.1 percent to negative $139.4 million. (See Table A - 1.) Table A - 1 Cupertino Union School District Net Position (in millions of dollars) Governmental Activities Percent Changes Current and other assets $ $ % Capital assets % Total Assets % Deferred charge on refunding % Current year pension contribution % Total Deferred Outflows of Resources % Current liabilities % Long-term debt % Total Liabilities % Difference between actual and expected rate of investment return % Total Deferred Inflows of Resources % Net investment in capital assets (22.8) (25.1) 10.1% Restricted % Unrestricted (133.1) (139.8) 5.0% Total Net Position $ (126.6) $ (140.1) 10.7% 1 Amount has been adjusted to comply with GASB 68 implementation. See Note 16 for more detail. The changes in the District s financial position include the following: the decrease of $2.3 million in net investment in capital assets, the decrease of $4.5 million in restricted net position, and the decrease of $6.7 million in the unrestricted net position. In , the District s total assets decreased by $33.5 million, or 9.6%, which resulted from the decrease of $68.1 million, or 36.1% in current assets and an increase of $34.6 million, or 21.6% in capital assets. The total liabilities decreased by $51.7 million, or 10.7%, which resulted from 8

40 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 a decrease of $4.3 million in current liabilities, and a decrease of $47.4 million in long-term debt. The decrease in current liabilities was mostly from the decrease in accounts payable at the end of the year and the current portion of the long-term obligation. The decrease in long-term debt was due to the decrease in pension liability, see Note 9 for more details. Changes in Net Position The District s total revenues increased by 6.2 percent, or $11.2 million to $191.3 million. (See Table A - 2.) The increase mostly resulted from the increase of $5.6 million in property taxes and $7.2 million in federal and state aid that is not restricted to specific purposes. Table A - 2 Cupertino Union School District Changes in Net Position (in millions of dollars) Governmental Activities Percent Changes Revenues Program revenues Charges for services $ 3.5 $ % Operating grants and contributions % General revenues Property taxes % Federal and State aid % Interest and investment earnings % Miscellaneous % Total revenues % Expenses Instruction % Instruction related activities % Pupil services % General administration % Plant services % Ancillary and community services % Interest on long-term debt % Total expenses % Increase (decrease) in net assets $ (1.6) $ (12.5) 681.3% 1 Amount has been adjusted to comply with GASB 68 implementation. See Note 16 for more detail. 9

41 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 The total cost of all programs and services increased $22.1 million to $203.8 million. The District s expenses are predominantly related to instruction and instruction related activities (80.33 percent). (See Chart - 3) During , instruction expenses rose by $12.2 million, or 10.2%, plant services increased by $0.5 million, or 2.8% and the interest on long-term debt also increased by $2.2 million, or 30.6%. Total expenses surpassed revenues, decreasing net position by $12.5 million in Governmental Activities Charts 2 and 3 below illustrate the composition of the District s general fund expenditures, both by object and by function codes. As is common with other school districts, the majority of expenditures are for personnel salaries and the related benefits (approximately 85.8%). Books and Supplies 6.40% Employee Benefits 19.31% Chart - 2 Cupertino Union School District General Fund Expenditures by Object FY Services and Contracts 7.65% Classified Salaries 17.40% Capital Outlay 0.22% Certificated Salaries 49.02% Chart - 3 Cupertino Union School District General Fund Expenditures by Function FY General Administration 5.54% Pupil Services 4.85% Plant Services 8.95% Other Outgo and Debt 0.32% Others 0.00% Instruction-Related Services 12.74% Instruction 67.60% 10

42 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 General Fund Budgetary Highlights The original adopted budget projected an ending fund balance of $24,165,574. The final budget projected an ending fund balance of $20,399,623. There are several major factors that contributed to the variance in the projected fund balances: (1) The District s original budget was based on the Governor s May Revision, and was adopted on June 17, which was before the State adopted its budget in late June. (2) The GASB 68, which was enacted during the fiscal year, requires districts to recognize the employer costs and obligation for pensions of both California State Teachers Retirement System (STRS) and California Public Employees Retirement System (PERS) on the financial statements. The STRS on-behalf pension contribution was calculated to be $4,157,705, which was recorded as the state revenue and the expenditures at the year-end. (3) The Governor s May Revise, released in May, included a one-time Mandate fund of $1,264,439. (4) The district settled its compensation negotiation with all employee groups in May for an increase of 4% retro back to July 1. (5) The original budget did not include any school or program carryovers from the closing fiscal year. The final budget included the carryovers from the school sites and the categorical programs from the year-end closing which was completed after the District s budget adoption. Our actual ending balance as of June 30, 2015 is $21,111,791 with an unassigned fund balance of $1,854,419 excluding the required reserves for economic uncertainty of $11,200,171. The final budget projected an ending fund balance of $20,399,623, with unassigned ending fund balance of $2,165,081. The overall difference between the actual ending fund balance and final budget has a favorable variance of $712,168, which includes an increase of $557,763 in unrestricted ending balance, and an increase of $154,405 in reserves for unspent categorical programs. The higher unrestricted ending balance of $557,763 resulted from the following variances: $58,938 from lower unrestricted revenue, $118,579 from lower general fund contribution to the restricted programs and transfer in, and $498,122 from lower unrestricted expenditures and transfer out. The lower than projected unrestricted expenditures resulted from saving in personnel costs, other operating expenses, and higher unspent balance from the school and program carryovers. The unspent balance of the carryovers is projected to be spent in The variance of $154,405 in the restricted revenues and expenditures is mostly due to the fact that several categorical programs expenditures did not materialize by the end of the fiscal year, which resulted in higher unspent balances at the end of the year. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2015 the District had $432.5 million invested in a broad range of capital assets, including land, school buildings, modulars, computers and audio-visual equipment. (See Table A - 3.) This amount represents a net increase of $48.2 million or 12.5 percent over , which was mostly from the facilities modernization projects completed and several modulars installed at various schools. The major funding sources for these projects were from the proceeds from the sale of General Obligation Bonds and developer fees. 11 Table A - 3 Cupertino Union School District Capital Assets at Year - End (in millions of dollars) Governmental Activities Changes Land $ 3.2 $ 3.2 $ - Site improvments Building and improvements Furniture and equipment Totals $ $ $ 48.2

43 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 Capital Facilities Projects In June 2012 voters approved Measure H, a $220 million general obligation bond for facility improvements. Additional District staff was hired to manage the Measure H bond program and selections of Architects, Construction Managers and other consultants were finalized and approved. As of June 30, 2015, approximately 47% of the $220 million program total has been spent. The District has sold two bond series, one for $50,000,000 in October 2012 and the second for $99,995,000 in April The Board of Education approved the initial Measure H Bond Program Implementation Plan in January 2013 and has approved two annual updates since. The Board also approves all changes to the approved bond project list on a quarterly basis. The Measure H Bond Program undergoes financial and performance audits on a yearly basis. The bond program is also overseen by the Measure H Citizens Bond Oversight Committee (CBOC) which meets quarterly. In 2015 approximately $20 million of construction work was awarded. Long-Term Debt As of June , the District had a total of $408.7 million in total long-term debt outstanding, of which $275.4 million in general obligation bonds, $131.6 million in pension liabilities and $1.7 million in other long-term debts. (See Table A - 4.) This amount represents a net decrease of $47.0 million or 10.3 percent from The net decrease includes the decrease of $13.0 million in the General Obligation Bonds, and $34.4 million in pension liabilities per GASB 68. FACTORS BEARING ON THE DISTRICT S FUTURE Table A - 4 Cupertino Union School District Outstainding Long-Term Debt at Year-End (in millions of dollars) Governmental Activities Changes General obligation bonds $ $ $ (13.0) Capital leases Compensated absences Supplementary retirement (0.1) Pension liabilities (34.4) Totals $ $ $ (47.0) FY saw the State budget adopted on time. The State Budget incorporated many of the Governor s May Revision provisions with a handful of significant changes. For school districts, this will be the third year of implementing the Local Control Funding Formula (LCFF). The final State Budget agreement allocated $182 million less to the Governor s May Revision proposed funding level. It is estimated that the change in LCFF funding will close 51.52% of the gap toward the funding target for each school district in On average, the increase equals 10.44% and $679 per average daily attendance (ADA). The State has started a 7-year implementation schedule to retire the $73.7 billion STRS shortfall. Over the span, the employer and employee contribution rates will increase over their previous rates of 8.25% and 8.0% respectfully. The employer contributions rates will increase to 19.1% by The employee contribution rates will increase to 10.25% by The employer contribution to CalPERS will increase from 11.77% to % in , and to 20.4% by The District continues to operate with a conservative budget philosophy. This is reflective by the District s ending reserve balance in addition to the mandated fund balance reserve for economic uncertainties. 12

44 CUPERTINO UNION SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2015 Net Pension Liability (NPL) Per GASB 68, districts are required to recognize the STRS and PERS employer costs and obligation for pensions on the financial statements, effective The STRS on-behalf pension contribution for the district is calculated to be $4,157,705, which is recorded as the state revenue and the expenditures in the new resource code CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have questions about this report or need additional financial information, please contact: Chris Jew, Chief Business Officer, Business Services Vista Drive, Cupertino, CA Julia Yu, Director of Fiscal Service Vista Drive, Cupertino, CA

45 CUPERTINO UNION SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Activities ASSETS Deposits and investments $ 115,281,513 Receivables 4,768,143 Prepaid expenses 252,352 Stores inventories 211,457 Capital assets not depreciated 3,192,428 Capital assets, net of accumulated depreciation 191,845,280 Total Assets 315,551,173 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 2,861,424 Current year pension contribution 10,829,412 Total Deferred Outflows of Resources 13,690,836 LIABILITIES Accounts payable 13,153,385 Interest payable 4,551,477 Unearned revenue 3,638,645 Claim liabilities 3,240,761 Current portion of long-term obligations other than pensions 14,690,510 Noncurrent portion of long-term obligations other than pensions 262,444,958 Aggregate net pension liability 131,605,872 Total Liabilities 433,325,608 DEFERRED INFLOWS OF RESOURCES Difference between actual and expected investment return 35,985,194 Total Deferred Inflows of Resources 35,985,194 NET POSITION Net investment in capital assets (25,100,996) Restricted for: Debt services 17,494,607 Capital projects 1,068,549 Educational program 2,670,884 Food services 935,645 Insurance programs 2,657,299 Unrestricted (139,794,781) Total Net Position $ (140,068,793) The accompanying notes are an integral part of these financial statements. 14

46 CUPERTINO UNION SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Net (Expenses) Revenues and Change in Program Revenues Net Position Charges for Operating Services and Grants and Governmental Functions/Programs Expenses Sales Contributions Activities Governmental Activities: Instruction $ 131,587,298 $ - $ 14,027,401 $ (117,559,897) Instruction-related activities: Supervision of instruction 8,533,043-1,431,857 (7,101,186) Instructional library, media, and technology 1,932,977-93,117 (1,839,860) School site administration 11,836, ,894 (11,460,091) Pupil services: Home-to-school transportation 3,463, (3,463,920) Food services 4,039,773 3,264, ,112 (174,856) All other pupil services 5,125,074-1,057,204 (4,067,870) Administration: Data processing 2,175, (2,175,838) All other administration 7,283, , ,979 (6,976,300) Plant services 18,213,575 16,475 5,703 (18,191,397) Ancillary services 197,550-26,630 (170,920) Community services 158, (158,787) Interest on long-term obligations 9,348, (9,348,803) Total Governmental Activities $ 203,897,556 $ 3,415,934 $ 17,791,897 (182,689,725) General revenues and subventions: Property taxes, levied for general purposes 88,196,802 Property taxes, levied for debt service 18,882,303 Taxes levied for other specific purposes 8,657,630 Federal and State aid not restricted to specific purposes 41,567,259 Interest and investment earnings 234,172 Miscellaneous 12,642,542 Subtotal, General Revenues 170,180,708 Change in Net Position (12,509,017) Net Position - Beginning, as restated (127,559,776) Net Position - Ending $ (140,068,793) The accompanying notes are an integral part of these financial statements. 15

47 [THIS PAGE INTENTIONALLY LEFT BLANK]

48 CUPERTINO UNION SCHOOL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2015 Bond Interest General Building and Redemption Fund Fund Fund ASSETS Deposits and investments $ 24,298,517 $ 59,714,127 $ 22,025,517 Receivables 4,493,600 89,602 20,567 Due from other funds 13,096 12,087 - Prepaid expenditures 234,478 17,677 - Stores inventories 65, Total Assets $ 29,105,158 $ 59,833,493 $ 22,046,084 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 5,683,803 $ 7,172,187 $ - Due to other funds 38, Unearned revenue 2,271, Total Liabilities 7,993,367 7,172,187 - Fund Balances: Nonspendable 374, Restricted 2,670,884 52,661,306 22,046,084 Assigned 5,011, Unassigned 13,054, Total Fund Balances 21,111,791 52,661,306 22,046,084 Total Liabilities and Fund Balances $ 29,105,158 $ 59,833,493 $ 22,046,084 The accompanying notes are an integral part of these financial statements. 16

49 Non-Major Governmental Funds Total Governmental Funds $ 1,877,741 $ 107,915,902 57,787 4,661,556 2,004 27, , , ,457 $ 2,083,719 $ 113,068,454 $ 66,429 $ 12,922,419 13,096 51,118-2,271,542 79,525 15,245, , ,091 1,856,048 79,234,322-5,011,372-13,054,590 2,004,194 97,823,375 $ 2,083,719 $ 113,068,454 17

50 CUPERTINO UNION SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Total Fund Balance - Governmental Funds $ 97,823,375 Amounts Reported for Governmental Activities in the Statement of Net Position are Different Because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of capital assets is $ 432,520,351 Accumulated depreciation is (237,482,643) Net Capital Assets 195,037,708 Expenditures relating to contributions made to pension plans were recognized on the modified accrual basis, but are not recognized on the accrual basis. 10,829,412 In governmental funds, unmatured interest on long-term obligations is recognized in the period when it is due. On the government-wide financial statements, unmatured interest on long-term obligations is recognized when it is incurred. (4,551,477) An internal service fund is used by the District's management to charge for the costs of various insurance program to the individual funds. The assets and liabilities of the internal service fund are included with governmental activities. 2,657,299 The difference between projected and actual pension plan investment earnings are not recognized on the modified accrual basis, but are recognized on the accrual basis as an adjustment to pension expense. (35,985,194) Unamortized costs related to loss on refunding were reported on statement of net position and amortized over the life of the bonds. 2,861,424 Long-term obligations, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term obligations at year-end consist of: Bonds payable and premiums 275,423,769 Capital leases payable 237,665 Compensated absences (vacations) 1,474,034 Net pension liability 131,605,872 Total Long-Term Obligations (408,741,340) Total Net Position - Governmental Activities $ (140,068,793) The accompanying notes are an integral part of these financial statements. 18

51 This page left blank intentionally.

52 CUPERTINO UNION SCHOOL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 Bond Interest General Building and Redemption Fund Fund Fund REVENUES Local control funding formula $ 125,310,155 $ - $ - Federal sources 4,285, Other state sources 10,273, ,886 Other local sources 23,609,330 2,953,701 18,841,051 Total Revenues 163,479,309 2,953,701 18,942,937 EXPENDITURES Current Instruction 117,231, Instruction-related activities: Supervision of instruction 8,480, Instructional library, media and technology 1,917, School site administration 11,697, Pupil services: Home-to-school transportation 3,326, Food services All other pupil services 5,085, Administration: Data processing 2,154, All other administration 7,462, Plant services 15,526, Facility acquisition and construction 119,660 50,124,208 - Ancillary services 197, Community services 158, Debt service Principal 62,460-11,805,000 Interest and other 17,105-10,244,329 Total Expenditures 173,436,459 50,124,345 22,049,329 Excess (Deficiency) of Revenues Over Expenditures (9,957,150) (47,170,644) (3,106,392) Other Financing Sources (Uses) Transfers in 2,659, Other sources 102, Transfers out (4,690) (2,453,509) - Net Financing Sources 2,757,266 (2,453,509) - NET CHANGE IN FUND BALANCES (7,199,884) (49,624,153) (3,106,392) Fund Balance - Beginning 28,311, ,285,459 25,152,476 Fund Balance - Ending $ 21,111,791 $ 52,661,306 $ 22,046,084 The accompanying notes are an integral part of these financial statements. 19

53 Non-Major Governmental Funds Total Governmental Funds $ - $ 125,310, ,656 4,871,527 91,743 10,467,582 4,174,932 49,579,014 4,852, ,228,278 57, ,288,377-8,480,419-1,917,073-11,697,216-3,326,366 3,956,088 3,956,088-5,085,179-2,154, ,685 7,649,425 60,122 15,586, ,788 50,741, , ,787-11,867,460-10,261,434 4,757, ,367,960 94,504 (60,139,682) 4,690 2,664, ,129 - (2,458,199) 4, ,447 99,194 (59,831,235) 1,905, ,654,610 $ 2,004,194 $ 97,823,375 20

54 CUPERTINO UNION SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Total Net Change in Fund Balances - Governmental Funds $ (59,831,235) Amounts Reported for Governmental Activities in the Statement of Activities are Different Because: Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures; however, for governmental activities, those costs are shown in the Statement of Net Position and allocated over their estimated useful lives as annual depreciation expenses in the Statement of Activities. This is the amount by which depreciation exceeds capital outlays in the period. Capital outlays $ 48,308,803 Depreciation expense (13,663,761) Net Income Adjustment 34,645,042 Loss on disposal of capital assets is reported in the government-wide Statement of Net Position, but is not recorded in the governmental funds. (7,289) In the Statement of Activities, certain operating expenses, such as compensated absences (vacations) 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). Vacation used was less than the amounts earned. (433,802) In the governmental funds, pension costs are based on employer contributions made to pension plans during the year. However, in the Statement of Activities, pension expense is the net effect of all changes in the deferred outflows, deferred inflows and net pension liability during the year. (349,269) Proceeds received from the capital lease is a revenue source in the governmental funds, but it increases long-term obligations in the Statement of Net Position and does not affect the Statement of Activities. (102,129) The decrease in the District's obligation related to the supplemental employee retirement plan is recorded as an expenditure the governmental funds, but it decreases the long-term liability in the Statement of Net Position and decreases expenses in the Statement of Activities. 113,404 Accreted interest is not an expenditure in the governmental funds, but it increases the long term liabilities in the Statement of Net Position and is reflected as additional interest expense in the Statement of Activities. (495,500) Payment of principal on general obligation bonds is an expenditure in the governmental funds, but it reduces long-term liabilities in the Statement of Net Position and does not affect the Statement of Activities. 11,805,000 The accompanying notes are an integral part of these financial statements. 21

55 CUPERTINO UNION SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES (Continued) FOR THE YEAR ENDED JUNE 30, 2015 Payment of principal on capital leases is an expenditure in the governmental funds, but reduces long-term liabilities in the Statement of Net Position and does not affect the Statement of Activities. 62,460 Amortization of bond premium is not recorded in the governmental funds, but is amortized over the life of the bond in the Statement of Activities. 1,689,170 Amortization of defeasance cost is not recorded in the governmental funds, but is amortized over the life of the bond in the Statement of Activities. (281,039) An Internal Service Fund is used by the District's management to charge the costs of the workers' compensation and other employee benefit programs to the individual funds. The net revenue of the Internal Service Fund is reported with governmental activities. 676,170 Change in Net Position of Governmental Activities $ (12,509,017) The accompanying notes are an integral part of these financial statements. 22

56 CUPERTINO UNION SCHOOL DISTRICT PROPRIETARY FUND STATEMENT OF NET POSITION JUNE 30, 2015 ASSETS Current Assets Governmental Activities - Internal Service Fund Deposits and investments $ 7,365,611 Receivables 106,587 Due from other funds 23,931 Total Current Assets 7,496,129 LIABILITIES Current Liabilities Accounts payable 230,966 Unearned revenue 1,367,103 Non-Current Liabilities Claim liabilities 3,240,761 Total Current Liabilities 4,838,830 NET POSITION Restricted for insurance programs 2,657,299 Total Net Position $ 2,657,299 The accompanying notes are an integral part of these financial statements. 23

57 CUPERTINO UNION SCHOOL DISTRICT PROPRIETARY FUND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 Governmental Activities - Internal Service Fund OPERATING REVENUES In-District premiums $ 23,848,336 Total Operating Revenues 23,848,336 OPERATING EXPENSES Payroll costs 215,686 Insurance 22,422,813 Other operating cost 348,173 Total Operating Expenses 22,986,672 Operating Income 861,664 NONOPERATING REVENUES Interest income 20,824 Transfers out (206,318) Total Nonoperating Revenues (185,494) Change in Net Position 676,170 Total Net Position - Beginning 1,981,129 Total Net Position - Ending $ 2,657,299 The accompanying notes are an integral part of these financial statements. 24

58 CUPERTINO UNION SCHOOL DISTRICT PROPRIETARY FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015 Governmental Activities - Internal Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash received from user charges $ 23,765,843 Cash payments to employees for services (215,686) Cash payments for insurance claims (23,013,465) Net Cash Provided for Operating Activities 536,692 CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 19,070 Transfer out (230,576) Net Cash Used for Investing Activities (211,506) Net increase in cash and cash equivalents 325,186 Cash and cash equivalents - Beginning 7,040,425 Cash and cash equivalents - Ending $ 7,365,611 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED FROM OPERATING ACTIVITIES Operating income $ 861,664 Changes in assets and liabilities: Receivables (98,714) Accounts payable (242,479) Unearned revenue 16,221 NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 536,692 The accompanying notes are an integral part of these financial statements. 25

59 CUPERTINO UNION SCHOOL DISTRICT FIDUCIARY FUND STATEMENT OF NET POSITION JUNE 30, 2015 Agency Fund ASSETS Deposits and investments $ 170,772 Total Assets $ 170,772 LIABILITIES Due to student groups $ 170,772 Total Liabilities $ 170,772 The accompanying notes are an integral part of these financial statements. 26

60 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The Cupertino Union School District was organized in 1916 under the laws of the State of California. The District operates under a locally-elected five-member Board form of government and provides educational services to grades K - 8 as mandated by the State and Federal agencies. The District operates twenty elementary and five middle schools. A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds, departments, boards, and agencies that are not legally separate from the District. For Cupertino Union School District, this includes general operations, food service, and student related activities of the District. Basis of Presentation - Fund Accounting The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The District's funds are grouped into three broad fund categories: governmental, proprietary, and fiduciary. Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the District's major governmental funds: Major Governmental Funds General Fund The General Fund is the chief operating fund for the District. It is used to account for the ordinary operations of the District. All transactions except those accounted for in another fund are accounted for in this fund. Building Fund The Building Fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued. Bond Interest and Redemption Fund The Bond Interest and Redemption Fund is used for the repayment of bonds issued for a District (Education Code Sections ). Non-Major Governmental Funds Special Revenue Funds The Special Revenue funds are established to account for the proceeds from specific revenue sources (other than trusts, major capital projects, or debt service) that are restricted or committed to the financing of particular activities and that compose a substantial portion of the inflows of the fund. Additional resources that are restricted, committed, or assigned to the purpose of the fund may also be reported in the fund. 27

61 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Child Development Fund The Child Development Fund is used to account separately for federal, State, and local revenues to operate child development programs and is to be used only for expenditures for the operation of child development programs. Cafeteria Fund The Cafeteria Fund is used to account separately for federal, State, and local resources to operate the food service program (Education Code Sections ) and is used only for those expenditures authorized by the governing board as necessary for the operation of the District's food service program (Education Code Sections and 38100). Capital Project Funds The Capital Project funds are used to account for financial resources that are restricted, committed, or assigned to the acquisition or construction of major capital facilities and other capital assets (other than those financed by proprietary funds and trust funds). Capital Facilities Fund The Capital Facilities Fund is used primarily to account separately for monies received from fees levied on developers or other agencies as a condition of approving a development (Education Code Sections ). Expenditures are restricted to the purposes specified in Government Code Sections or to the items specified in agreements with the developer (Government Code Section 66006). Proprietary Funds Proprietary funds are used to account for activities that are more business-like than government-like in nature. Business-type activities include those for which a fee is charged to external users or to other organizational units of the local education agency, normally on a full cost-recovery basis. Proprietary funds are generally intended to be self-supporting and are classified as enterprise or internal service. The District has the following proprietary fund: Internal Service Fund The Internal Service Fund may be used to account for goods or services provided to other funds of the District on a cost-reimbursement basis. The District operates a self-insurance fund that is accounted for in an internal service fund. Fiduciary Funds Fiduciary funds are used to account for assets held in trustee or agent capacity for others that cannot be used to support the District's own programs. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds, and agency funds. The key distinction between trust and agency funds is that trust funds are subject to a trust agreement that affects the degree of management involvement and the length of time that the resources are held. The District has only an agency fund. Agency Fund Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Such funds have no equity accounts since all assets are due to individuals or entities at some future time. The District's agency fund accounts for student body activities (ASB). Basis of Accounting - Measurement Focus Government-Wide Financial Statements The government-wide financial 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 fund financial statements are prepared. 28

62 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The government-wide Statement of Activities presents a comparison between expenses, both direct and indirect, and program revenues for each governmental function, and exclude fiduciary activity. Direct expenses are those that are specifically associated with a service, program, or department and are therefore clearly identifiable to a particular function. The District does not allocate indirect expenses to functions in the Statement of Activities. Program revenues include charges paid by the recipients of the goods or services offered by the programs and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each function is self-financing or draws from the general revenues of the District. Eliminations have been made to minimize the double counting of internal activities. Fund Financial Statements Fund financial statements report detailed information about the District. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The internal service fund is presented in a single column on the face of the proprietary fund statements. Governmental Funds All governmental funds are accounted for using a flow of current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets and current liabilities generally are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances reports on the sources (revenues and other financing sources) and uses (expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide statements are prepared. Governmental fund financial statements therefore include reconciliations with brief explanations to better identify the relationship between the government-wide statements prepared on the accrual basis of accounting, using the economic resources measurement focus and the statements for the governmental funds prepared on a modified accrual basis of accounting using the current financial resources measurement focus. Under this basis, revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. Proprietary Funds Proprietary funds are accounted for using a flow of economic resources measurement focus and the accrual basis of accounting. All assets and all liabilities associated with the operation of this fund are included in the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in net total position. The Statement of Cash Flows provides information about how the District finances and meets the cash flow needs of its proprietary fund. Fiduciary Funds Fiduciary funds are accounted for using the flow of economic resources measurement focus and the accrual basis of accounting. Revenues - Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year, or are expected to be collected soon enough thereafter, to be used to pay liabilities of the current fiscal year. For the District, available means expected to be received within 90 days of fiscal year-end. 29

63 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Non-exchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, certain grants, entitlements, and donations. Revenue from property taxes is recognized in the fiscal year in which the taxes are received. Revenue from certain grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include time and purpose restrictions. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Unearned Revenue Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet and revenue is recognized. Certain grants received before the eligibility requirements are met are recorded as unearned revenue. On the governmental fund financial statements, receivables that will not be collected within the available period are also recorded as unearned revenue. Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, and typically paid within 90 days. Principal and interest on longterm obligations, which have not matured, are recognized when paid in the governmental funds as expenditures. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds but are recognized in the government-wide statements. Cash and Cash Equivalents The 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. Cash equivalents also include cash with county treasury balances for purposes of the Statement of Cash Flows. Investments Investments held at June 30, 2015, with original maturities greater than one year are stated at fair value. Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fair value are stated at cost or amortized cost. Fair values of investments in state or county investment pools are determined by the program sponsor. Prepaid Expenditures (Expenses) Prepaid expenditures (expenses) represent amounts paid in advance of receiving goods or services. The District has the option of reporting expenditure in governmental funds for prepaid items either when purchased or during the benefiting period. The District has chosen to report the expenditures over the benefiting period. 30

64 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Stores Inventories Inventories consist of expendable food and supplies held for consumption and unused donated commodities. Inventories are stated at cost, on the weighted average cost basis. The costs of inventory items are recorded as expenditures in the governmental type funds when used. Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are long-lived assets of the District as a whole. The District maintains a capitalization threshold of $5,000. The District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not capitalized, but are expensed as incurred. When purchased, such assets are recorded as expenditures in the governmental funds. In the government-wide Statement of Net Position and Statement of Activities, such amounts are capitalized and their cost is amortized to operations over their useful lives by an annual depreciation expense charge. The valuation basis for capital assets is historical cost, or where historical cost is not available, estimated historical cost based on replacement cost. Depreciation is computed using the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: buildings, 20 to 50 years; improvements, 5 to 50 years; equipment, 2 to 15 years. Interfund Balances On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as "interfund receivables/payables". These amounts are eliminated in the Statement of Net Position. Compensated Absences Compensated absences are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the government-wide Statement of Net Position. For governmental funds, the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employee resignations and retirements that occur prior to year-end that have not yet been paid with expendable available financial resources. These amounts are reported in the fund from which the employees who have accumulated leave are paid. Sick leave is accumulated without limit for each employee at the rate of one day for each month worked. Leave with pay is provided when employees are absent for health reasons; however, the employees do not gain a vested right to accumulated sick leave. Employees are never paid for any sick leave balance at termination of employment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District's financial statements. However, credit for unused sick leave is applicable to all classified school members who retire after January 1, At retirement, each member will receive.004 year of service credit for each day of unused sick leave. Credit for unused sick leave is applicable to all certificated employees and is determined by dividing the number of unused sick days by the number of base service days required to complete the last school year, if employed full-time. 31

65 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities, and long-term obligations are reported in the government-wide financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner from current financial resources are reported as obligations of the funds. However, claims and judgments, compensated absences, special termination benefits, and contractually required pension contributions that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are due for payment during the current year. Long-term obligations are not recognized as liabilities in governmental funds but are disclosed in the notes to financial statements. Debt service expenditures, including principal and interest, from bonds, capital leases or other long-term loans, are recognized as expenditures in the governmental fund financial statements when paid. Debt Issuance Costs, Premiums and Discounts In the government-wide financial statements and in the proprietary fund type financial statements, long-term obligations are reported as liabilities in the applicable governmental activities, or proprietary fund statement of net position. Debt premiums and discounts, as well as issuance costs, related to prepaid insurance costs are amortized over the life of the bonds using the straight-line method. In governmental fund financial statements, bond premiums and discounts, as well as debt issuance costs are recognized in the current period. The face amount of the debt is reported as other financing sources. Premiums received on debt issuance are also reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position also reports deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The District reports deferred outflows of resources for the unamortized loss on the refunding of general obligation bonds and current year pension contributions. In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The District reports deferred inflows of resources for the difference between actual and expected rate of return on investments specific to the net pension liability. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the California State Teachers Retirement System (CalSTRS) and the California Public Employees' Retirement System (CalPERS) plan for schools (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Member contributions are recognized in the period in which they are earned. Investments are reported at fair value. 32

66 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Fund Balances Governmental Funds As of June 30, 2015, fund balances of the governmental funds are classified as follows: Nonspendable - amounts that cannot be spent either because they are in nonspendable 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 constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments. Committed - amounts that can be used only for specific purposes determined by a formal action of the governing board. The governing board is the highest level of decision-making authority for the District. Commitments may be established, modified, or rescinded only through resolutions or other action as approved by the governing board. The District currently does not have any committed funds. Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Under the District s adopted policy, only the governing board or chief business officer/assistant superintendent of business services may assign amounts for specific purposes. Unassigned - all other spendable amounts. Spending Order Policy When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the governing board has provided otherwise in its commitment or assignment actions. Minimum Fund Balance Policy In fiscal year , the governing board adopted a minimum fund balance policy for the General Fund in order to protect the District against revenue shortfalls or unpredicted on-time expenditures. The policy requires a Reserve for Economic Uncertainties consisting of unassigned amounts equal to no less than 3 percent of General Fund expenditures and other financing uses. Net Position Net position represents the difference between assets and liabilities. Net position net of investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The District applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. 33

67 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Operating Revenues and Expenses Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the District, these revenues are primarily interfund insurance premiums. Operating expenses are necessary costs incurred to provide the goods or services that are the primary activity of the fund. lnterfund Activity Transfers between governmental and proprietary activities in the government-wide financial statements are reported in the same manner as general revenues. Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented in the financial statements. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Budgetary Data The budgetary process is prescribed by provisions of the California Education Code and requires the governing board to hold a public hearing and adopt an operating budget no later than July 1 st of each year. The District governing board satisfied these requirements. The adopted budget is subject to amendment throughout the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption with the legal restriction that expenditures cannot exceed appropriations by major object account. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all budget amendments have been accounted for. For budget purposes, onbehalf payments have not been included as revenue and expenditures. Property Tax Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The County of Santa Clara bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received. 34

68 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Change in Accounting Principles In June 2012, the 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. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. The District has implemented the Provisions of this Statement for the year ended June 30, In November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - An Amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. The District has implemented the Provisions of this Statement for the year ended June 30, As the result of implementing GASB Statement No. 68, the District has restated the beginning net position in the government wide Statement of Net Position, effectively decreasing net position as of July 1, 2014, by $155,466,751. The decrease results from recognizing the net pension liability, net of related deferred outflows of resources. New Accounting Pronouncements In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. 35

69 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. The scope of this Statement includes OPEB plans - defined benefit and defined contribution administered through trusts that meet the following criteria: Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable. OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms. OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. 36

70 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify - in the context of the current governmental financial reporting environment - the hierarchy of generally accepted accounting principles (GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, and should be applied retroactively. Earlier implementation is permitted. NOTE 2 - DEPOSITS AND INVESTMENTS Summary of Deposits and Investments Deposits and investments as of June 30, 2015, are classified in the accompanying financial statements as follows: Governmental activities $ 107,915,902 Proprietary fund 7,365,611 Fiduciary fund 170,772 Total Deposits and Investments $ 115,452,285 Deposits and investments as of June 30, 2015, consist of the following: Cash on hand and in banks1,419,484 $ Cash in revolving 76,959 Investments 113,955,842 Total Deposits and Investments $ 115,452,285 Policies and Practices The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; and collateralized mortgage obligations. 37

71 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Investment in County Treasury The District is considered to be an involuntary participant in an external investment pool as the District is required to deposit all receipts and collections of monies with their County Treasurer (Education Code Section 41001). The fair value of the District's investment in the pool is reported in the accounting financial statements at amounts based upon the District's pro-rata share of the amortized cost which approximates fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis. General Authorizations Limitations as they relate to interest rate risk and concentration of credit risk are indicated in the schedules below: Maximum Maximum Maximum Authorized Remaining Percentage Investment Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds, Notes, Warrants 5 years None None Registered State Bonds, Notes, Warrants 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Banker's Acceptance 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Reverse Repurchase Agreements 92 days 20% of base None Medium-Term Corporate Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None Joint Powers Authority Pools N/A None None Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The District manages its exposure to interest rate risk by depositing substantially all of its funds in the County Treasury Pool and purchasing a combination of shorter term and longer term investments and by timing cash flows maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. The fair value of the deposits with the County Treasurer at June 30, 2015 was $114,013,732 and the weighted average life of pool investments was 469 days. 38

72 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The County Pool Investment is not rated. Custodial Credit Risk - Deposits This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk for deposits. However, the California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agency. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105% of the secured deposits. The District believes there is no significant custodial credit risk with respect to any of the District s bank balances at June 30, NOTE 3 - RECEIVABLES Receivables at June 30, 2015, consisted of intergovernmental grants, entitlements, interest and other local sources. All receivables are considered collectible in full. Bond Interest Non-Major General Building Redemption Governmental Proprietary Fund Fund Fund Funds Total Fund Federal Government Categorical aid $ 1,720,498 $ - $ - $ 4,510 $ 1,725,008 $ - State Government Categorical aid 501, , ,550 - Lottery 1,693, ,693,342 - Local Government Interest 51,853 89,602 20,567 2, ,977 6,313 Other Local Sources 526, , , ,274 Total $ 4,493,600 $ 89,602 $ 20,567 $ 57,787 $ 4,661,556 $ 106,587 39

73 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 - CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2015, was as follows: July 1, 2014 Additions Deductions June 30, 2015 Governmental Activities Capital Assets Not Being Depreciated: Land $ 3,180,730 $ 11,698 $ - $ 3,192,428 Capital Assets Being Depreciated: Land Improvements 25,120,507 4,301,749-29,422,256 Buildings and Improvements 290,815,471 38,327, ,142,693 Modulars 58,509,549 5,233,853-63,743,402 Machinery and Equipment 6,739, , ,973 7,019,572 Total Capital Assets Being Depreciated 381,184,791 48,297, , ,327,923 Total Capital Assets 384,365,521 48,308, , ,520,351 Less Accumulated Depreciation: Land Improvements 10,758, ,171-11,625,610 Buildings and Improvements 189,807,378 10,355, ,163,062 Modulars 18,633,746 2,136,019-20,769,765 Machinery and Equipment 4,766, , ,684 4,924,206 Total Accumulated Depreciation 223,965,566 13,663, , ,482,643 Governmental Activities Capital Assets, Net $ 160,399,955 $ 34,645,042 $ 7,289 $ 195,037,708 Depreciation expense was charged as a direct expense to governmental functions as follows: Governmental Activities Instruction $ 13,377,513 Supervision of instruction 1,090 Pupil transportation 112,934 Food services 27,563 All other pupil services 1,206 All other general administration 29,364 Data processing 21,551 Plant maintenaince and operations 92,540 Total Depreciation Expense Governmental Activities $ 13,663,761 40

74 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 5 - INTERFUND TRANSACTIONS Interfund Receivables/Payables (Due To/Due From) Interfund receivable and payable balances at June 30, 2015, between major and non-major governmental funds, internal service fund, and fiduciary fund are as follows: Due To Due From Non-Major General Building Governmental Proprietary Fund Fund Funds Fund Total General Fund $ - $ 12,087 $ 2,004 $ 23,931 $ 38,022 Non-Major Governmental Funds 13, ,096 Total $ 13,096 $ 12,087 $ 2,004 $ 23,931 $ 51,118 All balances resulted from the time lag between the date that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Operating Transfers Interfund transfers for the year ended June 30, 2015, consisted of the following: Transfer Out General Transfer In Non-Major Governmental Fund Funds Total General Fund $ - $ 4,690 $ 4,690 Building Fund 2,453,509-2,453,509 Proprietary Fund 206, ,318 Total $ 2,659,827 $ 4,690 $ 2,664,517 The Building Fund transferred to the General Fund for the Routine Restricted Maintenance Account (RRMA). The Proprietay Fund transferred to the General Fund for the health and welfare axcess charges. The General fund transferred to the Cafeteria fund to cover the deficit fund balance. Total $ 2,664,517 $ 2,453, ,318 4,690 41

75 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 6 - DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources are a consumption of net position by the District that is applicable to a future reporting period. For governmental activities, the negative net investment in capital assets amount of $25,100,996 includes the effect of deferring the recognition of loss of $2,861,424 from advance refunding. The loss will be recognized as an expense and as a decrease in net position over the remaining life of related bonds. The District s current year pension contribution of $10,829,412 was made after the pension liability measurement date, June 30, Therefore, the recognition of current year payment is deferred and will be recognized as pension expenses in fiscal year (see Note 12 for more information on pension expenses). The changes in the District's deferred outflow of resources during the year consisted of the following: Balance Balance July 1, 2014 Additions Deductions June 30, 2015 Bond defeasance costs $ 3,142,463 $ - $ 281,039 $ 2,861,424 Current year District's pension contribution 9,562,915 10,829,412 9,562,915 10,829,412 Total $ 12,705,378 $ 10,829,412 $ 9,843,954 $ 13,690,836 NOTE 7 - ACCOUNTS PAYABLE Accounts payable at June 30, 2015, consisted of the following: Non-Major Governmental General Building Governmental Funds Proprietary Fund Fund Funds Total Fund Vendor payables $ 974,317 $ 7,151,373 $ 48,175 $ 8,173,865 $ 230,966 State principle apportionment 924, ,371 - Salaries and benefits 3,785,115 20,814 18,254 3,824,183 - Total $ 5,683,803 $ 7,172,187 $ 66,429 $ 12,922,419 $ 230,966 NOTE 8 - UNEARNED REVENUE Unearned revenue at June 30, 2015, consisted of the following: General Proprietary Fund Fund Federal financial assistance $ 117,011 $ - Employee health care benefits withheld 2,154,531 1,367,103 Total $ 2,271,542 $ 1,367,103 42

76 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 9 - LONG-TERM OBLIGATIONS Summary The changes in the District's long-term obligations during the year consisted of the following: Balance Balance Due in July 1, 2014 Additions Deductions June 30, 2015 One Year General obligation bonds $ 262,615,864 $ 495,500 $ 11,805,000 $ 251,306,364 $ 13,250,000 Bond premium 25,806,575-1,689,170 24,117,405 1,358,693 Compensated absences 1,040, ,802-1,474,034 - Capital leases 197, ,129 62, ,665 81,817 Supplemental retirement 113, , Subtotal 289,774,071 1,031,431 13,670, ,135,468 14,690,510 Pension liabilities 165,975,300-34,369, ,605,872 - Total $ 455,749,371 $ 1,031,431 $ 48,039,462 $ 408,741,340 $ 14,690,510 Payments on the General Obligation Bonds are made by the Bond Interest and Redemption Fund with local revenues. The accumulated vacation and pension liabilities will be paid by the fund for which the employee worked. Payments on the capital leases are made by the General Fund. Payments on the supplemental retirement plan are made by the General Fund. Bonded Debt The outstanding general obligation bonded debt is as follows: Bonds Bonds Issue Maturity Original Outstanding Accreted Outstanding Date Date Issue July 1, 2014 Interest Redeemed June 30, /1/32 $ 9,625,000 $ 8,150,000 $ - $ - $ 8,150, /1/32 374, ,159 40, , /1/34 1,600,000 1,600, ,600, /1/34 3,398,760 4,499, ,645-4,808, /1/23 13,490,000 12,085, ,000 11,480, /1/26 21,090,000 19,270, ,000 18,420, /1/20 14,640,000 11,640,000-1,470,000 10,170, /1/25 4,505,000 4,505, ,505, /1/27 490, , , , /1/37 50,000,000 42,295,000-8,085,000 34,210, /1/27 35,485,000 35,485, ,485, /1/24 22,320,000 21,935, ,000 21,140, /1/38 99,995,000 99,995, ,995,000 $ 277,013,461 $ 262,615,864 $ 495,500 $ 11,805,000 $ 251,306,364 43

77 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Debt Service Requirements to Maturity The bonds mature through 2039 as follows: Interest to Fiscal Year Principal Maturity Total 2016 $ 13,250,000 $ 10,759,232 $ 24,009, ,530,000 10,375,232 21,905, ,245,000 10,036,044 16,281, ,050,000 9,778,694 16,828, ,920,000 9,467,444 17,387, ,305,000 40,818,344 96,123, ,167,242 30,573,142 88,740, ,474,219 23,967,105 70,441, ,450,000 3,762,050 47,212,050 Sub Total 249,391,461 $ 149,537,287 $ 398,928,748 Accretion 1,914,903 Total $ 251,306,364 Capital Leases The District has entered into agreements to lease various facilities and equipment. Such agreements are, in substance, purchases (capital leases) and are reported as capital lease obligations. The District's liability on lease agreements with options to purchase is summarized below. Copiers Balance, July 1, 2014 $ 219,996 Additions 107,946 Payments 72,991 Balance, June 30, 2015 $ 254,951 The capital leases have minimum lease payments as follows: Year Ending June 30, Lease Payment 2016 $ 90, , ,987 Total 254,951 Less: Amount Representing Interest 17,286 Present Value of Minimum Lease Payments $ 237,665 44

78 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Accumulated Unpaid Compensated Absences The total accumulated unpaid compensated absences for the District at June 30, 2015, amounted to $1,474,034. Supplemental Employee Retirement Plan (SERP) The District provides a supplemental retirement plan in one premium annuity contract with Pacific Life Insurance Company. The last payment was paid in the current year. As of June 30, 2015, the District has no more payments remaining. NOTE 10 - FUND BALANCES Fund balances are composed of the following elements: Bond Interest and Non-Major General Building Redemption Governmental Fund Fund Fund Funds Total Nonspendable Revolving cash $ 75,000 $ - $ - $ 1,959 $ 76,959 Stores inventories 65, , ,457 Prepaid expenditures 234, ,675 Total Nonspendable 374, , ,091 Restricted Educational programs 2,670, ,670,884 Capital projects - 52,661,306-1,068,549 53,729,855 Debt services ,046,084-22,046,084 Food services , ,500 Total Restricted 2,670,884 52,661,306 22,046,084 1,856,049 79,234,323 Assigned Program carryover 5,011, ,011,372 Total Assigned 5,011, ,011,372 Unassigned Reserve for economic uncertainties 11,200, ,200,171 Remaining unassigned 1,854, ,854,419 Total Unassigned 13,054, ,054,590 Total $ 21,111,791 $ 52,661,306 $ 22,046,084 $ 2,004,195 $ 97,823,376 45

79 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 11 - RISK MANAGEMENT Workers Compensation and Property and Liability The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and natural disasters. Employee workers compensation, dental and medical programs are administered by the Self-Insurance Fund. During fiscal year ending June 30, 2015, the District contracted with the Northern California RELIEF public entity risk pool for property and liability, fidelity and boiler insurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years. There has not been a significant reduction in coverage from the prior year. Insurance Program / Company Name Type of Coverage Limits Property and Liability North California ReLIEF Property $ 250,000,000 North California ReLIEF Liability $ 5,000,000 Protected Insurance Programs for Schools Joint Power Authority (PIPS) Workers' Compensation $ 155,000,000 Claims Liabilities The District is self-insured for dental, medical and claims incurred for the workers compensation program prior to the termination of workers compensation self insurance program in fiscal year The District records an estimated liability for indemnity torts and other claims against the District. Claims liabilities are based on estimates of the ultimate cost of reported claims (including future claim adjustment expenses) and an estimate for claims incurred, but not reported based on historical experience. Workers' Compensation Dental Medical Total Liability Balance, June 30, 2013 $ 2,578,732 $ 106,649 $ 859,751 $ 3,545,132 Claims and changes in estimates 5, ,113 5,260,970 5,387,756 Claims payments (145,725) (120,891) (5,213,641) (5,480,257) Liability Balance, June 30, ,438, , ,080 3,452,631 Claims and changes in estimates (178) 124,425 4,511,735 4,635,982 Claims payments (132,371) (118,096) (4,597,385) (4,847,852) Liability Balance, June 30, 2015 $ 2,306,131 $ 113,200 $ 821,430 $ 3,240,761 Assets available to pay claims at June 30, 2015 totaled $5,897,

80 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 12 - EMPLOYEE RETIREMENT SYSTEMS Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of the California State Teachers' Retirement System (CalSTRS) and classified employees are members of the California Public Employees' Retirement System (CalPERS). The District implemented GASB Statements No. 68 and No. 71 for the fiscal year ended June 30, As a result, the District reported its proportionate share of the net pension liabilities, pension expense and deferred inflow of resources for each of the above plans and a deferred outflow of resources for each of the above plans as follows: Proportionate Deferred Proportionate Proportionate Share of Net Outflow of Share of Deferred Share of Pension Plan Pension Liability Resources Inflow of Resources Pension Expense CalSTRS $ 101,611,807 $ 7,336,518 $ 25,021,714 $ 8,772,380 CalPERS 29,994,065 3,492,894 10,963,480 2,665,860 Total $ 131,605,872 $ 10,829,412 $ 35,985,194 $ 11,438,240 The details of each plan are as follows: California State Teachers' Retirement System (CalSTRS) Plan Description The District contributes to the State Teachers Retirement Plan (STRP) administered by the California State Teachers' Retirement System (CalSTRS). STRP is a cost-sharing multiple-employer public employee retirement system defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers' Retirement Law. A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013, annual actuarial valuation report, Defined Benefit Program Actuarial Valuation. This report and CalSTRS audited financial information are publically available reports that can be found on the CalSTRS website under Publications at: Benefits Provided The STRP provides retirement, disability and survivor benefits to beneficiaries. Benefits are based on members' final compensation, age and years of service credit. Members hired on or before December 31, 2012, with five years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or after January 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service. 47

81 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, Cash Balance Benefit Program and Replacement Benefits Program. The STRP holds assets for the exclusive purpose of providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defray reasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the state is the sponsor of the STRP and obligor of the trust. In addition, the state is both an employer and nonemployer contributing entity to the STRP. The District contributes exclusively to the STRP Defined Benefit Program, thus disclosures are not included for the other plans. The STRP provisions and benefits in effect at June 30, 2015, are summarized as follows: STRP Defined Benefit Program Hire date On or before December 31, 2012 On or after January 1, 2013 Benefit formula 2% at 60 2% at 62 Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Retirement age Monthly benefits as a precentage of eligible compensation 2.0% - 2.4% 2.0% - 2.4% Required employee contribution rate 8.15% 8.15% Required employer contribution rate 8.88% 8.88% Required state contribution rate 5.95% 5.95% Contributions Required member, District and State of California contributions rates are set by the California Legislature and Governor and detailed in Teachers' Retirement Law. The contributions rates are expressed as a level percentage of payroll using the entry age normal actuarial method. In accordance with AB 1469, employer contributions into the CalSTRS will be increasing to a total of 19.1 percent of applicable member earnings phased over a seven year period. The contribution rates for each plan for the year ended June 30, 2015, are presented above and the District's total contributions were $7,336,518. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related state support and the total portion of the net pension liability that was associated with the District were as follows: Total net pension liability, including State share: District's proportionate share of net pension liability State's proportionate share of the net pension liability associated with the District Total $ $ 101,611,807 61,357, ,969,403 48

82 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The net pension liability was measured as of June 30, The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2015, the District's proportion was percent. For the year ended June 30, 2015, the District recognized it s proportionate share of pension expense of $8,772,380. In addition, the District recognized pension expense and state aid revenue of $5,297,142 for support provided by the State. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows Pension contributions subsequent to measurment date $ 7,336,518 $ - Net differences between projected and actual earnings on plan investments - 25,021,714 Total $ 7,336,518 $ 25,021,714 The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows: Year Ended June 30, Amortization 2016 $ 6,255, ,255, ,255, ,255,427 Total $ 25,021,714 Actuarial Methods and Assumptions Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 2006 through June 30, 2010 Actuarial cost method Entry age normal Discount rate 7.60% Investment rate of return 7.60% Consumer price inflation 3.00% Wage growth 3.75% 49

83 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Actuarial Methods and Assumptions Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement: CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on RP2000 series tables adjusted to fit CalSTRS experience. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant. Based on the model for CalSTRS consulting actuary' investment practice, a best estimate range was determined be assuming the portfolio is re-balanced annually and that the annual returns are lognormally distributed and independently from year to year to develop expected percentile for the long-term distribution of annualized returns. The assumed asset allocation is based on board policy for target asset allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best estimates of 10-year geometric real rates of return and the assumed asset allocation for each major asset class used as input to develop the actuarial investment rate of return are summarized in the following table: Long-term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 47% 4.50% Private equity 12% 6.20% Real estate 15% 4.35% Inflation sensitive 5% 3.20% Fixed income 20% 0.20% Cash/liquididty 1% 0.00% Discount Rate The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.60 percent) and assuming that contributions, benefit payments and administrative expense occurred midyear. Based on these assumptions, the STRP's fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability. 50

84 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The following presents the District's proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate: Net Pension Discount Rate Liability 1% decrease (6.60%) $ 158,386,233 Current discount rate (7.60%) $ 101,611,807 1% increase $ 54,272,254 California Public Employees Retirement System (CalPERS) Plan Description Qualified employees are eligible to participate in the School Employer Pool (SEP) [and the Safety Risk Pool] under the California Public Employees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees' Retirement Law. A full description of the pension plan(s) regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013 annual actuarial valuation report(s), Schools Pool Actuarial Valuation, [and the Risk Pool Actuarial Valuation Report, Safety,] This (These) report(s) and CalPERS audited financial information are publically available reports that can be found on the CalPERS website under Forms and Publications at: Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of service credit, a benefit factor and the member's final compensation. Members hired on or before December 31, 2012, with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on or after January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The Basic Death Benefit is paid to any member's beneficiary if the member dies while actively employed. An employee's eligible survivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or 52 for members hired on or after January 1, 2013), and has at least five years of credited service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. 51

85 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The CalPERS provisions and benefits in effect at June 30, 2015, are summarized as follows: School Employer Pool (CalPERS) Hire date On or before December 31, 2012 On or after January 1, 2013 Benefit formula 2% at 55 2% at 62 Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Retirement age Monthly benefits as a precentage of eligible compensation 1.1% - 2.5% 1.0% - 2.5% Required employee contribution rate 7.000% 6.000% Required employer contribution rate % % Contributions Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Total plan contributions through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contributions rates are expressed as percentage of annual payroll. The contribution rates for each plan for the year ended June 30, 2015, are presented above and the total District contributions were $3,492,894. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions As of June 30, 2015, the District reported net pension liabilities for its proportionate share of the CalPERS net pension liability totaling $29,994,065. The net pension liability was measured as of June 30, The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. At June 30, 2015, the District's proportion was percent. For the year ended June 30, 2015, the District recognized pension expense of $2,664,860. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows Pension contributions subsequent to measurement date $ 3,492,894 $ - Adjustment to changes in proportionate share - 657,184 Net differences between projected and actual earnings on plan investments - 10,963,480 Total $ 3,492,894 $ 11,620,664 52

86 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows: Year Ended June 30, Amortization 2016 $ 2,795, ,795, ,795, ,576,574 Total $ 10,963,480 Actuarial Methods and Assumptions Total pension liability for the SEP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 1997 through June 30, 2011 Actuarial cost method Entry age normal Discount rate 7.50% Investment rate of return 7.50% Consumer price inflation 2.75% Wage growth 3.00% Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience study adopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates include five years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries. 53

87 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first ten years) and the longterm (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 47% 5.25% Global fixed income 19% 0.99% Private equity 12% 6.83% Real estate 11% 4.50% Inflation sensitive 6% 0.45% Infrastructure and Forestland 3% 4.50% Liquidity 2% -0.55% Discount Rate The discount rate used to measure the total pension liability was 7.50 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability. The following presents the District's proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate: Net Pension Discount rate Liability 1% decrease (6.50%) $ 52,616,436 Current discount rate (7.50%) $ 29,994,065 1% increase (8.50%) $ 11,090,792 54

88 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Social Security As established by Federal law, all public sector employees who are not members of their employer's existing retirement system (CalSTRS or CalPERS) must be covered by Social Security or an alternative plan. The District has elected to use social security as its alternative plan. Contributions made by the District and an employee vest immediately. The District contributes 6.2 percent of an employee's gross earnings. An employee is required to contribute 6.2 percent of his or her gross earnings to the pension plan. On Behalf Payments The State of California makes contributions to CalSTRS on behalf of the District. These payments consist of State General Fund contributions to CalSTRS in the amount of $4,157,705, $3,788,119, and $3,801,306, for fiscal years ending June 30, 2015, 2014 and 2013 respectively (5.679 percent of , percent of , and percent of annual payrolls). Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits to CalPERS. Therefore, there is no on-behalf contribution rate for CalPERS. Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures. Accordingly, these amounts have been recorded on the financial statements. On behalf payments have been excluded from the calculation of the available reserves, and have not been included in the budget amounts reported in the General Fund Budgetary Schedule. NOTE 13 - COMMITMENTS AND CONTINGENCIES Grants The District received financial assistance from Federal and State agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30, Litigation The district is involved in various litigations arising from the normal course of business. In the opinion of management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the District at June 30,

89 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Construction Commitments As of June 30, 2015, the District had the following commitments with respect to the unfinished capital projects: Remaining Expected Construction Date of Capital Project Commitment Completion CMS$ 2,164,588 2/28/2016 Garden Gate 3,282,768 2/28/2017 Hyde 3,048,417 12/31/2015 McAluffe 2,613,323 3/31/2016 Miller 1,908,941 12/31/2015 Muir 2,408,619 3/31/2016 Other Commitments 7,958,390 6/30/2017 $ 23,385,046 NOTE 14 - OPERATING LEASE REVENUE The District has entered into various operating leases for buildings and equipment with lease terms in excess of one year. None of these agreements contain purchase options. All agreements contain a termination clause providing for cancellation after a specified number of days written notice to lessors, but it is unlikely that the District will cancel any of the agreements prior to the expiration date. Future minimum lease payments under these agreements are as follows: Lease June 30, Payment 2016 $ 2,610, ,652, , , ,162 Total $ 7,309,461 NOTE 15 - PARTICIPATION IN PUBLIC JOINT POWER AUTHORITIES The District is a member of the Northern California ReLiEF joint powers authority. The District pays an annual premium to the Northern California ReLiEF JPA. The relationship between the District and the JPA is such that the JPA not component unit of the District for financial reporting purposes. The JPA has budgeting and financial reporting requirements independent of member units and its financial statements are not presented in these financial statements; however, fund transactions between the entities and the District are included in these statements. Audited financial statements are generally available from the entity. The District has appointed one member to the governing board of ReLiEF. 56

90 CUPERTINO UNION SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 During the year ended June 30, 2015, the District made payments of $692,313 to ReLiEF for insurance coverage received. NOTE 16 - RESTATEMENT OF PRIOR YEAR NET POSITION The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the current year. The restatement does not include deferred inflows of resources, as this information was not available. As a result, the effect on the current fiscal year is as follows: Statement of Net Position Net position - Beginning $ 28,852,609 Restatement (156,412,385) Net Position - Beginning as Restated $ (127,559,776) 57

91 REQUIRED SUPPLEMENTARY INFORMATION 58

92 CUPERTINO UNION SCHOOL DISTRICT GENERAL FUND BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2015 Variances - Favorable (Unfavorable) Budgeted Amounts Final Original Final Actual to Actual REVENUES Local control funding formula $ 123,907,413 $ 125,272,354 $ 125,310,155 $ 37,801 Federal sources 4,101,409 4,444,012 4,285,871 (158,141) Other state sources 4,534,345 10,274,091 10,273,953 (138) Other local sources 24,626,111 23,937,368 23,609,330 (328,038) Total Revenues 157,169, ,927, ,479,309 (448,516) EXPENDITURES Current Certificated salaries 82,064,145 85,147,696 85,065,909 81,787 Classified salaries 29,875,125 30,239,728 30,195,166 44,562 Employee benefits 27,901,099 33,549,073 33,511,868 37,205 Books and supplies 9,658,332 11,826,762 11,101, ,036 Services and operating expenditures 13,177,822 13,482,520 13,268, ,314 Other outgo (87,731) (69,281) (164,308) 95,027 Capital outlay 364, , ,327 (59,358) Debt service ,565 (79,565) Total Expenditures 162,953, ,495, ,436,459 1,059,008 Excess (Deficiency) of Revenues Over Expenditures (5,784,171) (10,567,642) (9,957,150) 610,492 Other Financing Sources (Uses) Transfers in 2,453,509 2,660,590 2,659,827 (763) Other sources , ,129 Transfers out (815,439) (5,000) (4,690) 310 Net Financing Sources 1,638,070 2,655,590 2,757, ,676 NET CHANGE IN FUND BALANCES (4,146,101) (7,912,052) (7,199,884) 712,168 Fund Balance - Beginning 28,311,675 28,311,675 28,311,675 - Fund Balance - Ending $ 24,165,574 $ 20,399,623 $ 21,111,791 $ 712,168 59

93 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF THE DISTRICT S PROPORTIONATE SHARE OF THE NET PPENSION LIABILITY FOR THE YEAR ENDED JUNE 30, 2015 CalSTRS 2015 District's proportion of the net pension liability % District's proportionate share of the net pension liability $ 101,611,807 State's proportionate share of the net pension liability associated with the District 61,357,596 Total $ 162,969,403 District's covered - employee payroll $ 76,856,296 District's proportionate share of the net pension liability as a percentage of its covered - employee payroll % Plan fiduciary net position as a percentage of the total pension liability 77% CalPERS District's proportion of the net pension liability % District's proportionate share of the net pension liability $ 29,994,065 District's covered - employee payroll $ 27,680,980 District's proportionate share of the net pension liability (asset) as a percentage of its covered - employee payroll 108% Plan fiduciary net position as a percentage of the total pension liability 83% Note : In the future, as data become available, ten years of information will be presented. 60

94 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF DISTRICT PENSION CONTRIBUTIONS FOR THE YEAR ENDED JUNE 30, 2015 CalSTRS 2015 Contractually required contribution $ 7,336,518 Contributions in relation to the contractually required contribution (7,336,518) Contribution deficiency (excess) $ - District's covered - employee payroll $ 82,554,422 Contributions as a percentage of covered - employee payroll 8.89% CalPERS Contractually required contribution $ 3,492,894 Contributions in relation to the contractually required contribution (3,492,894) Contribution deficiency (excess) $ - District's covered - employee payroll $ 30,455,001 Contributions as a percentage of covered - employee payroll 11.47% Note : In the future, as data become available, ten years of information will be presented. 61

95 SUPPLEMENTARY INFORMATION 62

96 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 Pass-Through Federal Entity Federal Grantor/Pass-Through CFDA Identifying Federal Grantor/Program or Cluster Title Number Number Expenditures U.S. DEPARTMENT OF EDUCATION Passed through California Department of Education (CDE): No Child Left Behind Act: Title I - Basic Grants Low-Income and Neglected $ 750,771 Title II - Improving Teacher Quality Local Grants ,580 Title II - Administrator Training ,872 Title III - Immigrant Education Program ,880 Title III - Limited English Proficient (LEP) Student Program ,311 Special Education Cluster: Basic Local Assistance Entitlement ,623,652 Local Assistance, Private School ,800 Preschool Grants ,045 Preschool Local Entitlement A ,258 Preschool Staff Development A Total U.S. Department of Education 4,285,871 U.S. DEPARTMENT OF AGRICULTURE Passed through CDE: Child Nutrition Cluster: National School Lunch Program ,333 School Breakfast Program ,210 Especially Needy Breakfast ,496 Meal Supplements ,617 Commodity ,305 Total U.S. Department of Agriculture 797,961 Total Expenditures of Federal Awards $ 5,083,832 1 Amount not included in financial statement See accompanying note to supplementary information. 63

97 CUPERTINO UNION SCHOOL DISTRICT LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE JUNE 30, 2015 ORGANIZATION The Cupertino Union School District was organized in 1916 under the laws of the State of California. The District operates under a locally-elected five-member Board form of government and provides educational services to grades K - 8 as mandated by the State and Federal agencies. The District operates twenty elementary and five middle schools. GOVERNING BOARD MEMBER OFFICE TERM EXPIRES Phyllis Vogel President 2016 Josephine Lucey Vice President 2016 Anjali Kausar Clerk 2018 Kristen Lyn Member 2018 Soma McCandless Member 2018 ADMINISTRATION Wendy Gudalewicz Chris Jew Julia Yu Superintendent Chief Business Officer Director of Fiscal Service See accompanying note to supplementary information. 64

98 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE YEAR ENDED JUNE 30, 2015 Final Report Second Period Annual Report Report Regular ADA Transitional kindergarten through third 7, , Fourth through sixth 6, , Seventh and eighth 4, , Total Regular ADA 18, , Extended Year Special Education Transitional kindergarten through third Fourth through sixth Seventh and eighth Total Extended Year Special Education Special Education, Nonpublic, Nonsectarian Schools Transitional kindergarten through third Fourth through sixth Seventh and eighth Total Special Education, Nonpublic, Nonsectarian Schools Extended Year Special Education, Nonpublic, Nonsectarian Schools Transitional kindergarten through third Fourth through sixth Seventh and eighth Total Extended Year Special Education, Nonpublic, Nonsectarian Schools Total ADA 18, , See accompanying note to supplementary information. 65

99 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2015 Reduced Number of Days Minutes Minutes Actual Traditional Grade Level Requirement Requirement Minutes Calendar Status Kindergarten 36,000 35,000 36, Complied Grades ,400 49,000 Grade 1 52, Complied Grade 2 52, Complied Grade 3 52, Complied Grades ,000 52,500 Grade 4 56, Complied Grade 5 56, Complied Grade 6 56, Complied Grades ,000 52,500 Grade 7 56, Complied Grade 8 56, Complied See accompanying note to supplementary information. 66

100 CUPERTINO UNION SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2015 There were no adjustments to the Unaudited Actual Financial Report, which required reconciliation to the audited financial statements at June 30, See accompanying note to supplementary information. 67

101 CUPERTINO UNION SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2015 (Budget) GENERAL FUND Revenues $ 183,117,584 $ 163,479,309 $ 151,321,416 $ 142,482,714 Other sources and transfers in 2,687,590 2,761,956 3,032,614 2,453,509 Total Revenues and Other Sources 185,805, ,241, ,354, ,936,223 Expenditures 172,983, ,436, ,474, ,476,996 Other uses and transfers out - 4, ,862 Total Expenditures and Other Uses 172,983, ,441, ,474, ,906,858 INCREASE (DECREASE) IN FUND BALANCE $ 12,822,174 $ (7,199,884) $ 879,295 $ 1,029,365 ENDING FUND BALANCE $ 33,933,965 $ 21,111,791 $ 28,311,675 $ 27,432,380 AVAILABLE RESERVES 2 $ 30,967,912 $ 13,054,590 $ 9,596,982 $ 20,622,565 AVAILABLE RESERVES AS A PERCENTAGE OF TOTAL OUTGO % 7.53% 6.25% 14.33% LONG-TERM OBLIGATIONS OTHER THAN PENSION $ 262,444,958 $ 277,135,468 $ 289,774,071 $ 193,293,444 AVERAGE DAILY ATTENDANCE AT P-2 18,897 18,695 18,885 18,690 The General Fund balance has decreased by $6,320,589 over the past two years. The fiscal year budget projects an increase of $12,822,174 (61 percent). For a district this size, the State recommends available reserves of at least three percent of total General Fund expenditures, transfers out, and other uses (total outgo). The District anticipates incurring an operating surplus during the fiscal year. Total long-term obligations have increased by $83,842,024 over the past two years. The increase is mainly due to issuance of Measure H bonds. Average daily attendance has increased by 5 over the past two years. An increase of 202 ADA is anticipated during fiscal year Budget is included for analytical purposes only and has not been subjected to audit. 2 Available reserves consist of all unassigned fund balances including all amounts reserved for economic uncertainties contained in the General Fund. 3 On-behalf payments of $4,157,705, $3,788,119, and $3,801,306, have been excluded from the calculation of the available reserves percentage for fiscal years ending June 30, 2015, 2014 and 2013, respectively. See accompanying note to supplementary information. 68

102 CUPERTINO UNION SCHOOL DISTRICT NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2015 Child Capital Total Non-Major Development Cafeteria Facilities Governmental Fund Fund Fund Funds ASSETS Deposits and investments $ 6,251 $ 781,249 $ 1,090,241 $ 1,877,741 Receivables 7,626 30,329 19,832 57,787 Due from other funds - 2,004-2,004 Prepaid expenses Stores inventories - 145, ,990 Total Assets $ 13,877 $ 959,769 $ 1,110,073 $ 2,083,719 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 3,059 $ 24,124 $ 39,246 $ 66,429 Due to other funds 10,818-2,278 13,096 Total Liabilities 13,877 24,124 41,524 79,525 Fund Balances: Nonspendable - 148, ,146 Restricted - 787,499 1,068,549 1,856,048 Total Fund Balances - 935,645 1,068,549 2,004,194 Total Liabilities and Fund Balances $ 13,877 $ 959,769 $ 1,110,073 $ 2,083,719 See accompanying note to supplementary information. 69

103 CUPERTINO UNION SCHOOL DISTRICT NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 Child Capital Total Non-Major Development Cafeteria Facilities Governmental Fund Fund Fund Funds REVENUES Federal sources $ - $ 585,656 $ - $ 585,656 Other State sources 58,287 33,456-91,743 Other local sources - 3,424, ,221 4,174,932 Total Revenues 58,287 4,043, ,221 4,852,331 EXPENDITURES Current Instruction 57, ,144 Pupil services: Food services - 3,956,088-3,956,088 Administration: All other administration 1, ,164 22, ,685 Plant services - 19,963 40,159 60,122 Facility acquisition and construction , ,788 Total Expenditures 58,287 4,139, ,325 4,757,827 Excess (Deficiency) of Revenues Over Expenditures - (95,392) 189,896 94,504 Other Financing Sources (Uses) Transfers in - 4,690-4,690 Net Financing Sources (Uses) - 4,690-4,690 NET CHANGE IN FUND BALANCES - (90,702) 189,896 99,194 Fund Balance - Beginning - 1,026, ,653 1,905,000 Fund Balance - Ending $ - $ 935,645 $ 1,068,549 $ 2,004,194 See accompanying note to supplementary information. 70

104 CUPERTINO UNION SCHOOL DISTRICT NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2015 NOTE 1 - PURPOSE OF SCHEDULES Schedule of Expenditures of Federal Awards The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. The following schedule provides reconciliation between revenues reported on the Statement of Revenues, Expenditures and Changes in Fund Balances and the related expenditures reported on the Schedule of Expenditures of Federal Awards. The reconciling amounts represent Federal funds that have not been recorded in the current period. CFDA Number Amount Description Total Federal Revenues-Statement of Revenues, Expenditures and Changes in Fund Balances: $ 4,871,527 Commodities ,305 Total Schedule of Expenditures of Federal Awards $ 5,083,832 Local Education Agency Organization Structure This schedule provides information about the District's boundaries and schools operated, members of the governing board, and members of the administration. Schedule of Average Daily Attendance (ADA) Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of State funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs. 71

105 CUPERTINO UNION SCHOOL DISTRICT NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2015 Schedule of Instructional Time The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. The District neither met nor exceeded its target funding. This schedule presents information on the amount of instructional time offered by the District and whether the District complied with the provisions of Education Code Sections through Districts must maintain their instructional minutes at the requirement, as required by Education Code Section Reconciliation of Annual Financial and Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Unaudited Actual Financial Report to the audited financial statements. Schedule of Financial Trends and Analysis This schedule discloses the District's financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time. Non-Major Governmental Funds - Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances The Non-Major Governmental Funds Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances is included to provide information regarding the individual funds that have been included in the Non-Major Governmental Funds column on the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances. 72

106 INDEPENDENT AUDITOR S REPORTS 73

107 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Trustees Cupertino Union School District Cupertino, California We have audited, in accordance with the 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, each major fund, and the aggregate remaining fund information of Cupertino Union School District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Cupertino Union School District's basic financial statements, and have issued our report thereon dated November 30, Emphasis of Matter - Change in Accounting Principles As discussed in Note 16 to the financial statements, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Our opinion is not modified with respect to this matter. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Cupertino Union School District'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 Cupertino Union School District's internal control. Accordingly, we do not express an opinion on the effectiveness of Cupertino Union School District'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 District'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 was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 74

108 Compliance and Other Matters As part of obtaining reasonable assurance about whether Cupertino Union School District's financial statements are free from 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 District'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 District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Palo Alto, California November 30,

109 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Board of Trustees Cupertino Union School District Cupertino, California Report on Compliance for Each Major Federal Program We have audited Cupertino Union School District's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Cupertino Union School District's (the District) major federal programs for the year ended June 30, Cupertino Union School District's major Federal programs are identified in the summary of auditor's 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. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Cupertino Union School District'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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Cupertino Union School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Cupertino Union School District's compliance. Opinion on Each Major Federal Program In our opinion, Cupertino Union School District 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,

110 Report on Internal Control Over Compliance Management of Cupertino Union School District 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 Cupertino Union School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the 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 OMB Circular A-133, 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 Cupertino Union School District'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. 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 OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Palo Alto, California November 30,

111 INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE Board of Trustees Cupertino Union School District Cupertino, California Report on State Compliance We have audited Cupertino Union School District's compliance with the types of compliance requirements as identified in the Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting that could have a direct and material effect on each of the Cupertino Union School District's State government programs as noted below for the year ended June 30, Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its State's programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance of each of the Cupertino Union School District's State programs based on our audit of the types of compliance requirements referred to above. We conducted our audit 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 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting. These standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the applicable government programs noted below. An audit includes examining, on a test basis, evidence about Cupertino Union School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions. Our audit does not provide a legal determination of Cupertino Union School District's compliance with those requirements. Unmodified Opinion on Each of the Programs In our opinion, Cupertino Union School District complied, in all material respects, with the compliance requirements referred to above that are applicable to the government programs noted below that were audited for the year ended June 30,

112 In connection with the audit referred to above, we selected and tested transactions and records to determine the Cupertino Union School District's compliance with the State laws and regulations applicable to the following items: Procedures Performed Attendance Accounting: Attendance Reporting Yes Teacher Certification and Misassignments Yes Kindergarten Continuance Yes Independent Study No Continuation Education No Instructional Time Yes Instructional Materials Yes Ratios of Administrative Employees to Teachers Yes Classroom Teacher Salaries Yes Early Retirement Incentive No Gann Limit Calculation Yes School Accountability Report Card Yes Juvenile Court Schools No Middle or Early College High Schools No K-3 Grade Span Adjustment Yes Transportation Maintenance of Effort Yes Regional Occupational Centers or Programs Maintenance of Effort No Adult Education Maintenance of Effort No California Clean Energy Jobs Act Yes After School Education and Safety Program: General Requirements No After School No Before School No Proper Expenditure of Education Protection Account Funds Yes Common Core Implementation Funds Yes Unduplicated Local Control Funding Formula Pupil Counts Yes Local Control Accountability Plan Yes Charter Schools: Attendance No Mode of Instruction No Non Classroom-Based Instruction/Independent Study No Determination of Funding for Non Classroom-Based Instruction No Annual Instruction Minutes Classroom-Based No Charter School Facility Grant Program No We did not perform testing for Independent Study because the ADA generated is below the testing threshold. The District does not offer Continuation Education program, Early Retirement Incentive, Juvenile Court Schools, Middle or Early college High schools, Regional Occupational Centers, Adult Education, After School Education and Safety program, or Charter Schools, therefore, we did not perform procedures related to them. Palo Alto, California November 30,

113 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 80

114 CUPERTINO UNION SCHOOL DISTRICT SUMMARY OF AUDITOR S RESULTS FOR THE YEAR ENDED JUNE 30, 2015 FINANCIAL STATEMENTS Type of auditor's report issued: Internal control over financial reporting: Material weaknesses identified? Significant deficiencies identified? Noncompliance material to financial statements noted? FEDERAL AWARDS Internal control over major federal programs: Material weaknesses identified? Significant deficiencies identified? Type of auditor's report issued on compliance for major federal programs: Any audit findings disclosed that are required to be reported in accordance with Section.510(a) of OMB Circular A-133? Identification of major federal programs: Unmodified No None reported No No None reported Unmodified No CFDA Number(s) Name of Federal Program or Cluster Title II - Teacher Quality , A, , A Special Education Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? STATE AWARDS Type of auditor's report issued on compliance for State programs: $ 300,000 Yes Unmodified 81

115 CUPERTINO UNION SCHOOL DISTRICT FINANCIAL STATEMENT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 None reported. 82

116 CUPERTINO UNION SCHOOL DISTRICT FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 None reported. 83

117 CUPERTINO UNION SCHOOL DISTRICT STATE AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 None reported. 84

118 CUPERTINO UNION SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 There were no audit findings reported in the prior year's schedule of financial statement findings. 85

119 Cupertino Union School District 2015 Continuing Disclosure Annual Report Appendix B: Adopted Budget for Fiscal Year Ended June 30, 2016 B-1

120 Cupertino Union School District Adoption Budget Financial Report

121 CUPERTINO UNION SCHOOL DISTRICT FISCAL YEAR BUDGET BOARD OF EDUCATION Phyllis Vogel, President Josephine Lucey, Vice President Anjali Kausar, Clerk Soma McCandless, Member Kristen L yn, Member ADMINISTRATION Wendy Gudalewicz, Superintendent Nancy Johnson, Associate Superintendent, Human Resources Chris Jew, Chief Business Officer, Business Services Diane Elia, Associate Superintendent, Instruction Leslie Mains, Chief Engagement Officer Jeremy Nishihara, Chief Information Officer

122 CUPERTINO UNION SCHOOL DISTRICT 2015~201 S ADOPTION BUDGET TABLE OF CONTENTS PART I PART II MISSION STATEMENT OVERVIEW Budget Calendar Basis for Budget Presentation - by Fund Account Presentation - SACS ADA, Enrollment Historical Data General Fund Revenue Pie Chart General Fund Expenditures Pie Chart PART Ill FINANCIAl REPORTS -All FUNDS FTE Summary by Object, by Fund Fund 01 -General Fund Budget Assumptions Budget at a Glance Summary of All Funds Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Resource Budget Expenditure Summary by Function Budget Function I Object Recap Instruction Instructional Supervision Instructional Research Curriculum Development Instructional Staff Training Instructional Library, Media & Technology Other Instructional Resources School Administration Guidance and Counseling Services Psychological Services Attendance & Social Work Services Health Services Speech Pathology & Audiology Pupil Testing Services Pupil Transportation After School Sports Civic Center Board of Education Superintendent

123 CUPERTINO UNION SCHOOL DISTRICT 2015~2016 ADOPTION BUDGET TABLE OF CONTENTS Community Development & Public Information Family/Community Engagement External Financial Audit Other General Administration-Business Other General Administration-Facilities General Administration-Cost Transfer Fiscal Services Special Projects Administration Personnel/Human Resources Services Purchasing Warehousing and Distribution Printing, Publishing & Duplicating Risk Management Information Technology Electronic Services General Maintenance Vehicle Maintenance Operations Custodial Services Grounds Hazardous Materials Utilities Security Disaster Preparedness Energy Education Program Facility Acquisition and Construction Facility Modernization Deferred Maintenance Projects Americans with Disabilities Act Debt Service Fund 07 -Special Education Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 08 -Categorical Programs Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Resource Page

124 CUPERTINO UNION SCHOOL DISTRICT 2015~2016 ADOPTION BUDGET TABLE OF CONTENTS Fund 09 - lottery Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Goal Budget Goal I Object Recap Unassigned Regular Education (K-8) Regular Education (K-6) Elementary Planning Time Middle School WEB Training Middle School Libraries Intervention Support Start-up Classroom Instructional Materials Fund 12- Child Development Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Resource Fund 13 Student Nutrition Services Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 21 - Building Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 23 -General Obligation Bonds Budget Assumptions Budget Expenditure Summary by Object Budget Expenditure Summary by Function

125 CUPERTINO UNION SCHOOL DISTRICT ADOPTION BUDGET TABLE OF CONTENTS Fund 24- General Obligation Bonds Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 25 -Capital Reserve (Developer Fees) Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 62 -Self-Funded Insurance Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function Fund 63 -Workers' Compensation Fund Budget Assumptions Budget Revenue Summary by Object Budget Revenue Summary by Resource Budget Expenditure Summary by Object Budget Expenditure Summary by Function PART IV SUPPlEMENTAl information Multi-Year Projections Multi-Year Projection Assumptions CEEF Grant

126 N N The tnission of the Cupertino Union School District is to provide a child-centered environment that cultivates character, fosters academic excellence, and embraces diversity. District families, community, and staff join as partners to develop creative, exemplary learners vvith the skills and enthusiasm to contribute to a constantly changing global society. Adopted January 22,

127 BUDGET CALENDAR BASIS FOR PRESENTATION-BY FUND ACCOUNT PRESENTATION-SACS ADA, ENROLLMENT HISTORICAL DArfA GENERAL FUND REVENUE PIE CHART GE ERAL FUND EXPENDITURES PIE CHART

128 CUPERTINO UNION SCHOOL DISTRICT BUDGET DEVELOPMENT CALENHAR to the Board for Interim Financial January 7, 2015* Budget Advisory Committee Meeting February 2, 2015 February 4, 2015* Budget planning instructions and budget worksheets are to be distributed to all departments. The Business Services staff will meet with departments individually to assist in understanding the process. Budget Advisory Committee Meeting Febnmry 24, 2015 Budget worksheets are to be returned to the business office for review. March 4, 2015* Budget Advisory Committee Meeting 2015 Financial April 1, 2015* Budget Advisory Committee Meeting Present to the Board. May 6, 2015* Budget Advisory Committee Meeting May 26, 2015 Present Preliminary Budget to the Board. Hold Public Hearing on L,CAP and Budget Adoption. Budget Study Session - Budget Advisory Committee Revise 2015 Board and LCAP ~- Budget Advisory Meetings held monthly-- additional meetings to be scheduled as needed (all meetings are subject to change) 2

129 The accoui1ting system of Cupertino Union School District is organized and operated on the basis of self-balancing accounts, which comprise its assets, liabilities and fund balances, revenues and expenditures as appropriate. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The various types of funds, as defined by the California State Accounting Manual, are as follows: General Funds: The general funds are used to account for the ordinary operations of the district. All transactions except those required or permitted by law to be in another fund are accounted for in these funds. These funds are divided into unrestricted and restricted general funds. The unrestricted general funds are used to account for those projects and activities that are funded with unrestricted revenues. The restricted general funds are used to account for those projects and activities that are funded by external revenue sources that are legally restricted by the donor to specific purposes. The district's unrestricted general funds comprise General Fund and Lottery Fund. The restricted general funds comprise Special Education Transportation, Home-to-School Transportation, Special Education, and Categorical Programs. SQecial Revenue Funds: The special revenue funds are established to account for the proceeds from specific resources, which by law are restricted to the financing of particular activities. The district's special revenue funds comprise Child Development, Student Nutrition Services, and Deferred Maintenance funds. The Child Development Fund is used to account for federal, state and local revenues to operate child development programs. The Student Nutrition Services Fund is used to account separately for federal, state, and local resources to operate the food service program. The Deferred Maintenance Fund is used to account for state apportionments and the district's contributions for defened maintenance purposes. i=aqital Projects Funds: The capital projects funds are established to account for financial resources to be used tor the acquisition or construction of major capital facilities. The district's capital projects funds comprise Building Fund, Capital Facilities Fund, Capital Reserve Fund for Capital Outlay Projects and County School Facilities Fund 3

130 The Building Fund is used to account separately for proceeds from the sale of bonds and the revenue from rentals and leases of real property. The Capital Facilities Fund is used to account for money received from fees levied on developers or other agencies as a condition of approving a development The Capital Reserve Fund fbr Capital Outlay Projects exists primarily to provide for the accumulation of money for capital outlay purposes. The County School Facilities Fund is established to receive apportionments from the State School Facilities Fund authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants. Debt Service Funds: The debt service funds are established to account f(x the accumulation of resources for and the payment of the principal and interest on general long-term debt. The distlict's debt service funds comprise Bond Interest and Redemption Fund, and Certificates of Participation Fund. The Bond Interest and Redemption Fund is used for the repayment of bonds issued for the district. The county auditor maintains control over the district's Bond Interest and Redemption Fund. The principal and interest on the bonds are paid by the county treasurer from taxes levied by the county auditor-controller. The Certificates of Participation Fund is used for the accumulation of resources for and the retirement of principal and interest of the outstanding Cetiificates of Participation (COPs). Self-Insurance Funds: The self-insurance funds are used to separate money received for self-insurance activities from other operating funds. The district has established two self-insurance funds: Health & Welfare and Workers' Compensation. Expense transactions recorded in these funds include the payment of claims, estimates of costs relating to incuued-but-not-reported (IBNR), administrative costs, deductible insurance amounts, cost of excess insurance, and other related costs. 4

131 s As required by the Federal and State governments, the district implemented the SACS (Standardized Account Code Structure) in The standardized structure was developed to accomplish the objectives of establishing a uniform, comprehensive, and minimum chart of accounts statewide to improve financial data collection, reporting transmission, accuracy and comparability and providing better information for use by administrators, parents, board members, legislators, and others interested in school finance. The district's accounting data is organized and presented in the following fields as required by the SACS: Fund, Locathm, Resource, Goal, Function, Object, Local Program, Project Year and Cost Center. These fields in sequence make up the account strings of the district's accounting numbers. These fields are defined by the California State Accounting Manual as follows: Fund: Establishes a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, all related liabilities, and residual equities and balances or changes therein. Location: Designates a specific school structure under a principal's responsibility or a cost center under a department manager's responsibility. Resource: Tracks revenues and resulting expenditures in accordance with restrictions or special reporting requirements placed by law or regulation. Goal: Accumulates costs by instructional goals and objectives of a school district. Function: Represents a general operational area in the district and groups together related activities or services performed to accomplish the goal. QQj,!: Captures the service or commodity obtained as a result of a specific expenditure, a general source and type of revenue, or a balance sheet account. Local frogrart!: Further accumulates costs by specific sub-programs in the district.,r_roject Year: Distinguishes the activities of the sa1ne grant with different project years within the fiscal year. -=~~~== Captures revenues or related costs of programs designated by resource, goal, function or local program code.

132 ADA AND ENROLLMENT HISTORIC DATA The average daily attendance is a calculation of the number of students in class on an average day. The ADA determined for the attendance period ended before April 15 (P-2 ADA) is the base for the Revenue Limit calculation. Before the P-2 ADA is available, the district uses the CBEDS (Califomia Basic Educational Data System) enrollment in October and the percentage of ADA as of CBEDS enrollment historic data to project the P-2 ADA. The charts on the following pages demonstrate the historical data of the district's CBEDS enrollment, Average Daily Attendance (ADA) at P-2, and Percentage of P-2 ADA vs. CBEDS Enrollment over the last eleven years. 6

133 CUPERTINO UNION SCHOOL DISTRICT CBEDS Enrollment Report FY through FISCAL CBEDS % INC/(DEC) YEAR Enrollment Iocr. OVERPRYR CBEDS Enrollment , % , , % ,500 19, , % , ,500..: , % ,000 16, , % , , % , % , % , % (116) ** 19, % 109 ** Estimated 7

134 CUPERTINO UNION SCHOOL DISTRICT AVERAGE DAILY ATTENDANCE (ADA) AT P-2 FY through FISCAL ADA % JNC/(DEC) In cr. OVERPRYR Average Daily Attendance co , % , % ,500 19, , % , , % , ~ 17, , % , , % , , , % , , % , % , % (108) ** 18, % 101 ** Estimated 8

135 CUPERTINO UNION SCHOOL DISTRICT P-2 ADA vs. CBEDS ENROLLMENT From to P-2 P-2 Ex. P-2 CBEDS ADAaso/oof Years ADA ADA Abx. ADA % EnroUmen1 % Enrollment (Projected) ~unded) less I ncr (October) lncr E:r. Abs. 19,400 - ADA vs. CBEDS ENROLLMENT 19, 100..J ~ _...A ,304 16, , % 16, % % / -- - ~ ,800, I, ,676 16, , % 16, % % / / 18,500 /,' ,986 16, , % 17, % %, /,, 18, ,292 17, , % 17, % % }I I/ 17,900 ' ,641 17, , % 18, % % / ' 17,600 v ,064 18, , % 18, % % v,' / / 17, ,370 18, , % 18, % % ,692 18, , % 19, % % ,904 18, , % 19, % % 16,700,' ,796 18, ,904!.13% 19, % % 16,400 '' ' ' * 18,897 18, , % 19, % % 16,100 17,000 I /,,,'' ) r- / ADA ~,,' - Enrollm ent * Estimated funded ADA 15,800 15,

136 General Fund Revenues Adoption Budget General Fund Projected Revenues 7 4% of the District's revenues are generated from the District's state aid Other State 9% Federal 2% Other Sources Most of the District's General Fund revenue is generated from the District's state aid from the Local Control Funding Formula (LCFF). Public education--unlike any other public agency--receives most of its revenue based on the population it serves. Other major sources of revenues are the local income and the categorical income from the State. The local income includes the Measure A Parcel Taxes, which generate a total of $8. 75M for eight years. The categorical income is from both the restricted and unrestricted programs. Most of the categorical programs are now unrestricted, part of the LCFF. Federal income is a small corner of the entire District income but it is growing as new federal commitments are added. Again, most of the federal income is restricted since it must be expended for purposes that are determined by the grantor and not the local Board of Education. General Fund Sources (In Million $) State Aid $138 Federal 4 Other State 16 Other Local 24 Other Source 3 The District's total resources for expenditure in the budget year include a "beginning balance," which is a restricted and unrestricted carryover balance of funding from the prior year. A portion of the beginning balanced must remain as a Reserve for Economic Uncertainties. Total Revenues 185 Beginning Balance 20 Total General Fund $185 10

137 General Fund Expenditures Books and Supplies 6% It takes people to teach people and 85% of the District's total expenditures are committed to the employees of the District Adoption Budget General Fund Projected Expenditures Contracts & Operating Employee -/ Benefits 18% Capital Outlay/Other 0% Certificated Salaries 49% Most of the expenditures of the District are to pay the salaries and benefits of the employees of the District. It takes people to teach people and in Cupertino Union School District, 85% of the District's budgeted expenditures are for the services of District employees. Employee salaries are divided into two separate line items -certificated and classified employees. The certificated employees include teachers, nurses, librarians, psychologists, principals, vice principals, instructional leaders, or others who provide services that require credentials from the state of California. Classified employee salaries include all of the support personnel in the District including salaries for positions such as secretaries, accountants, bus drivers, mechanics, painters, custodial personnel and management such as department managers or others who provide support services for the school sites. The employee benefits consist of health & welfare and statutory benefits. The health and welfare benefits alone represent 7. 8% of the general fund budget. The statutory benefits include retirements (STRS and PERS), OASDI, Medicare, unemployment and workers' compensation benefits. General Fund Expenditures (In Million$) Classified Salaries 18% Certificated Salaries Classified Salaries Employee Benefits Books and Supplies Operating Expenses Capital/Other Total Expenditures Ending Balance Total General Fund $ $205 11

138

139 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) Fund Oi- General Fund First Interim Second Interim Prelim Difference ** RegularTeachers Summer School Teachers Counselors Psychologists Nurses Superintendent Assistant Superintendent Directors Principals Assistant Principals Coordinators Other Certificated Salaries Resource Teachers Total1000s (1.000) lnstr'l Assistants - Classroom School Technology Specialist School Media Clerk Maint & Operations - Personnel Transportation - Regular Personnel Assistant Superintendent Director Manager/Coordinator Supervisor Clerical & Office- Personnel Categorical Program Coordinator Total2000s (0.813) (0.500) (0.250) Total Fund 01 **Teacher FTE total includes FTE for Extra Periods 12

140 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First Interim Second Interim Prelim Object Description Budget Budget Budget Difference 10/07/14 12/15/14 05/05/15 Fund 07- Special Education Special Education Teachers Speech Pathologists Psychologists Nurses Assistant Superintendent (0.200) Directors Coordinators Other Certificated Total 1000s lnstr'l Assistants- Classroom (0.998) Manager Supervisor Clerical & Office - Personnel (0.400) Other - Classified Total2000s (0.398) Total Fund l3

141 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First Interim Second Interim Prelim Object Description Budget Budget Budget Difference 10/07/14 12/15/14 05/05/15 Fund 08 - Categorical Programs Regular Teachers (4.000) Nurses Resource Teachers Total 1000s lnstr'l Assistants- Classroom (0.375) School Technology Specialist (1.748) School Media Clerk Maintenance & Operations Directors Supervisors Clerical & Office- Personnel Categorical Program Coordinator Total2000s Total Fund (0.373) 14

142 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First Interim Second Interim Prelim Difference Fund 09 - Lottery Regular Teachers Resource Teachers Total 1000s lnstr'l Assistants - Classroom School Technology Specialist School Media Clerk Clerical & Office - Personnel Total2000s (0.626) Total Fund 09

143 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First interim Second Interim Prelim Difference Fund 13 - Student Nutrition Food Services - Drivers Food Services - Regular Personnel Director Supervisor Clerical & Office - Personnel Total 2000s Total Fund 13 16

144 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 20'15) First Interim Second Interim Prelim Difference Fund 24 - General Obligation Bond Directors Clerical & Office - Personnel Total2000s Total Fund 24 17

145 CUPERTINO UNION SCHOOl DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First Interim Second Interim Prelim Difference Fund 62 -Self-Funded Insurance Director Clerical & Office - Personnel Total 2000s Total Fund 62 18

146 CUPERTINO UNION SCHOOL DISTRICT POSITION SUMMARY BY OBJECT CODES AND BY FUNDS PRELIMINARY BUDGET (AS OF May 5, 2015) First Interim Second Interim Prelim Difference Fund 63 -Workers' Compensation Assistant Superintendent Director Clerical & Office - Personnel Total 2000s Total Fund 63 Total All Funds 19

147 BUDGET ASSUMPTIONS BUDGET AT A GLANCE SUMMAR OF ALL FUNDS T EE-YEA COMPARATIVE FINANCIAL REPORTS

148 The followilrng information represents the major bllldget assmnptions being lllsed in preparation of the Preliminary Budget for H6. These asslllmptions include many of the provisions included in the Governor's January Proposed Bllldget, May Revise and subsequent legislative bills. Enrollment: FEDERAL AND STATE REVENUE The enrollment for CBEDS on October 7, 2015 is projected to be , which is based on the projected P-2 ADA and the average conversion ratio of % for ADA. The projected enrollment is an increase of 109 over the CBEDS of ADA: The ADA is projected to be 18,897, an increase of 101 ADA from the estimated P-2 ADA of 18,796 of If the enrollment declines below the level, the district will receive the guaranteed state funding based on the actual P-2 ADA of Independent study ADA is included and is limited to a minimum of 5 days per state law. The total LCFF funds for are $136,073,754, based on the calculation from the School Services of California (SSC). The calculation is based on the following: a COLA of 1.02%, estimated ADA of 18,897, based funding of$7,025 per ADA, supplemental grant of$176 per ADA, and the gap funding rate of 53.08%. The LCFF funds consist of the following funding: $86,743,750 from property taxes, $8,754,696 from EPA Entitlement, $10,077,234 from Categorical programs, and $30,498,074 from State Aid. The amount of$3,331,209 of the total LCFF is restricted in the Supplemental grant, which can only be used for unduplicated count student population. Home to School transportation and Special Education transportation programs are now unrestricted and are part of the categorical programs included in LCFF. Other categorical programs included in the LCFF are: Class Size Reduction program, Economic Impact Aid, Deferred Maintenance, Hourly Supplemental program, Oral Health program, and all Tier Ill programs. The categorical programs included in LCFF will be excluded from any COLA increase. The funding projection for other programs for is summarized as follows: l. Title II Teacher Quality Funding: $ 279, Title I Funding: $ 389, Title III -- LEP Funding: $ 214, Title ljl - Immigrant Education Funding: $ 241, Mandate Block Grant Funding: $ 528, One-Time Mandate Reimbursement Funding: $11,247,018 20

149 Lottery: The Lotte1y revenue is projected to be $ per ADA, or l2_,l26,208 for unrestricted non- Proposition 20 funding and $34.00 per ADA, or $6]J_,_021 for restricted Proposition 20 funding. LOCAL REVENUE 1. On May , the community approves Measure A which assesses $250 per parcel and generates $8,750,000 annually, starting July 1, 2015 for eight years. The Measure A replaces the parcel tax measures from 2009 and Civic Center revenue is projected to be.$_282, The inter-fund transfer-in is projected to $2d2l,..S_Q.2 from the Building Fund to the Routine Restricted Maintenance Account (RRMA). ENCROACHMENT/CONTRIBUTION 1. Tnmsportation will encroach upon the Unrestricted General Fund by $1_,_605, Special Education - AB602 funding has been designated to each SELPA. Allocation of income from equalization, growth and COLA are SELPA specific and are addressed in the Budget Allocation Plan. The implementation of LCFF eliminates the ADA transfer but includes the COE County fund transfer in the AB602 calculation, which increases the encroachment. The encroachment upon the unrestricted General Fund for is estimated to be $15,)j_fi,61.2~. 3. Routine Restricted Maintenance Account (RRMA) - The district received the School Facilities Program (Proposition 47) Grant in , and is required by law to reserve an amount equal to 3% of total general fund budget plus other financing sources in the Routine Restricted Maintenance Account for twenty years after receipt of the grant. This requirement is restored for after being suspended for through The District continues its expenditures of.$5,l89_,42.q in the Routine Restricted Maintenance Account (RRMA) for Salaries and Benefits: EXPENDITURES The District reached a one-year salary and benefit agreement with all employee units for the fiscal year ending June 30,2015. The negotiation with the employee units for will begin soon. The technology support allocation of $20 per student for all sites is budgeted at.3ju.j.~q, The total expenditures for LCFF Supplemental Grant are budgeted at $3,331,202.'1 and One-Time Mandate Reimbursement is budgeted at $_1402,

150 The statutory benefits in this budget include the following rates: Unemployment Insurance rate of.q.oj_~q, PERS employer contribution at JJ.85%, and STRS rate at j_q]]_%. Workers' Compensation premium is budgeted at _$1.68 per $1 00 payroll. The health & welfare obligation amount is calculated to be $J3,551_502. The cost of certificated and classified "step and column" movements for all currently employed eligible staff, including benefits, is estimated at $2,226,41Q. The differential from certificated employee retirements is estimated at $lli_,_2_qj_ m salaries and benefits (based on 13 retirees and new hire's salary at Column D, Step 5). The property & liability premium is budgeted at $813,092. The energy cost (gas and electricity) is budgeted at$2_, 15,156_. THREE-YEAR COMPARATIVE FINANCIAL REPORTS The three-year financial reports are in an easy at-a-glance format, which lists prior year revised budget, prior year actual amount, current year revised budget, and the proposed budget for the new fiscal year. The three-year financial reports for this fund are organized and sorted as follows: * Budget Revenue Summary by Object- revenues sorted by account numbers * Budget Revenue Summaty by Resource revenues sorted by resource codes * Budget Expenditures Summary by Object- expenditures sorted by account Budget Expenditures Summmy by Resource expenditures sorted by resource Budget Expenditures Summmy by Function expenditures sorted by function Budget Function I Object Recap - each department's expenditures sorted by account numbers 22

151 CUPERTINO UNION SCHOOL DISTRICT BUDGET AT A GLANCE & Estimated Actual Adoption Budget Unrestricted Restricted Total Unrestricted Restricted Total BEGINNING BALANCE -JULY '1 $23,481,906 $4,829,771 $28,31 i,677 $17,370,492 $1,795,480 $19,165,972 Total Revenue Total Contributions & Encroachments Total Transfers In /Other Sources Grand Total Revenue $136,920,948 ($17,221,212) $234,080 $119,933,816 $25,040,893 $161,961,841 $17,221,212 $0 $2,453,509 $2,687,589 $44,715,614 $164,649,430 $159,794,974 ($18,354,600) $234,081 $141,674,455 $23,322,611 $183,117,585 $18,354,600 $0 $2,453,509 $2,687,590 $44,130,720 $185,805,175 Total Expenditures Total Transfers Out/Other Uses Total Expenditures $126,045,230 $0 $126,045,230 $47,749,905 $173,795,135 $0 $0 $47,749,905 $173,795,135 $129,147,449 $0 $129,147,449 $43,835,552 $172,983,001 $0 $0 $43,835,552 $172,983,001 Revenue Less Expenditures ($6,111,414) ($3,034,291) ($9, 145,705) $12,527,006 $295,168 $12,822,174 ESTIMATED ENDING BALANCE- JUNE 30 $17,370,492 $1,795,480 $19,165,972 $29,897,498 $2,090,648 $31,988,146 N w COMPONENTS OF ENDING BALANCE Nonspendable (Working Capital): Revolving Cash Stores (Warehouse) Prepaid Expenses Total Working Capital $75,000 $61,714 $165,626 $302,340 $302,340 $75,000 $ $165,626 $302,340 $302,340 Restricted: Categorical Programs $1,795,480 $1,795,480 $2,090,648 $2,090,648 Assigned: Tier Ill Categorical Programs Balance One-Time Mandate Reimbursement One-Time Mandate Reimbursement Various School/Program Carryovers $1,497,287 $966,284 $1,717,139 $1,497,287 $966,284 $1,717,139 $1,497,287 $966,284 $7,844,298 $1,202,503 $1,497,287 $966,284 $7,844,298 $1,202,503 Unassigned!Unappropriated: Additional Reserve for Future Downturn Reserve for Economic Uncertainties (3%) $6,000,000 $5,213,854 $6,000,000 $5,189,490 Unassigned/Unappropriated Amount $1,673,589 $6,895,296 * Unrestricted Funds: General Fund and Lottery **Restricted Funds: Special Education Transportation, Home-to-School Transportation, Special Education, and Categorical Programs.

152 SUMMARY OF CUPERTINO UNION SCHOOL DISTRIC FUNDS ADOPTION BUDGET JULY01,2015 ADOPTION BUDGET Fund 01 Fund OS 07/01115 Lottery REVENUE SOURCES: Unrestricted State Aid $136,~73, Federal Other State ( ) $4,721 Unrestricted lottery & Lottery- Prop 20 $2,526,208 Mandate Block Grant/One- I ime Funding $11,775,730 Local Revenue $25,000 $2,700 MANLEA-Medi Cal Parcel Tax (ending , ) $8,750,000 Developer Fees Interest $82,430 $40,583 Civic Center $282,872 Transportation Fees $230,974 Rental Income Student Care Other Sources TOTAL REVENUE $15!,225,482 $2,569,491 Sub-Total Sub-Total General Fund 07 Fund OS General Fund Sp. Ed. Categorical Fund unrestricted Restricted Restricted restricted $136,073,755 $2,026,475 $2,026,47' $0 $3,039,424 $1,125,422 $4,164,84E $4,721 $923,998 $14,000 $937,99c $2,526,208 $671,024 $671,024 $11,775,730 $0 $27,700 $9,658,322 $9,658,323 $0 $0 S8,750,000 $0 $0 $0 $123,013 $0 $282,872 $0 $230,974 I $0 $0 $0 $0 I $0 $0 $5,863,946 $5,863,946 S159,794,973 $11,853,843 $11,468,768 $23,322, Total Fund 12 Fund 13 Gone.ral Fund Child Care Cafeteria,,,100,230 ~0 $4,164, % $600,000 $942, % $100,648 $33,000 $3,197, % $11,775, % $9,686, % $3,606,000 $0 0.00% $8,750, % $0 0.00% $123, % $5,000 $282, % $230, % $0 0.00% $0 0.00% $5,863, % $183,117, % $100,648 $4,244,000 - EXPENDITURES: Certificated Salaries $72,647,444 S695,562.. Classified Salaries I $16,940,951 $1,259,533 Employee Benefits S23,989,861 $594,283 Books and Supplies $6,825,702 S46,684 Services & Other $7,699,693 ($1,596,755) Capital Outlay $310,000 Direct Cost/Indirect Cost Transfer ($342,543) Other Outgo/ Debt Services (#7439) I S77,034 TOTAL t:xpense $128,148,142 S999,307. Rev less Exp. $29,077,340 $1,570,184 Other Financing sources/uses: lnterfund Transfer ln $234,081 lnterfund Transfer Out ---~-~ Other _i"inancing Sources -- Other rinancing Uses, ~c - Contribution (8980)-Specia! Education ($15,518,619) Contribution (8980)--RRMA ($2,835,981) iotal TRANSrERS ($18, 120,519) so Net!ncr/(Decr)in Fd Ba! S1 0,956,821 $1,570,184 Unaudited Beginning Bal-711 S4,534,349 S12,836,143 Ending Fund Bal $15,491,170 $14,406,327 I $73,343,006 s1 o, 136,324 I $1,111,918 11,248,242 $18,200,484 $9,352,733 ' $3,254,700 $12,607,433 $24,584,144 $5,513,368 1 $1,207,797 $6,721,165 $6,872,386 $176,475 T $4,156,472 $4,332,947 $6,102,938 $1,867,156 1 $6,860,912 $8,728,068 $310,000 I $28,215 $28,215 ($342,543) $31,237 i $138,244 $169,481 $77,034 I $0 $129,147,449 $27,077,293 ' $16,758,258 $43,835,551 I $30,647,524 ($15,223,450)1 ($5,289,490) ($20,512, I $234,081 $2,453,509 S2,453,509 so i $0 $0 $0 so $0 ($15,518,619) $15,518,619 S15,518,619 (S2,835,981) $2,835,981 $2,835,981 ($18,120,519) $15,518,619 $5,289,490 S20,808, 109 $12,527,005 S295,169 $0 $295,169 $17,370,492 $895,479 $900,000 $1,795,479 S29,897,497 $1,190,648 $900,000 S2,090,648 $84,591, % $30,807, % $1,615,311 $31,305, % $472,855 $11,205,333 6,48% $1,906,500 $14,831, % $98,675 $111,300 $338, % $85,000 ($173,062) -0.10% $1,973 $171,089 $77, % $172,983, % $100,648 $4,362,055 $2,687, % $0 0.00% $0 0.00% $0 ($118,055) $0 $0 so $2,687, % $0 $0 $12,822,175 $0 ($118,055) $19,165,971 $0 $852,424 S31,988,146 so $734,369 5/21/20158:57 AM Fund Summary- Adoption

153 SUMMARY OF CUPERTINO UNION SCHOOL DISTRIC FUNDS ADOPTION BUDGET JULY01,2015 ADOPTION BUDGET Fund 21 (8705) 07/01/15 Leased Sites REVENUE SOURCES: State Aid Federal Other State ( ) lotte;y & Lotte;y- Prop 20!.llandate Block ~rant/one-time Funding l Building Local Revenue $4,703 MAAILEA-Medi Cal Parcel Tax (ending , ) Developer Fees Interest Civic Center 1 ransportaiion Fees Rental Income Student Care Other Sources ~ j $20,000 $1,560,663 TOTAL Rt:VENUE $1,585, Fund 21 (8706) Child Care Building $1,017,024 $1,017, I Fund 23 Fund 24 Fund 25 Fund 62 Fund 53 GO Bond-2001 GO Bond-2012 Dev. Fees Self-Fund Ins Self-Fund we $600,000 $20,511,068 $1,991,678 $90,000 $3,000 $10,000 $12,000 -~ r----- $0 $90,000 $603,000 $20,521,068 $2,003,678 Grand Total All Funds $138,100, % $4,764, % $1,076, % $3,197, % $11,775, % $35,799, % so 0.00% $8,750, % $600, % $263, % $282, % $230, % $1,560, % $1,017, % $5,863, % $213,282, % N l.jl EXPENDITURES: Certificated Salaries Classified Salaries t=$25,000 Employee Benefits ' $2,346 Books and Supplies $34,647 Services & Other S442,57o 1 Capital Outlay $22,886 Direct Cost/Indirect Cost Transfer Other Outgo/ Debt Services (#7439) TOTAL EXPENSE $527,449.. $9,000 $845 $9,816 $54,143 $10,635 $84,439 - $16,000 $310,849 $2,000 $82,648 $89,127 $1,501 $77,082 $188 $17,915 $20,085 $201,000 $183,618 $253 $828,000 $331,583 $20,244,913 $1,751,623 $52,499 $16,807,863 $85,611 $70,000 $18,224,794 $603,000 $20,345,476 $1,861,088 $84,591, % $32,957, % $31,898, % $13,541, % $38,693, % $17,402, % ($0) 0.00% $77, % $219,161, % Rev less Exp. $1,057,917 Other Financing sources/uses:!nterfund transfer In lnterfund Transfer Out ($1,400,000) Other Financing Sources Other Financing Uses Contribution (8980)--Special Education Contribution (8980)-RRMA TOtAL TRANSFERS ($1,400,000) Net lncr/(decr)in Fd Bal ($342,083) Unaudited Beginning Bal-7/1 $3,348,700 Ending Fund Bai. -6/30 $3,006, $932,585 ($1,053,509) ($1,053,509) ($120,924) $764,314 $643,390 (S70,000) ($18,134,794) so $175,592 $142,590 - ($234,081) $0 so $0 ($234,081) $0 ($70,000) ($18, 134,794) $0 ($58,489) $142,590 $70, $18,486,790 $0 $1,658,337 $562,822 $351,996 $0 $1,599,848 $705,412 ($5,879,581 $2,687, % ($2,687, % $0 0.00% $0 $0 $0 so ($5,879,581) $44,909,358 <... $39,029,778 5/21/20158:57 AM Fund Summary- Adoption