The date of this Official Statement is February 22, 2016.

Transcription

1 NEW ISSUES BOOK-ENTRY ONLY BANK QUALIFIED Rating: MOODY S: Aa3 See BOND RATING herein Subject to compliance by the District with certain covenants, in the opinion of Chapman and Cutler LLP, Chicago, Illinois ( Bond Counsel ), under present law, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Bonds is not exempt from present State of Illinois income taxes. See TAX EXEMPTION herein for a more complete discussion. The Bonds are qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See QUALIFIED TAX-EXEMPT OBLIGATIONS herein. School District Number 159 Will County, Illinois (Mokena) $2,865,000 General Obligation Limited School Bonds, Series 2016A $4,080,000 General Obligation Refunding School Bonds, Series 2016B Dated: March 7, 2016 Due: December 1, as further described on the inside cover page The General Obligation Limited School Bonds, Series 2016A (the Series 2016A Bonds ), and General Obligation Refunding School Bonds, Series 2016B (the Series 2016B Bonds, and together with the Series 2016A Bonds, the Bonds ), of School District Number 159, Will County, Illinois (the District ), will be issued in fully registered form and will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. Ownership by the beneficial owners of the Bonds will be evidenced by book-entry only. Payments of principal of and interest on the Bonds will be made by The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, as bond registrar and paying agent, to DTC, which in turn will remit such payments to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments of principal of and interest on the Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. Individual purchases of the Bonds will be made in the principal amount of $5,000 or any integral multiple thereof. The Bonds will bear interest from their dated date at the rates per annum as shown on the inside cover page. Interest on the Bonds (computed on the basis of a 360-day year consisting of twelve 30-day months) will be payable semi-annually on each June 1 and December 1, commencing December 1, Proceeds of the Series 2016A Bonds will be used to (a) increase the working cash fund of the District and (b) pay costs associated with the issuance of the Series 2016A Bonds. Proceeds of the Series 2016B Bonds will be used to (a) refund certain of the District s outstanding bonds and (b) pay costs associated with the issuance of the Series 2016B Bonds. The Series 2016A Bonds due on or after December 1, 2028, and the Series 2016B Bonds due on or after December 1, 2027, are subject to redemption prior to maturity at the option of the District, as a whole or in part, on any date on or after December 1, 2025, at the redemption price of par plus accrued interest to the redemption date. See THE BONDS Redemption herein. In the opinion of Bond Counsel, the Series 2016A Bonds are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate, except that the rights of the owners of the Series 2016A Bonds and the enforceability of the Series 2016A Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The amount of said taxes that may be extended to pay the Series 2016A Bonds is limited as provided by law. See THE BONDS Security Series 2016A herein. In the opinion of Bond Counsel, the Series 2016B Bonds are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Series 2016B Bonds and the enforceability of the Series 2016B Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. See THE BONDS Security Series 2016B herein. The Bonds are offered when, as and if issued by the District and received by Robert W. Baird & Co. Incorporated, St. Charles, Illinois (the Underwriter ), subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, and certain other conditions. Chapman and Cutler LLP, Chicago, Illinois, will also act as Disclosure Counsel to the District. It is expected that beneficial interests in the Bonds will be available for delivery through the facilities of DTC on or about March 7, The date of this Official Statement is February 22, 2016.

2 School District Number 159 Will County, Illinois (Mokena) $2,865,000 GENERAL OBLIGATION LIMITED SCHOOL BONDS, SERIES 2016A MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS MATURITY (DECEMBER 1) AMOUNT INTEREST RATE YIELD CUSIP NUMBER * (968869) 2016 $ 85, % 0.85% FN , % 1.15% FP , % 1.30% FQ , % 1.50% FR , % 1.65% FS , % 1.80% FT , % 2.00% FU , % 2.20% FV , % 2.35% FW , % 2.50% FX0 4.00% $440,000 Term Bond due December 1, 2028, Yield 2.73%, CUSIP* FY8 4.00% $495,000 Term Bond due December 1, 2031, Yield 2.95%, CUSIP* FZ5 4.00% $760,000 Term Bond due December 1, 2035, Yield 3.20%, CUSIP* GA9 $4,080,000 GENERAL OBLIGATION REFUNDING SCHOOL BONDS, SERIES 2016B MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS MATURITY (DECEMBER 1) AMOUNT INTEREST RATE YIELD CUSIP NUMBER * (968869) 2020 $195, % 1.65% GB , % 1.80% GC , % 2.00% GD , % 2.20% GE , % 2.35% GF , % 2.50% GG6 4.00% $480,000 Term Bond due December 1, 2027, Yield 2.64%, CUSIP* GH4 4.00% $520,000 Term Bond due December 1, 2029, Yield 2.81%, CUSIP* GJ0 4.00% $560,000 Term Bond due December 1, 2031, Yield 2.95%, CUSIP* GK7 4.00% $610,000 Term Bond due December 1, 2033, Yield 3.10%, CUSIP* GL5 4.00% $660,000 Term Bond due December 1, 2035, Yield 3.20%, CUSIP* GM3 * CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw-Hill Companies Financial. No representations are made as to the correctness of the CUSIP numbers. These CUSIP numbers may also be subject to change after the issuance of the Bonds.

3 No dealer, broker, salesman or other person has been authorized by the District or Robert W. Baird & Co. Incorporated, St. Charles, Illinois (the Underwriter ), to give any information or to make any representations other than those contained in this Official Statement in connection with the offering described herein and if given or made, such other information or representations must not be relied upon as statements having been authorized by the District, the Underwriter or any other entity. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the Bonds, nor shall there be any offer to sell or solicitation of an offer to buy the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is submitted in connection with the sale of the securities described in it and may not be reproduced or used, in whole or in part, for any other purposes. Unless otherwise indicated, the District is the source of all tables and statistical and financial information contained in this Official Statement. The information contained in this Official Statement concerning DTC has been obtained from DTC. The other information set forth herein has been furnished by the District or from other sources believed to be reliable. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date of this Official Statement. This Official Statement should be considered in its entirety and no one factor considered more or less important than any other by reason of its position in this Official Statement. Where statutes, reports or other documents are referred to herein, reference should be made to such statutes, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. Any statements made in this Official Statement, including the Exhibits and Appendices, involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of such estimates will be realized. This Official Statement contains certain forward-looking statements and information that are based on the District s beliefs as well as assumptions made by and information currently available to the District. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

4 TABLE OF CONTENTS PAGE INTRODUCTION...1 THE BONDS...1 Authority and Purpose...1 General Description...2 Registration and Transfer...2 Redemption...2 Security...5 Debt Service Extension Base Availability after Issuance of the Series 2016A Bonds...7 THE PROJECT...8 THE REFUNDING...8 Verification...9 SOURCES AND USES...9 RISK FACTORS...9 Finances of the State of Illinois...9 Local Economy...10 Loss or Change of Bond Rating...10 Secondary Market for the Bonds...10 Continuing Disclosure...10 Suitability of Investment...11 Future Changes in Laws...11 Factors Relating to Tax Exemption...11 Bankruptcy...12 THE DISTRICT...12 General Description...12 District Administration...13 Board of Education...13 Enrollment...13 Employee Union Membership and Relations...14 Population Data...14 Educational Characteristics of Persons 25 Years and Older...14 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE DISTRICT...15 Direct General Obligation Bonded Debt...15 Overlapping General Obligation Bonded Debt...16 Selected Financial Information...17 Composition of EAV...17 Trend of EAV...17 Taxes Extended and Collected...18 School District Tax Rates by Purpose Representative Total Tax Rates...19 Ten Largest Taxpayers...19 Retailers Occupation, Service Occupation and Use Tax i-

5 New Property...20 Largest Employers...21 Unemployment Rates...21 Specified Owner-Occupied Units...22 Employment by Industry...22 Employment by Occupation...23 Median Household Income...23 Per Capita Income...24 SHORT-TERM BORROWING...24 FUTURE DEBT...24 DEFAULT RECORD...24 WORKING CASH FUND...24 Working Cash Fund Summary...25 REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES...25 Summary of Property Assessment, Tax Levy and Collection Procedures...25 Tax Levy and Collection Procedures...25 Exemptions...26 Property Tax Extension Limitation Law...28 Truth in Taxation Law...29 SCHOOL DISTRICT FINANCIAL PROFILE...29 STATE AID...31 General...31 General State Aid...31 Supplementary State Aid...33 Mandated Categorical State Aid...33 Competitive Grant State Aid...34 Payment for Mandated Categorical State Aid and Competitive Grant State Aid...34 RETIREMENT PLANS...35 Teachers Retirement System of the State of Illinois...35 Illinois Municipal Retirement Fund...36 BOND RATING...38 TAX EXEMPTION...39 QUALIFIED TAX-EXEMPT OBLIGATIONS...42 CONTINUING DISCLOSURE...42 THE UNDERTAKING...42 Annual Financial Information Disclosure...43 Reportable Events Disclosure...43 Consequences of Failure of the District to Provide Information...44 Amendment; Waiver...45 Termination of Undertaking...45 Additional Information...45 Dissemination of Information; Dissemination Agent...46 AUDITED FINANCIAL STATEMENTS...46 BOOK-ENTRY ONLY SYSTEM...46 CERTAIN LEGAL MATTERS...49 NO LITIGATION ii-

6 UNDERWRITING...49 AUTHORIZATION...50 EXHIBITS Exhibit A Combined Statement of Revenues, Expenditures and Changes in Fund Balance, Fiscal Years Ended Exhibit B Budget, Fiscal Year Ending June 30, 2016 Exhibit C General Fund Revenue Sources, Fiscal Years Ended June 30, APPENDICES Appendix A Audited Financial Statements of the District for the Fiscal Year Ended June 30, 2015 Appendix B Proposed Forms of Opinions of Bond Counsel -iii-

7 SCHOOL DISTRICT NUMBER 159 WILL COUNTY, ILLINOIS (MOKENA) Willowcrest Lane Mokena, Illinois Board of Education Jim Andresen President Danielle Didrickson Anna Briscoe Aaron Janik Secretary Jennifer Reidl Stacy Cesta Jaime Staley Vice President Administration Dr. Omar Castillo Superintendent Raphael Obafemi Chief School Business Official Professional Services Underwriter Robert W. Baird & Co. Incorporated St. Charles, Illinois Bond Counsel and Disclosure Counsel Chapman and Cutler LLP Chicago, Illinois Bond Registrar, Paying Agent and Escrow Agent The Bank of New York Mellon Trust Company, National Association Chicago, Illinois Auditor Smith, Koelling, Dykstra & Ohm, P.C. Bourbonnais, Illinois

8 OFFICIAL STATEMENT School District Number 159 Will County, Illinois (Mokena) $2,865,000 General Obligation Limited School Bonds, Series 2016A $4,080,000 General Obligation Refunding School Bonds, Series 2016B INTRODUCTION The purpose of this Official Statement is to set forth certain information concerning School District Number 159, Will County, Illinois (the District ), in connection with the offering and sale of its General Obligation Limited School Bonds, Series 2016A (the Series 2016A Bonds ), and General Obligation Refunding School Bonds, Series 2016B (the Series 2016B Bonds and together with the Series 2016A Bonds, the Bonds ). This Official Statement contains forward-looking statements that are based upon the District s current expectations and its projections about future events. When used in this Official Statement, the words project, estimate, intend, expect, scheduled, pro-forma and similar words identify forward-looking statements. Forward-looking statements are subject to known and unknown risks, uncertainties and factors that are outside of the control of the District. Actual results could differ materially from those contemplated by the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Neither the District nor any other party plans to issue any updates or revisions to these forward-looking statements based on future events. THE BONDS AUTHORITY AND PURPOSE The Bonds are being issued pursuant to the School Code of the State of Illinois (the School Code ), the Local Government Debt Reform Act of the State of Illinois (the Debt Reform Act ), and all laws amendatory thereof and supplementary thereto, and separate bond resolutions adopted by the Board of Education of the District (the Board ) on the 17th day of February, 2016, each as supplemented by a notification of sale (together, the Bond Resolution ). Proceeds of the Series 2016A Bonds will be used to (a) increase the working cash fund of the District and (b) pay costs associated with the issuance of the Series 2016A Bonds. See THE PROJECT herein. Proceeds of the Series 2016B Bonds will be used to (a) refund certain of the District s outstanding Capital Appreciation School Bonds, Series 2000, dated June 1, 2000 (the Series 2000 Bonds, and those Series 2000 Bonds being refunded, the Refunded Bonds ), and

9 (b) pay costs associated with the issuance of the Series 2016B Bonds. See THE REFUNDING herein. GENERAL DESCRIPTION The Bonds will be dated the date of issuance thereof, will be in fully registered form, without coupons, and will be in denominations of $5,000 or any integral multiple thereof under a book-entry only system operated by The Depository Trust Company, New York, New York ( DTC ). Principal of and interest on the Bonds will be payable by The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois (the Registrar ). The Bonds will mature as shown on the inside cover page hereof. Interest on the Bonds will be payable each June 1 and December 1, beginning December 1, The Bonds will bear interest from their dated date, or from the most recent interest payment date to which interest has been paid or provided for, computed on the basis of a 360-day year consisting of twelve 30-day months. The principal of the Bonds will be payable in lawful money of the United States of America upon presentation and surrender thereof at the principal corporate trust office of the Registrar. Interest on each Bond will be paid by check or draft of the Registrar payable upon presentation in lawful money of the United States of America to the person in whose name such Bond is registered at the close of business on the 15th day of the month next preceding the interest payment date. REGISTRATION AND TRANSFER The Registrar will maintain books for the registration of ownership and transfer of the Bonds. Subject to the provisions of the Bonds as they relate to book-entry form, any Bond may be transferred upon the surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the registered owner or his or her attorney in such form as will be satisfactory to the Registrar. No service charge shall be made for any transfer or exchange of Bonds, but the District or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption. The Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 15th day of the month next preceding any interest payment date on such Bond and ending at the opening of business on such interest payment date, nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. REDEMPTION Optional Redemption. The Series 2016A Bonds due on or after December 1, 2028, and the Series 2016B Bonds due on or after December 1, 2027, are subject to redemption prior to -2-

10 maturity at the option of the District as a whole or in part in integral multiples of $5,000 in any order of their maturity as determined by the District (less than all of the Bonds of a single series and maturity to be selected by the Registrar), on December 1, 2025, and on any date thereafter, at the redemption price of par plus accrued interest to the redemption date. Mandatory Sinking Fund Redemption. The Series 2016A Bonds due on December 1 of the years 2028, 2031, and 2035 are subject to mandatory redemption, in integral multiples of $5,000 selected by lot by the Registrar, at a redemption price of par plus accrued interest to the redemption date, on December 1 of the years and in the principal amounts as follows: FOR THE SERIES 2016A BONDS DUE DECEMBER 1, 2028 YEAR PRINCIPAL AMOUNT 2026 $140, , ,000 (stated maturity) FOR THE SERIES 2016A BONDS DUE DECEMBER 1, 2031 YEAR PRINCIPAL AMOUNT 2029 $160, , ,000 (stated maturity) FOR THE SERIES 2016A BONDS DUE DECEMBER 1, 2035 YEAR PRINCIPAL AMOUNT 2032 $180, , , ,000 (stated maturity) The Series 2016B Bonds due on December 1 of the years 2027, 2029, 2031, 2033 and 2035 are subject to mandatory redemption, in integral multiples of $5,000 selected by lot by the Registrar, at a redemption price of par plus accrued interest to the redemption date, on December 1 of the years and in the principal amounts as follows: -3-

11 FOR THE SERIES 2016B BONDS DUE DECEMBER 1, 2027 YEAR PRINCIPAL AMOUNT 2026 $235, ,000 (stated maturity) FOR THE SERIES 2016B BONDS DUE DECEMBER 1, 2029 YEAR PRINCIPAL AMOUNT 2028 $255, ,000 (stated maturity) FOR THE SERIES 2016B BONDS DUE DECEMBER 1, 2031 YEAR PRINCIPAL AMOUNT 2030 $275, ,000 (stated maturity) FOR THE SERIES 2016B BONDS DUE DECEMBER 1, 2033 YEAR PRINCIPAL AMOUNT 2032 $300, ,000 (stated maturity) FOR THE SERIES 2016B BONDS DUE DECEMBER 1, 2035 YEAR PRINCIPAL AMOUNT 2034 $325, ,000 (stated maturity) The principal amounts of Bonds to be mandatorily redeemed in each year may be reduced through the earlier optional redemption thereof, with any partial optional redemptions of such Bonds credited against future mandatory redemption requirements in such order of the mandatory redemption dates as the District may determine. In addition, on or prior to the 60th day preceding any mandatory redemption date, the Registrar may, and if directed by the District shall, purchase Bonds required to be retired on such mandatory redemption date. Any such Bonds so purchased shall be cancelled and the principal amount thereof shall be credited against the mandatory redemption required on such next mandatory redemption date. -4-

12 General. The District will, at least 45 days prior to any optional redemption date (unless a shorter time period shall be satisfactory to the Registrar), notify the Registrar of such redemption date and of the principal amount, series and maturity or maturities of Bonds to be redeemed. For purposes of any redemption of less than all of the outstanding Bonds of a single series and maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Registrar from the Bonds of such series and maturity by such method of lottery as the Registrar shall deem fair and appropriate (except when the Bonds are held in a book-entry system, in which case the selection of Bonds to be redeemed will be made in accordance with procedures established by DTC or any other book-entry depository); provided that such lottery shall provide for the selection for redemption of Bonds or portions thereof in principal amounts of $5,000 and integral multiples thereof. Unless waived by any holder of Bonds to be redeemed, notice of the call for any redemption will be given by the Registrar on behalf of the District by mailing the redemption notice by first-class mail at least 30 days and not more than 60 days prior to the date fixed for redemption to each registered owner of the Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such registered owner to the Registrar. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed at the option of the District are received by the Registrar prior to the giving of such notice of redemption, such notice may, at the option of the District, state that said redemption will be conditional upon the receipt of such moneys by the Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the District will not redeem such Bonds, and the Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Bonds will not be redeemed. Otherwise, prior to any redemption date, the District will deposit with the Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Bond Resolution, and notwithstanding failure to receive such notice, the Bonds or portions of Bonds so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the District shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds will be paid by the Registrar at the redemption price. SECURITY Series 2016A Bonds The Series 2016A Bonds, in the opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel ( Bond Counsel ), are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the -5-

13 District is subject to the levy of taxes to pay the same without limitation as to rate, except that the rights of the owners of the Series 2016A Bonds and the enforceability of the Series 2016A Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The amount of said taxes that will be extended to pay the Series 2016A Bonds is limited pursuant to the Property Tax Extension Limitation Law of the State of Illinois, as amended (the Limitation Law ). The Debt Reform Act provides that the Series 2016A Bonds are payable from the debt service extension base of the District (the Base ), which is an amount equal to that portion of the extension for the District for the 1994 levy year constituting an extension for payment of principal of and interest on bonds issued by the District without referendum, but not including alternate bonds issued under Section 15 of the Debt Reform Act or refunding obligations issued to refund or to continue to refund obligations of the District initially issued pursuant to referendum, increased each year, commencing with the 2009 levy year, by the lesser of 5% or the percentage increase in the Consumer Price Index (as defined in the Limitation Law, the CPI ) during the 12-month calendar year preceding the levy year. The Limitation Law further provides that the annual amount of taxes to be extended to pay the Series 2016A Bonds and all other limited bonds hereafter issued by the District shall not exceed the Base. The Series 2016A Bonds constitute the only series of limited bonds of the District that are payable from the Base. The District is authorized to issue from time to time additional limited bonds payable from the Base, as permitted by law, and to determine the lien priority of payments to be made from the Base to pay the District s limited bonds. The amount of the Base has been determined to be $208, for levy year 2015 and $209, for levy year 2016, which is calculated from an original Base of $186, as increased annually by CPI as described above. The following chart shows the Base of the District, the debt service payable on the outstanding limited bonds of the District and the Series 2016A Bonds, and the available Base after the issuance of the Series 2016A Bonds. -6-

14 DEBT SERVICE EXTENSION BASE AVAILABILITY AFTER ISSUANCE OF THE SERIES 2016A BONDS LEVY YEAR DEBT SERVICE ON THE SERIES 2016A BONDS TOTAL DEBT SERVICE ON LIMITED BONDS DEBT SERVICE EXTENSION BASE UNUSED DEBT SERVICE EXTENSION BASE 2015 $207, $207, $208, $ , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , The bond resolution authorizing the issue of the Series 2016A Bonds, as supplemented by a notification of sale (together, the 2016A Bond Resolution ), provides for the levy of ad valorem taxes, unlimited as to rate, upon all taxable property within the District in amounts to pay, as and when due, all principal of and interest on the Series 2016A Bonds. The 2016A Bond Resolution will be filed with the County Clerk of Will County, Illinois (the County Clerk ) and will serve as authorization to the County Clerk to extend and collect the property taxes as set forth in the 2016A Bond Resolution. Series 2016B Bonds The Series 2016B Bonds, in the opinion of Bond Counsel, are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Series 2016B Bonds and the enforceability of the Series 2016B Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The bond resolution authorizing the issue of the Series 2016B Bonds, as supplemented by a notification of sale (together, the 2016B Bond Resolution ), provides for the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the District in amounts sufficient to pay, as and when due, all principal of and interest on the Series 2016B Bonds. The 2016B Bond Resolution will be filed with the County Clerk and will serve as -7-

15 authorization to the County Clerk to extend and collect the property taxes as set forth in the 2016B Bond Resolution to pay the Series 2016B Bonds. Reference is made to Appendix B for the proposed forms of opinions of Bond Counsel. THE PROJECT A portion of the proceeds of the Series 2016A Bonds will be deposited into the District s Working Cash Fund. The District expects to transfer such funds out of the Working Cash Fund to a fund of the District where it may lawfully be used for capital project purposes (the Project ). The Project includes roof and window repair and replacement and energy conservation improvements. The District expects to complete the Project within three years. THE REFUNDING A portion of the proceeds of the Series 2016B Bonds will be used to refund the Refunded Bonds, further described as follows: SERIES 2000 BONDS MATURITY (DECEMBER 1) ORIGINAL PRINCIPAL AMOUNT ISSUED ORIGINAL PRINCIPAL AMOUNT REFUNDED BY THE SERIES 2016B BONDS CALL PRICE CALL DATE 2016 $ 811, $ 230, Not Callable Not Callable , , Not Callable Not Callable , , Not Callable Not Callable , , Not Callable Not Callable TOTAL $3,143, $1,013, Certain proceeds received from the sale of the Series 2016B Bonds will be deposited in an Escrow Account (the Escrow Account ) to be held by The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois (the Escrow Agent ), under the terms of an Escrow Agreement, dated as of the date of issuance of the Series 2016B Bonds, between the District and the Escrow Agent. The moneys so deposited in the Escrow Account will be applied by the Escrow Agent to purchase direct non-callable obligations of, or obligations guaranteed by the full faith and credit of, the United States of America (the Government Securities ) and to provide an initial cash deposit. The Government Securities together with interest earnings thereon and the beginning cash deposit will be sufficient to pay when due the compound accreted value of the Refunded Bonds up to and including the maturity dates thereof. -8-

16 VERIFICATION The accuracy of (a) the mathematical computations regarding the adequacy of the maturing principal of and interest earnings on the Government Securities together with an initial cash deposit in the Escrow Account to pay the debt service described above on the Refunded Bonds, and (b) the mathematical computations supporting the conclusion that the Bonds are not arbitrage bonds under Section 148 of the Internal Revenue Code of 1986, as amended (the Code ) will be verified by Dunbar, Breitweiser & Company, LLP, Certified Public Accountants, Bloomington, Illinois (the Verification Agent ). Such verification shall be based upon information supplied by the Underwriter. SOURCES AND USES The sources and uses of funds resulting from the Bonds are shown below: SOURCES: Principal Amount $6,945, Original Issue Premium 538, Total Sources $7,483, USES: Deposit to Escrow Account to pay Refunded Bonds $3,543, Deposit to Working Cash Fund 3,700, Costs of Issuance* 240, Total Uses $7,483, * Includes underwriter s discount and other issuance costs. RISK FACTORS The purchase of the Bonds involves certain investment risks. Accordingly, each prospective purchaser of the Bonds should make an independent evaluation of the entirety of the information presented in this Official Statement and its appendices and exhibits in order to make an informed investment decision. Certain of the investment risks are described below. The following statements, however, should not be considered a complete description of all risks to be considered in the decision to purchase the Bonds, nor should the order of the presentation of such risks be construed to reflect the relative importance of the various risks. There can be no assurance that other risk factors are not material or will not become material in the future. FINANCES OF THE STATE OF ILLINOIS The State of Illinois (the State ), has experienced adverse fiscal conditions resulting in significant shortfalls between the State s general fund revenues and spending demands. In addition, the underfunding of the State s pension systems has contributed to the State s poor -9-

17 financial health. Budget problems of the State may result in decreased or delayed State appropriations to the District, including appropriations of the hereinafter defined State Aid (7.82% of the District s General Fund Revenue Sources for the fiscal year ended June 30, 2015). LOCAL ECONOMY The financial health of the District is in part dependent on the strength of the local economy. Many factors affect the local economy, including rates of employment and economic growth and the level of residential and commercial development. It is not possible to predict to what extent any changes in economic conditions, demographic characteristics, population or commercial and industrial activity will occur and what impact such changes would have on the finances of the District. LOSS OR CHANGE OF BOND RATING The Bonds have received a credit rating from Moody s Investors Service, New York, New York ( Moody s ). The rating can be changed or withdrawn at any time for reasons both under and outside the District s control. Any change, withdrawal or combination thereof could adversely affect the ability of investors to sell the Bonds or may affect the price at which they can be sold. SECONDARY MARKET FOR THE BONDS No assurance can be given that a secondary market will develop for the purchase and sale of the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. The Underwriter is not obligated to engage in secondary market trading or to repurchase any of the Bonds at the request of the owners thereof. Prices of the Bonds as traded in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as to the future market value of the Bonds. Such market value could be substantially different from the original purchase price. CONTINUING DISCLOSURE A failure by the District to comply with the Undertaking for continuing disclosure (see CONTINUING DISCLOSURE herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and may adversely affect the transferability and liquidity of the Bonds and their market price. -10-

18 SUITABILITY OF INVESTMENT The interest rate borne by the Bonds is intended to compensate the investor for assuming the risk of investing in the Bonds. Furthermore, the tax-exempt feature of the Bonds is currently more valuable to high tax bracket investors than to investors that are in low tax brackets. As such, the value of the interest compensation to any particular investor will vary with individual tax rates and circumstances. Each prospective investor should carefully examine the Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment for such investor. FUTURE CHANGES IN LAWS Various state and federal laws, regulations and constitutional provisions apply to the District and to the Bonds. The District can give no assurance that there will not be a change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the District, or the taxing authority of the District. For example, many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Future actions of the State may affect the overall financial conditions of the District, the taxable value of property within the District, and the ability of the District to levy property taxes or collect revenues for its ongoing operations. FACTORS RELATING TO TAX EXEMPTION As discussed under TAX EXEMPTION herein, interest on the Bonds could become includible in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District in violation of its covenants in the Bond Resolution. Should such an event of taxability occur, the Bonds are not subject to any special redemption. There are or may be pending in the Congress of the United States legislative proposals relating to the federal tax treatment of interest on the Bonds, including some that carry retroactive effective dates, that, if enacted, could affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Bonds issued prior to enactment. Finally, reduction or elimination of the tax-exempt status of obligations such as the Bonds could have an adverse effect on the District s ability to access the capital markets to finance future capital or operational needs by reducing market demand for such obligations or materially increasing borrowing costs of the District. The tax-exempt bond office of the Internal Revenue Service (the Service ) is conducting audits of tax-exempt bonds, both compliance checks and full audits, with increasing frequency to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for Federal income tax purposes. It cannot be predicted whether the Service will commence any such audit. If an audit is commenced, under current procedures the Service may treat the District as a taxpayer and the -11-

19 Bondholders may have no right to participate in such proceeding. The commencement of an audit with respect to any tax-exempt obligations of the District could adversely affect the market value and liquidity of the Bonds, regardless of the ultimate outcome. BANKRUPTCY The rights and remedies of the Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Bonds will be similarly qualified. THE DISTRICT GENERAL DESCRIPTION The District has a population of approximately 19,000 and is located in Will County (the County ), in the Greater Chicago metropolitan area approximately 40 miles southwest of downtown Chicago. The District is 14 miles east of the City of Joliet the county seat. The District serves the Village of Mokena (the Village ) as well as a large unincorporated area. The northern boundary of the Village is I-80, the major east-west interstate route in northern Illinois. The District is located near two major north-south interstate highways: I-55 linking Chicago and St. Louis, and I-57 linking Chicago and Memphis. The District is also served by Illinois Route 6 (Wolf Road) and Illinois Route 45, and by U.S. Route 30 with interchanges at I-80 and I-57. The District is linked to downtown Chicago by two commuter train stations (Rock Island Railroad/Metropolitan Transportation Authority). Shuttle bus service is available to O Hare International Airport (within 30 miles) and Midway Airport (within 20 miles). Lincoln-Way Community High School District 210 serves students in grades 9 through 12. Colleges in Mokena include Rasmussen College and St. Xavier. Colleges and universities within commuting distance are Joliet Community College and the College of St. Frances, both in Joliet; Lewis University in Lockport; and Governors State University in University Park. The District is governed by an elected seven-member Board and a full-time administrative staff. -12-

20 DISTRICT ADMINISTRATION The day-to-day affairs of the District are conducted by a full-time staff including the following central administrative positions. OFFICIAL TITLE YEAR STARTED IN POSITION Dr. Omar Castillo Superintendent 2013 Raphael Obafemi Chief School Business Official and 2015 School Treasurer The Board appoints the administration. The staff is chosen by the administration with the approval of the Board. In general, policy decisions are made by the Board while specific program decisions are made by the administration. BOARD OF EDUCATION OFFICIAL POSITION TERM EXPIRES Jim Andresen President April 2017 Stacy Cesta Vice President April 2017 Anna Briscoe Secretary April 2017 Danielle Didrickson Member April 2017 Aaron Janik Member April 2019 Jennifer Reidl Member April 2019 Jaime Staley Member April 2019 ENROLLMENT HISTORICAL PROJECTED 2011/2012 1, /2017 1, /2013 1, /2018 1, /2014 1, /2019 1, /2015 1, /2020 1, /2016 1, /2021 1,655 Source: Enrollment figures are provided by the District. -13-

21 EMPLOYEE UNION MEMBERSHIP AND RELATIONS At the start of the school year, the District had 185 full-time employees and 57 part-time employees. Of the total number of employees, approximately 183 are represented by a union. Employee-union relations are considered to be good. District personnel are organized as follows: CONTRACT UNION NUMBER OF EMPLOYEE GROUP EXPIRES AFFILIATION MEMBERS Teachers June 2019 IEA 183 POPULATION DATA The U.S. Census Bureau, in its American Community Survey, estimates that the District s current population is approximately 19,172. The estimated populations of the District, the County, and the State at the times of the last three U.S. Census surveys were as follows: NAME OF ENTITY % CHANGE 2000/2010 The District N/A 14,847 17, % The County 357, , , % The State 11,430,602 12,419,293 12,830, % Source: U.S. Census Bureau. EDUCATIONAL CHARACTERISTICS OF PERSONS 25 YEARS AND OLDER HIGH SCHOOL GRADUATES 4 OR MORE YEARS OF COLLEGE The District 96.8% 33.7% The County 90.5% 32.6% The State 87.6% 31.9% Source: U.S. Census Bureau, American Community Survey 5-Year Estimates. -14-

22 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE DISTRICT DIRECT GENERAL OBLIGATION BONDED DEBT SERIES 2000 PLUS: THE SERIES 2016A PLUS: THE SERIES 2016B LESS: THE REFUNDED TOTAL CALENDAR YEAR BONDS (DECEMBER 1) BONDS (DECEMBER 1) BONDS (DECEMBER 1) BONDS (DECEMBER 1) OUTSTANDING BONDS 2016 $ 811,432 $ 85,000 $ 230,717 $ 665, , , , , , , , , , , , , ,000 $ 195, , , , , , , , , , , , , , , , , ,000 (1) 235,000 (1) 375, ,000 (1) 245, , , ,000 (1) 410, ,000 (1) 265, , ,000 (1) 275,000 (1) 440, , , , ,000 (1) 300,000 (1) 480, ,000 (1) 310, , ,000 (1) 325,000 (1) 520, , , ,000 TOTAL $3,143,530 $2,865,000 $4,080,000 $1,013,676 $9,074,854 (1) Mandatory sinking fund payment. -15-

23 OVERLAPPING GENERAL OBLIGATION BONDED DEBT (As of December 10, 2015) APPLICABLE TO DISTRICT TAXING BODY OUTSTANDING DEBT (1) PERCENT AMOUNT Will County Public Building Commission $ 635, % $ 18,590 Will County Forest Preserve District 125,014, % 3,659,829 New Lenox Township % 0 The Village 1,370, % 868,149 Village of Orland Park 87,265, % 849,606 Mokena Community Park District 6,378, % 3,726,199 New Lenox Public Library District 3,715, % 50,688 Community High School District Number ,069, % 38,448,040 Community College District No ,505, % 2,369,028 TOTAL OVERLAPPING BONDED DEBT $49,990,129 Source: Will County Clerk s Office. (1) Excludes the following amounts of alternate revenue bonds: Will County - $122,235,000; New Lenox Township - $1,132,806; Village of Mokena - $5,225,000; and Community College District No $108,985,

24 SELECTED FINANCIAL INFORMATION 2014 Estimated Full Value of Taxable Property: $ 1,583,486, EAV of Taxable Property: $ 527,828,734 Population Estimate: 19,172 General Obligation Bonded Debt (including the Bonds): $ 9,074,854 Other Direct General Obligation Debt: $ 113,659 Total Direct General Obligation Debt: $ 9,188,513 Percentage to Full Value of Taxable Property: 0.58% Percentage to EAV: 1.74% Debt Limit (6.9% of EAV): $ 36,420,183 Percentage of Debt Limit: 25.23% Per Capita: $ General Obligation Bonded Debt (including the Bonds): $ 9,074,854 Overlapping General Obligation Bonded Debt: $ 49,990,129 General Obligation Bonded Debt and Overlapping General Obligation Bonded Debt: $ 59,064,983 Percentage to Full Value of Taxable Property: 3.73% Percentage to EAV: 11.19% Per Capita: $ 3, COMPOSITION OF EAV BY PROPERTY TYPE Residential $523,979,012 $503,476,754 $475,761,018 $448,895,743 $439,441,553 Farm 505, , , , ,741 Commercial 75,569,982 72,343,361 70,281,295 68,612,325 69,581,073 Industrial 21,007,482 19,011,857 18,499,502 18,615,437 18,431,367 Total EAV $621,061,772 $595,333,347 $565,025,263 $536,496,945 $527,828,734 Source: Will County Clerk s Office. TREND OF EAV LEVY YEAR EQUALIZED ASSESSED VALUATION % CHANGE IN EAV FROM PREVIOUS YEAR 2010 $621,061,772 (1.68%) (1) ,333,347 (4.14%) ,025,263 (5.09%) ,496,945 (5.05%) ,828,734 (1.62%) Source: Will County Clerk s Office. (1) Based on the District s $631,663, EAV. -17-

25 TAXES EXTENDED AND COLLECTED TAX LEVY YEAR/ TAXES TAXES COLLECTED PERCENT COLLECTION YEAR EXTENDED AND DISTRIBUTED COLLECTED 2009/10 $13,442,422 $13,290, % 2010/11 14,051,523 13,973, % 2011/12 14,557,091 14,525, % 2012/13 15,082,784 15,048, % 2013/14 15,481,692 15,467, % 2014/15 (1) 15,910,869 15,739, % Source: Will County Treasurer s and County Clerk s Offices. (1) As of November 26, SCHOOL DISTRICT TAX RATES BY PURPOSE (Per $100 EAV) PURPOSE MAXIMUM RATE (1) Educational $ $ $ $ $ Operations and Maintenance Transportation IMRF Working Cash Tort Immunity Special Education Social Security/Medicare Bond and Interest Total $ $ $ $ $ Source: Will County Clerk s Office. (1) See REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Property Tax Extension Limitation Law herein for information on the operation of such maximum rates. -18-

26 REPRESENTATIVE TOTAL TAX RATES (Per $100 EAV) TAXING AUTHORITY The District $ $ $ $ $ The County Will County Forest Preserve District Will County Public Building Commission Frankfort Township Frankfort Township Road The Village Village of Mokena Road & Bridge Mokena Community Park District Mokena Community Public Library District Mokena Fire Protection District High School District Number Community College District No TOTAL* $ $ $ $ $ Source: Will County Clerk s Office. *The total of such rates is the property tax rate paid by a typical resident living in the largest tax code in the District. TEN LARGEST TAXPAYERS TAXPAYER NAME 2014 EQUALIZED ASSESSED VALUE PERCENT OF DISTRICT S TOTAL EAV Vanden Orland LLC $ 3,511, % Pipe Fitters Training Fund 3,416, % Harrison Investments Mokena 3,037, % Chicap Pipeline Co. 2,334, % JC Penney Properties, Inc. 2,304, % Inland Mokena Marketplace LLC 2,244, % JAJ, LLC 1,930, % Meijer Stores LP 1,712, % Sovran Acquisition LP 1,656, % Trean Mokena Promenade LLC 1,558, % $23,705, % Source: Will County Clerk s Office, except for taxpayer descriptions which are based on publicly available information available to the District. The above taxpayers represent 4.49% of the District s $527,828, EAV. Reasonable efforts have been made to seek out and report the largest taxpayers. However, many of the taxpayers listed may own multiple parcels and it is possible that some parcels and their valuations may not be included. -19-

27 RETAILERS OCCUPATION, SERVICE OCCUPATION AND USE TAX The following table shows the distribution of the municipal portion of the Retailers Occupation, Service Occupation and Use Tax collected by the Illinois Department of Revenue (the Department ) from retailers within the Village. The table indicates the level of retail activity in the Village. THE VILLAGE YEAR (1) STATE SALES TAX DISTRIBUTION (2) 2010 $3,975, ,692, ,136, ,488, ,007, (3) 3,085,958 Source: The Department. (1) Calendar year reports ending December 31. (2) Tax distributions are based on records of the Department relating to the 1% municipal portion of the Retailers Occupation, Service Occupation and Use Tax, collected on behalf of the Village, less a State administration fee. The municipal 1% sales tax includes tax receipts from the sale of food and drugs which are not taxed by the State. (3) As of Second Quarter NEW PROPERTY The following chart indicates the EAV of new property (as defined in the Limitation Law) within the District for each of the last five levy years. LEVY YEAR NEW PROPERTY Source: Will County Clerk s Office $9,789, ,971, ,098, ,674, ,583,

28 LARGEST EMPLOYERS Below is a listing of the largest employers within or near the District area: EMPLOYER PRODUCT OR SERVICE LOCATION APPROXIMATE NUMBER OF EMPLOYEES Horton Group, The Insurance for businesses, including risk management, Orland Park 300 employee benefits, safety & worksite wellness Panduit Corp. Electrical components & wiring Orland Park 300 Formax Manufacturing Mokena 264 Comfort Inn Orland Park, Georgios Hotel services, including 12 meeting, banquet, Orland Park 250 Banquets & Conference Centre conference & special events rooms/spaces & 150 sleeping rooms Provisur Technologies Company headquarters & food processing equipment Mokena 250 ITW Impro Plastic fabricators Mokena 248 The District Public education Mokena 240 Revere Electric Supply Co. Company headquarters & wholesale electrical supplies Mokena 200 Zenith American Solutions, Inc. Pension plans & medical & health insurance Mokena 160 Rizza Enterprises, Inc., Joe Automobile dealership, including fleet sales & leasing Orland Park 150 SEI Coatings, LLC Industrial painting & heavy construction services, Mokena 150 including bridges & tunnels Coldwell Banker Residential Brokerage Real estate brokerage Orland Park 140 Ozinga Bros., Inc. Corporate headquarters; ready-mixed concrete Mokena 125 Elim Adult Services Packaging, assembly & fulfillment services Orland Park 123 Coopers Hawk Winery & Restaurant Wines Orland Park 115 Organix Recycling, LLC Wholesaler of recycled food waste for the anaerobicdigestion energy, composting & animal feed industries Mokena 106 Source: 2015 Illinois Manufacturers Directory, 2015 Illinois Services Directory and the Illinois Department of Commerce and Economic Opportunity, except for District employee information which was provided by the District. UNEMPLOYMENT RATES Unemployment statistics are not compiled specifically for the District. The following table shows the trend in annual average unemployment rates for the Village, the County and the State of Illinois. THE VILLAGE THE COUNTY THE STATE 2010 Average 8.8% 11.1% 10.4% 2011 Average 8.6% 10.5% 9.7% 2012 Average 7.9% 9.7% 9.0% 2013 Average 7.8% 9.7% 9.1% 2014 Average 6.2% 7.4% 7.1% 2015 Average (11 mos.) N/A 6.2% 5.9% Source: State of Illinois Department of Employment Security. -21-

29 SPECIFIED OWNER-OCCUPIED UNITS THE DISTRICT THE COUNTY THE STATE VALUE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $50, % 5, % 243, % $50,000 to $99, % 10, % 508, % $100,000 to $149, % 26, % 525, % $150,000 to $199, % 40, % 533, % $200,000 to $299,999 2, % 53, % 663, % $300,000 to $499,999 1, % 36, % 486, % $500,000 to $999, % 8, % 188, % $1,000,000 or more % % 45, % Total 5, % 182, % 3,194, % Median Value $269,000 $212,700 $175,700 Source: U.S. Census Bureau ( American Community Survey). EMPLOYMENT BY INDUSTRY THE DISTRICT THE COUNTY THE STATE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Agriculture, forestry, fishing, hunting and mining % 1, % 63, % Construction % 19, % 308, % Manufacturing % 38, % 756, % Wholesale Trade % 10, % 181, % Retail Trade 1, % 39, % 663, % Transportation, warehousing and utilities % 25, % 353, % Information % 6, % 124, % Finance, insurance and real estate % 21, % 442, % Professional, scientific management administrative & waste management % 36, % 681, % Educational, health & social services 2, % 73, % 1,391, % Arts, entertainment, recreations accommodations & food services % 27, % 544, % Other Services % 15, % 288, % Public Administration % 12, % 232, % Total 9, % 327, % 6,032, % Source: U.S. Census Bureau ( American Community Survey). -22-

30 EMPLOYMENT BY OCCUPATION THE DISTRICT THE COUNTY THE STATE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Management, professional & related occupations 3, % 118, % 2,204, % Service occupations 1, % 51, % 1,048, % Sales & office occupations 2, % 84, % 1,500, % Natural resources, construction, & maintenance occupation % 28, % 441, % Production, transportation & material moving occupations 1, % 44, % 837, % Total 9, % 327, % 6,032, % Source: U.S. Census Bureau ( American Community Survey). MEDIAN HOUSEHOLD INCOME According to the U.S. Census Bureau, the District had a median household income of $92,366. This compares to $76,142 for the County and $57,166 for the State. The following table represents the distribution of household incomes for the District, the County and the State at the time of such survey. THE DISTRICT THE COUNTY THE STATE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $10, % 8, % 341, % $10,000 to $14, % 5, % 218, % $15,000 to $24, % 15, % 479, % $25,000 to $34, % 15, % 455, % $35,000 to $49, % 24, % 614, % $50,000 to $74,999 1, % 40, % 852, % $75,000 to $99, % 35, % 612, % $100,000 to $149,999 1, % 44, % 671, % $150,000 to $199, % 19, % 265, % $200,000 or more % 14, % 267, % Total 5, % 223, % 4,778, % Source: U.S. Census Bureau ( American Community Survey). -23-

31 PER CAPITA INCOME PER CAPITA INCOME The District $38,134 The County 30,791 The State 30,019 Source: U.S. Census Bureau ( American Community Survey). SHORT-TERM BORROWING The District has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements. FUTURE DEBT Except for the Bonds, the District does not currently anticipate issuing any debt in DEFAULT RECORD The District has no record of default and has met its debt repayment obligations promptly. WORKING CASH FUND The District is authorized to issue (subject to the provisions of the Limitation Law) general obligation bonds to create, re-create or increase a Working Cash Fund. Such fund can also be created, re-created or increased by the levy of an annual tax not to exceed $.05 per hundred dollars of equalized assessed valuation (the Working Cash Fund Tax ). The purpose of the fund is to enable the District to have sufficient cash to meet demands for expenditures for corporate purposes. Moneys in the Working Cash Fund may be loaned, in whole or in part, as authorized and directed by the Board, to any fund or funds of the District in anticipation of ad valorem property taxes levied by the District for such fund or funds. The Working Cash Fund is reimbursed when the anticipated taxes or other moneys are received by the District. Any time moneys are available in the Working Cash Fund, they must be transferred to such other funds of the District and used for any and all school purposes so as to avoid, whenever possible, the issuance of tax anticipation warrants or notes. Interest earned from the investment of the Working Cash Fund may be transferred from the Working Cash Fund to other funds of the District that are most in need of the interest. Moneys in the Working Cash Fund may not be appropriated by the Board in the annual budget. -24-

32 The District also has the authority to abate amounts in the Working Cash Fund to any other fund of the District if the amount on deposit in such other fund after the abatement will not constitute an excess accumulation of money in that fund and as long as the District maintains an amount to the credit of the Working Cash Fund at least equal to 0.05% of the then current value, as equalized or assessed by the Department, of the taxable property in the District. Finally, the District may abolish the Working Cash Fund and direct the transfer of any balance thereof to the educational fund at the close of the then current fiscal year. After such abolishment, all outstanding Working Cash Fund Taxes levied will be paid into the educational fund upon collection. Outstanding loans from the Working Cash Fund to other funds of the District at the time of abolishment will be paid or become payable to the educational fund at the close of the then current fiscal year. The outstanding balance in the Working Cash Fund at the time of abolishment, including all outstanding loans from the Working Cash Fund to other funds of the District and all outstanding Working Cash Fund Taxes levied, may be used and applied by the District for the purpose of reducing, by the balance in the Working Cash Fund at the close of the fiscal year, the amount of taxes that the Board otherwise would be authorized or required to levy for educational purposes for the fiscal year immediately succeeding the fiscal year in which the Working Cash Fund is abolished. WORKING CASH FUND SUMMARY FISCAL YEAR END OF YEAR FUND BALANCE 2011 $1,619, ,680, ,745, ,810, ,877,501 Source: Compiled from the District s Audited Financial Statements for Fiscal Years ending June 30, REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES SUMMARY OF PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES A separate tax to pay the principal of and interest on the Bonds will be levied on all taxable real property within the District. The information under this caption describes the current procedures for real property assessments, tax levies and collections in the County. There can be no assurance that the procedures described herein will not change. TAX LEVY AND COLLECTION PROCEDURES Local Assessment Officers determine the assessed valuation of taxable real property and railroad property not held or used for railroad operations. The Department assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local -25-

33 Assessment Officers valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33-1/3% of fair cash value. Farmland is assessed according to a statutory formula, which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization. Property tax levies of each taxing body are filed in the office of the county clerk of each county in which territory of that taxing body is located. The county clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property The county clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1-1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. EXEMPTIONS An annual General Homestead Exemption provides that the Equalized Assessed Valuation ( EAV ) of certain property owned and used for residential purposes ( Residential Property ) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $6,000 for tax year 2012 and thereafter. The Homestead Improvement Exemption applies to Residential Properties that have been improved or rebuilt in the 2 years following a catastrophic event. The exemption is limited to $75,000 to the extent the assessed value is attributable solely to such improvements or rebuilding. The Senior Citizens Homestead Exemption annually reduces the EAV on residences owned and occupied by senior citizens. Beginning with tax year 2013, the maximum exemption is $5,000. A Senior Citizens Assessment Freeze Homestead Exemption ( Senior Citizens Assessment Freeze Homestead Exemption ) freezes property tax assessments for homeowners, who are 65 and older and receive a household income not in excess of the maximum income limitation. The maximum income limitation is $55,000 for assessment year 2008 and after. In general, the exemption limits the annual real property tax bill of such property by granting to qualifying senior citizens an exemption as to a portion of the valuation of their property. For those counties with less than 3,000,000 in population, the exempt amount is the difference between (a) the current EAV of the residence and (b) the base amount, which is the EAV of a -26-

34 senior citizen s residence for the year prior to the year in which he or she first qualifies and applies for the Exemption (plus the EAV of improvements since such year). The Natural Disaster Homestead Exemption (the Natural Disaster Exemption ) applies to homestead properties containing a residential structure that has been rebuilt following a natural disaster occurring in taxable year 2012 or any taxable year thereafter. A natural disaster is an occurrence of widespread or severe damage or loss of property resulting from any catastrophic cause including but not limited to fire, flood, earthquake, wind, or storm. The Natural Disaster Exemption is equal to the equalized assessed value of the residence in the first taxable year for which the taxpayer applies for the exemption minus the base amount. To be eligible for the Natural Disaster Exemption, the residential structure must be rebuilt within two years after the date of the natural disaster, and the square footage of the rebuilt residential structure may not be more than 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster. The Natural Disaster Exemption remains at a constant amount until the taxable year in which the property is sold or transferred. Another exemption available to disabled veterans operates annually to exempt up to $70,000 of the EAV of property owned and used exclusively by such veterans or their spouses for residential purposes. However, individuals claiming exemption under the Disabled Persons Homestead Exemption ( Disabled Persons Homestead Exemption ) or the Disabled Veterans Standard Homestead Exemption ( Disabled Veterans Standard Homestead Exemption ) cannot claim the aforementioned exemption. Also, certain property is exempt from taxation on the basis of ownership and/or use, such as public parks, not-for-profit schools and public schools, churches, and not-for-profit hospitals and public hospitals. Furthermore, the Disabled Persons Homestead Exemption provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain persons with a disability. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Veterans Standard Homestead Exemption cannot claim the aforementioned exemption. In addition, the Disabled Veterans Standard Homestead Exemption provides disabled veterans an annual homestead exemption starting with assessment year 2007 and thereafter. Specifically, (a) those veterans with a service-connected disability of 70% are granted an exemption of $5,000 and (b) those veterans with a service-connected disability of less than 70%, but at least 50% are granted an exemption of $2,500. Furthermore, the veteran s surviving spouse is entitled to the benefit of the exemption, provided that the spouse has legal or beneficial title of the homestead, resides permanently on the homestead and does not remarry. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Persons Homestead Exemption cannot claim the aforementioned exemption. Beginning with assessment year 2007, the Returning Veterans Homestead Exemption ( Returning Veterans Homestead Exemption ) is available for property owned and occupied as the principal residence of a veteran in the assessment year the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a homestead exemption of $5,000, which is applicable in all counties. In order to apply for this -27-

35 exemption, the individual must pay real estate taxes on the property, own the property or have either a legal or an equitable interest in the property, subject to some limitations. Those individuals eligible for this exemption may claim the exemption in addition to other homestead exemptions, unless otherwise noted. PROPERTY TAX EXTENSION LIMITATION LAW The Limitation Law limits the annual growth in the amount of property taxes to be extended for certain Illinois non-home-rule units, including the District. In general, the annual growth permitted under the Limitation Law is the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. Taxes can also be increased due to new construction, referendum approval of tax rate increases, mergers and consolidations. The effect of the Limitation Law is to limit the amount of property taxes that can be extended for a taxing body. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes unlimited as to rate and amount cannot be issued by the affected taxing bodies unless they are approved by referendum, are alternate bonds or are for certain refunding purposes (such as the Series 2016B Bonds). The District has the authority to levy taxes for many different purposes. See School District Tax Rates by Purpose above. The ceiling at any particular time on the rate at which these taxes may be extended for the District is either (a) unlimited (as provided by statute), (b) initially set by statute but permitted to be increased by referendum, (c) capped by statute, or (d) limited to the rate approved by referendum. The only ceiling on a particular tax rate is the ceiling set by statute, at which the rate is not permitted to be further increased by referendum or otherwise. Therefore, taxing districts (such as the District) have flexibility to levy taxes for the purposes for which they most need the money. The total aggregate tax rate for the various purposes subject to the Limitation Law, however, will not be allowed to exceed the District s limiting rate computed in accordance with the provisions of the Limitation Law. Local governments, including the District, can issue limited bonds (such as the Series 2016A Bonds) in lieu of general obligation bonds that have otherwise been authorized by applicable law. See THE BONDS Security Series 2016A Bonds herein. Illinois legislators have introduced several proposals to modify the Limitation Law, including freezing property taxes and extending tax caps to all taxing bodies in the State (the Property Tax Freeze Proposal ). Specifically, Senate Bill 318 passed the Illinois Senate on August 4, This legislation includes, among other items, a State-wide property tax freeze for levy years 2016 and 2017 for taxing district located in counties other than Cook County and levy years 2017 and 2018 for taxing districts located in Cook County. If the Property Tax Freeze Proposal or similar legislation were to become law, such reform may have a material impact on the finances of the District. The District cannot predict whether, or in what form, any change to the Limitation Law, including the Property Tax Freeze Proposal, may be enacted into law, nor can the District predict the effect of any such change on the District s finances. -28-

36 TRUTH IN TAXATION LAW Legislation known as the Truth in Taxation Law (the Law ) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels. The provisions of the Law do not apply to levies made to pay principal of and interest on the Bonds. The District covenanted in the Bond Resolution that it will not take any action which would adversely affect the levy, extension, collection and application of the taxes levied by the District for payment of principal of and interest on the Bonds. The District also covenanted that it will comply with all present and future laws concerning the levy, extension and collection of such taxes levied by the District. SCHOOL DISTRICT FINANCIAL PROFILE As of the date of this Official Statement, the Illinois State Board of Education ( ISBE ) utilizes a system for assessing a school district s financial health referred to as the School District Financial Profile which replaced the Financial Watch List and Financial Assurance and Accountability System (FAAS). This system identifies those school districts which are moving into financial distress. The system uses five indicators which are individually scored, placed into a category of a four, three, two or one, with four being the best possible, and weighted in order to arrive at a composite district financial profile. The indicators and the weights assigned to those indicators are as follows: fund balance to revenue ratio (35%); expenditures to revenue ratio (35%); days cash on hand (10%); percent of short-term borrowing ability remaining (10%); and percent of long-term debt margin remaining (10%). The scores of the weighted indicators are totaled to obtain a district s overall score. The highest score is 4.0 and the lowest score is 1.0. A district is then placed in one of four categories as follows: Financial Recognition. A school district with a score of is assigned to this category, which is the best category of financial strength. These districts require minimal or no active monitoring by ISBE unless requested by the district. Financial Review. A school district with a score of is assigned to this category, the next highest financial strength category. These districts receive a limited review by ISBE, but are monitored for potential downward trends. ISBE staff also review the next year s school budget for further negative trends. Financial Early Warning. A school district with a score of is placed in this category. ISBE monitors these districts closely and offers proactive technical assistance, such as financial projections and cash flow analysis. These districts also are reviewed to determine whether they meet the criteria set forth in -29-

37 Article 1A-8 of the School Code to be certified in financial difficulty and possibly qualify for a Financial Oversight Panel. Financial Watch. A school district with a score of is in this category, the highest risk category. ISBE monitors these districts very closely and offers technical assistance with, but not limited to, financial projections, cash flow analysis, budgeting, personnel inventories and enrollment projections. These districts are also assessed to determine if they qualify for a Financial Oversight Panel. For each school district, ISBE calculates an original financial profile score (the Original Score ) and an adjusted financial profile score (the Adjusted Score ). The Original Score is calculated based solely on such school district s audited financial statements as of the close of the most recent fiscal year. The Adjusted Score is calculated based initially on a school district s audited financial statements for the most recent fiscal year, with adjustments made to reflect the impact on the Original Score of timing differences between such school district s actual and expected receipt of State Aid payments, as required by Section 1A-8 of the School Code. ISBE has implemented this statutory requirement by adding in payments expected to be received during the calculation year but not actually received until the following fiscal year, as well as by subtracting certain State Aid payments received during the current fiscal year but attributable to a prior fiscal year. Such adjustments may have a varying effect on a school district s Adjusted Score based on the amount of time by which such State Aid payments are delayed and the accounting basis adopted by such school district. Due to the manner in which such requirement has been implemented by ISBE, a school district s Adjusted Score may be different than it otherwise would have been in certain years based on the scheduled receipt of State Aid payments. The following table sets forth the District s Original Scores and Adjusted Scores, as well as the designation assigned to each score, for each of the last five fiscal years (as released by ISBE in March of the year following the conclusion of each fiscal year): FISCAL YEAR (JUNE 30) ORIGINAL SCORE DESIGNATION BASED ON ORIGINAL SCORE ADJUSTED SCORE DESIGNATION BASED ON ADJUSTED SCORE Recognition 3.65 Recognition Recognition 4.00 Recognition Recognition 3.65 Recognition Recognition 3.65 Recognition Recognition 3.65 Recognition -30-

38 STATE AID GENERAL The State provides aid to local school districts on an annual basis as part of the State s appropriation process. Many school districts throughout the State rely on such State Aid as a significant part of their budgets. For the fiscal year ended June 30, 2015, 7.82% of the District s General Fund revenue came from sources at the State, including State Aid. See Exhibit C to this Official Statement for more information concerning the breakdown of the District s revenue sources. The State provides for four different types of State Aid, each of which is discussed in greater detail below. The four forms of State Aid are: (a) General State Aid, (b) Supplementary State Aid, (c) Categorical State Aid and (d) Competitive Grant Aid. The percentage of the District s State Aid derived from each of these categories is set forth in Exhibit C. GENERAL STATE AID General State financial aid ( General State Aid ) for Illinois school districts is computed beginning with the fiscal year commencing July 1. General State Aid makes up the difference between the available local resources per pupil (the Available Local Resources ) and a foundation level (the Foundation Level ). The Foundation Level is a figure established annually by the State s budget representing the minimum level of per pupil financial support that should be available to provide for the basic education of each pupil determined in accordance with the average daily attendance, as such term is defined in the School Code. The Foundation Level has been established at $6,119 in each of the most recent five school years. A district s Available Local Resources are determined by multiplying equalized assessed valuation by the calculation tax rate, which is established by statute. Currently, the calculation tax rate is 3.00% for unit districts, 2.30% for elementary districts and 1.05% for high school districts. The product is added to revenue from the corporate personal property replacement tax, and the total is divided by the best three months average daily pupil attendance to arrive at the district s Available Local Resources per pupil. For districts subject to the hereinafter defined Limitation Law, Available Local Resources may be limited by such districts extension limitation ratio, calculated in accordance with the School Code. General State Aid makes up the difference between the Foundation Level and the Available Local Resources multiplied by the Average Daily Attendance (as defined in Section (C) of the School Code) (the ADA ). The ADA equals the monthly average of the actual number of pupils in attendance of each school district, as further averaged for the best three months of pupil attendance for each school district. The attendance data used to calculate the ADA for the purpose of determining the amount of General State Aid is the greater of the (a) requisite attendance data for the school year immediately preceding the school year for which General State Aid is being calculated or (b) average of the requisite attendance data for the three preceding school years. -31-

39 For any district with Available Local Resources of less than 93 percent of the Foundation Level, the entire deficiency in Available Local Resources as compared to the Foundation Level is awarded in General State Aid. Where Available Local Resources represent 93 to 175 percent of the foundation amount, State Aid is reduced on a sliding scale. Where a district has Available Local Resources representing 175 percent or more of the Foundation Level, the district receives a flat $218 per ADA. Other factors important in determining a school district s aid include, but are not limited to, the following: 1. any applicable reductions in a district s EAV; 2. the number of special need students in a district; 3. whether or not the district participates in a tax abatement or tax increment allocation program under the Real Property Tax Increment Allocation Redevelopment Act; 4. the amount of money the district receives as a replacement for taxes previously received from the corporate personal property tax; 5. the number of days the schools of the district are operating with students in attendance; 6. whether or not kindergarten students attend for full day or one-half day sessions; 7. whether the schools in the district are recognized by ISBE as meeting state-required standards for recognition; and 8. changes in enrollment. While the Foundation Level has not been adjusted in recent years, the State budget for General State Aid has been reduced. As such, the State has not been able to fund fully the General State Aid formula and instead has prorated the amount received by each District in recent years. For fiscal year 2016, total General State Aid was increased by $244 million from fiscal year 2015, reducing the General State Aid proration to 8%, with each district receiving 92% of its entitlement. In addition, the State appropriated $85 million (the FY 2016 Supplemental Contribution ) to supplement the General State Aid appropriation to be allocated among school districts based on a district s loss per student based under the General State Aid formula. The following table provides information regarding the amount of increase or decrease in the State s General State Aid appropriation, the proration percentage and the percentage of General State Aid entitlement paid or to be paid to each school district over the last four fiscal years. -32-

40 INCREASE/(DECREASE) APPROXIMATE APPROXIMATE PERCENTAGE OF GENERAL STATE AID FISCAL YEAR (JUNE 30) IN STATE APPROPRIATION ($ IN MILLIONS) PRORATION PERCENTAGE ENTITLEMENT RECEIVED OR TO BE RECEIVED 2012 ($152.2) 5% 95% 2013 (161.0) 11% 89% % 89% 2015 (1) % 89% (2) 8% 92% (1) Excludes the effect of Public Acts and which reduced General State Aid payments by 2.25% for the last several months of fiscal year 2015 and allowed ISBE to distribute an additional $97 million of aid to school districts as a means of balancing the State s budget. (2) Excludes the effect of the FY 2016 Supplemental Contribution. The Illinois Senate has passed legislation (Senate Bill 318) that provides supplemental grants to the school districts with the greatest loss per student due to the difference between the General State Aid claim as calculated under the School Code and the amount appropriated for General State Aid. The bill also creates a General State Aid Committee to propose a revised school funding formula for Illinois schools. The Committee must submit its proposed school funding formula to the General Assembly for consideration by December 31, The bill also repeals the current General State Aid formula as of June 1, The District cannot predict whether, or in what form, any change to the General State Aid formula will occur, nor can the District predict the effect of any such change on the District s finances. SUPPLEMENTARY STATE AID In addition to General State Aid, districts with specified levels or concentrations of pupils from low-income households are eligible to receive supplemental general State aid financial grants ( Supplemental General State Aid ). Supplemental General State Aid is distributed to districts pursuant to a statutory formula based upon the number of low-income pupils in the district. The low-income pupil count is determined by the Department of Human Services based on the number of pupils eligible for at least one of a variety of low-income programs as of July 1 of the immediately preceding fiscal year. The amount of Supplemental General State Aid received by a district increases as the ratio of low-income pupils to the ADA increases. MANDATED CATEGORICAL STATE AID Illinois school districts are entitled to reimbursement from the State for expenditures incurred in providing programs and services legally required to be available to students under State law. Such reimbursements, referred to as Mandated Categorical State Aid, are made to the school district in the fiscal year following the expenditure, provided that the school district files the paperwork necessary to inform the State of such an entitlement. At present, the School Code provides for Mandated Categorical State Aid with respect to mandatory school programs -33-

41 relating to: (a) special education, (b) transportation, (c) free and reduced breakfast and lunch, and (d) orphanage tuition. Though school districts are entitled to reimbursement for expenditures made under these programs, these reimbursements are subject to the State s appropriation process. In the event that the State does not appropriate an amount sufficient to fund fully the Mandated Categorical State Aid owed to each school district, the total Mandated Categorical State Aid is proportionally reduced such that each school district receives the same percentage of its Mandated Categorical State Aid request with respect to a specific category of such aid as every other school district. In past years, the State has not fully funded all Mandated Categorical State Aid payments. Therefore, pursuant to the procedures discussed above, proportionate reductions in Mandated Categorical State Aid payments to school districts have occurred. However, because these programs are mandatory under the School Code, each school district must provide these programs regardless of whether such school district is reimbursed by the State for the related expenditures. No assurance can be given that the State will make appropriations in the future sufficient to fund fully the Mandatory Categorical State Aid requirements. As such, the District s revenues may be impacted in the future by increases or decreases in the level of funding appropriated by the State for Mandated Categorical State Aid. COMPETITIVE GRANT STATE AID The State also provides funds to school districts for expenditures incurred in providing additional programs that are allowed, but not mandated by, the School Code. In contrast to Mandated Categorical State Aid, such Competitive Grant State Aid is not guaranteed to a school district that provides these programs. Instead, a school district applying for Competitive Grant State Aid must compete with other school districts for the limited amount appropriated by the State for such program. Competitive Grant State Aid is allocated, after appropriation by the State, among certain school districts selected by the State. The level of funding is determined separately for each category of aid year-to-year based on the State s budget. This process does not guarantee that any funding will be available for Competitive Grant State Aid programs, even if a school district received such funding in a prior year. Therefore, school districts may incur expenditures with respect to certain Competitive Grant State Aid programs without any guarantee that the State will appropriate the money necessary to reimburse such expenditures. The School Code provides numerous programs that qualify a school district for Competitive Grant State Aid. For fiscal year 2016, the largest Competitive Grant State Aid programs will be in Bilingual Education and Early Childhood Education, and the appropriations for these programs are approximately $314.2 million and $61.7 million, respectively. PAYMENT FOR MANDATED CATEGORICAL STATE AID AND COMPETITIVE GRANT STATE AID The State makes payments to school districts for Mandated Categorical State Aid and Competitive Grant State Aid (together, Categorical State Aid ) in accordance with a voucher -34-

42 system involving ISBE. ISBE vouchers payments to the State on a periodic basis. The time between vouchers varies depending on the type of Categorical State Aid in question. For example, with respect to the categories of Mandated Categorical State Aid related to special education and transportation, ISBE vouchers the State for payments on a quarterly basis. With respect to Competitive Grant State Aid, a payment schedule is established as part of the application process, and ISBE vouchers the State for payment in accordance with this payment schedule. Once ISBE has vouchered the State for payment, the State is required to make the Categorical State Aid payments to the school districts. As a general matter, the State is required to make such payments within 90 days after the end of the State s fiscal year. For fiscal years 2010, 2011 and 2012, the deadline for such payment was extended to 180 days. The deadline for the State to make Categorical State Aid payments was not extended for fiscal year 2013 or fiscal year However, no assurances can be given that an extension for such payment will not be made in the future. See Exhibit C for a summary of the District s general fund revenue sources. RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF THE STATE OF ILLINOIS The District participates in the Teachers Retirement System of the State of Illinois ( TRS ). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers outside the City of Chicago. The Illinois Pension Code sets the benefit provisions of TRS, which can only be amended by the Illinois General Assembly. The State of Illinois maintains primary responsibility for the funding of the plan, but contributions from participating employers and members are also required. The TRS Board of Trustees is responsible for the System s administration. TRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information. The report may be viewed at TRS s website as follows: See Note 10 to the Audit, as hereinafter defined, attached hereto as Appendix A, for a more complete discussion. Employer Funding of Teachers Retirement System Under the Illinois Pension Code, teachers employers (such as the District) are required to contribute 0.58% of each teacher s salary to TRS. According to TRS, school districts in fiscal year 2011 contributed a combined $155 million to TRS while the State contributed $2.4 billion. TRS also estimates that if school districts would have been required to contribute normal costs -35-

43 for fiscal year 2011, the total contributions made by school districts would have totaled $800 million. In general, normal costs consist of the portion of the present value of retirement benefits that are allocable to active employee members current year of service. In an attempt to remedy severe under-funding of the State s retirement systems in 2012, then Governor Quinn proposed changes to the manner of funding of such retirement systems, including TRS, with the goal of reaching full funding by One proposed change would require school districts, including the District, to contribute the full amount of the normal costs of their employees TRS pensions (the Cost Shifting Proposal ). The Cost Shifting Proposal would phase in such contributions over the course of several years. Discussions and deliberations on the complex topic of pension reform remain fluid. The District cannot predict whether, or in what form, the Cost Shifting Proposal may be introduced in the General Assembly or ultimately be enacted into law. Furthermore, it is possible that any future pension reform legislation that is passed by the General Assembly (including any legislation containing the Cost Shifting Proposal) could face court challenges. If the Cost Shifting Proposal were to become law, it may have a material adverse effect on the finances of District. How local school districts, including the District, would pay for such shift of contributions cannot be determined at the current time. Property taxes to pay pension costs are capped by the Limitation Law. If such pension expenditures are not exempted from the Limitation Law, school districts (such as the District) would have to pay such additional contributions from revenues or reserves. ILLINOIS MUNICIPAL RETIREMENT FUND The District also participates in the Illinois Municipal Retirement Fund (the IMRF ). The IMRF is a defined-benefit, agent multiple employer pension plan that acts as a common investment and administrative agent for units of local government and school districts in Illinois. IMRF is established and administered under statutes adopted by the Illinois General Assembly. The Illinois Pension Code sets the benefit provisions of the IMRF, which can only be amended by the Illinois General Assembly. Each employer participating in the IMRF, including the District, has an employer reserve account with the IMRF separate and distinct from all other participating employers (the IMRF Account ) along with a unique employer contribution rate determined by the IMRF Board, as described below. The employees of a participating employer receive benefits solely from such employer s IMRF Account. Participating employers are not responsible for funding the deficits of other participating employers. Both employers and employees contribute to the IMRF. At present, employees contribute 4.50% of their salary to the IMRF, as established by statute. Employers are required to make all additional contributions necessary to fund the benefits provided by the IMRF to its employees. The annual rate at which an employer must contribute to the IMRF is established by the IMRF Board of Trustees (the IMRF Board ). The District s annual required contribution rate for calendar year 2014 was 13.67%. -36-

44 The IMRF issues a publicly available financial report that includes financial statements and required supplementary information which may be viewed at the IMRF s website. Actuarial Assumptions The IMRF Board makes contribution decisions on the basis of an actuarial valuation performed by the IMRF s actuary (the Actuary ). In the actuarial valuation, the Actuary employs certain actuarial methods and assumptions regarding future activity in specific risk areas, including investment return, payroll growth and retiree longevity, to make determinations regarding the future liability of the IMRF to pay benefits and, as a result, to determine the amount that must be contributed in the current year to provide for payment of those benefits in the future. The assumptions and the methods used by the IMRF comply with the requirements of the Governmental Accounting Standards Board. The IMRF Board adopts its assumptions after considering the advice of the Actuary. At present, the Actuary uses the following assumptions, among others, in generating the actuarial valuation for the IMRF: (a) 7.50% investment rate of return (net of administrative expenses), (b) projected salary increases of 4.00% per year, attributable to inflation, (c) additional projected salary increases ranging from 0.4% to 10% per year depending on age and service, attributable to seniority/merit, and (d) post-retirement benefit increases of 3% annually. Actuarial assumptions that vary widely from pension plan experience may have the effect of causing over or under contributions by participating employers to their respective IMRF accounts. To ensure accurate actuarial assumptions, the Actuary conducts an experience study, which is a comparison of the actual experience of the IMRF to the assumptions previously used by the Actuary, every three years and makes recommendations to the IMRF Board with respect to necessary changes to such assumptions. See Note 10 to the Audit for additional information on the IMRF s actuarial methods and assumptions. Funded Status As of December 31, 2014, the most recent actuarial valuation date, the District s IMRF Account had a funded ratio ( Funded Ratio ) of 74.10% on an actuarial basis, taking into account the Asset Smoothing Method, as described in the footnote to the table below, which corresponds to an unfunded actuarial accrued liability ( UAAL ) of $1,984,254. On a market value basis, the IMRF Account s Funded Ratio was 86.35%, which corresponds to an UAAL of $1,045,432. The Funded Ratios described herein with respect to the IMRF Account represent the percentage of the Actuarial Accrued Liability ( AAL ) funded with respect to active and inactive members only. The District has funded 100% of the AAL with respect to its retirees. The Funded Ratio and UAAL for the District s IMRF Account as of December 31, 2012, through December 31, 2014, were as follows: -37-

45 ACTUARIAL VALUE (1) THE IMRF ACCOUNT MARKET VALUE CALENDAR YEAR (DECEMBER 31) FUNDED RATIO UAAL FUNDED RATIO UAAL % $1,984, % $1,045, % 1,531, % 609, % 1,902, % 1,743,180 Source: The IMRF. (1) The Funded Ratio and UAAL for the District s IMRF Account are computed using the actuarial value of assets calculated pursuant to the asset smoothing method (the Asset Smoothing Method ). The Asset Smoothing Method lessens the immediate impact of market fluctuations on the actuarial value of assets, the UAAL and the Funded Ratio that may otherwise occur as a result of market volatility. However, asset smoothing delays recognition of gains and losses, thereby providing an actuarial value of assets that does not reflect the true value of pension plan assets at the time of measurement. As a result, presenting the actuarial value of assets as determined under the Asset Smoothing Method might provide a more or less favorable presentation of the current financial position of a pension plan than would a method that recognizes investment gains and losses annually. The District contributed all of its annual pension cost ( APC ), as determined by the IMRF Board, to the IMRF Account in calendar years 2012 through The District anticipates that it will continue to make full contributions to its IMRF Account, which includes an amortization of the UAAL, in the coming years. The District s contributions to its IMRF Account for calendar years 2012 through 2014 were as follows: CALENDAR YEAR ENDED DECEMBER 31 THE IMRF ACCOUNT PERCENTAGE APC CONTRIBUTED 2014 $300, % , % , % Source: The IMRF. Please see Note 10 to the Audit, and the related required supplementary information disclosures, for a description of the IMRF, the IMRF Account, the District s funding policy, the funded status and funding progress of the IMRF Account, and information on the assumptions and methods used by the Actuary. BOND RATING Moody s has assigned the Bonds an underlying credit rating of Aa3. This rating reflects only the views of such organization and any explanation of the significance of such rating may only be obtained from the rating agency. Certain information concerning the Bonds and the District not included in this Official Statement may have been furnished to Moody s by the District. There is no assurance that the rating will be maintained for any given period of time or that it may not be changed by Moody s if, in such rating agency s judgment, circumstances so -38-

46 warrant. Any downward change in or withdrawal of the rating may have an adverse effect on the market price of the Bonds. Except as may be required by the Undertaking described below under the heading CONTINUING DISCLOSURE, neither the District nor the Underwriter undertakes responsibility to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of the rating or to oppose any such revision or withdrawal. TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The District has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the District s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the District with respect to certain material facts within the District s knowledge and upon the mathematical computation of the yield on the Bonds and the yield on certain investments by the Verification Agent. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Code includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the regular corporate tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include certain tax-exempt interest, including interest on the Bonds. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective -39-

47 purchasers of the Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for each series and maturity of the Bonds is the price at which a substantial amount of such series and maturity of the Bonds is first sold to the public. The Issue Price of a maturity of a series of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof. If the Issue Price of a maturity of a series of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity of such series, if any, of the Bonds (the OID Bonds ) and the principal amount payable at maturity is original issue discount. For an investor who purchases an OID Bond in the initial public offering at the Issue Price for such maturity of such series and who holds such OID Bond to its stated maturity, subject to the condition that the District complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Department under State income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Bonds. Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. If a Bond is purchased at any time for a price that is less than the Bond s stated redemption price at maturity or, in the case of an OID Bond, its Issue Price plus accreted original issue discount (the Revised Issue Price ), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market -40-

48 price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds. An investor may purchase a Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Service has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service may treat the District as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Interest on the Bonds is not exempt from present State income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. -41-

49 QUALIFIED TAX-EXEMPT OBLIGATIONS Subject to the District s compliance with certain covenants, in the opinion of Bond Counsel, the Bonds are qualified tax-exempt obligations under the small issuer exception provided under Section 265(b)(3) of the Code, which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. CONTINUING DISCLOSURE The District will enter into a Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the MSRB ) pursuant to the requirements of the Rule. No person, other than the District, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a statement of other terms of the Undertaking, including termination, amendment and remedies, are set forth below in THE UNDERTAKING. Pursuant to issuing its bonds, the District has entered into one or more undertakings to file annually its audited financial statements and certain financial information. The District failed to file its audited financial statements and certain financial information for fiscal years ending June 30, 2013, June 30, 2014 and June 30, 2015, within the time periods specified in such undertakings with the Municipal Securities Rulemaking Board s Electronic Municipal Market Access System ( EMMA ). Such information and corresponding notices were filed with EMMA on February 12, The District expects to establish procedures to ensure that future filings are made on a timely basis, including retaining a third party professional to assist with such filings. A failure by the District to comply with the Undertaking will not constitute a default under the Bond Resolution and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. The District must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the District and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the District. -42-

50 ANNUAL FINANCIAL INFORMATION DISCLOSURE The District covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. At present, such dissemination is made through EMMA. The District is required to deliver such information within 210 days after the last day of the District s fiscal year (currently June 30), beginning with the fiscal year ending June 30, If Audited Financial Statements are not available when the Financial Information is filed, the District will submit Audited Financial Statements to EMMA within 30 days after availability to the District. MSRB Rule G-32 requires all EMMA filings to be in wordsearchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Annual Financial Information means information of the type contained in the following headings, subheadings and exhibits of the Final Official Statement: THE BONDS Debt Service Extension Base Availability after Issuance of the Series 2016A Bonds FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS Direct General Obligation Bonded Debt Selected Financial Information (only as it relates to direct debt) Composition of Equalized Assessed Valuation Trend of Equalized Assessed Valuation Taxes Extended and Collected School District Tax Rates by Purpose WORKING CASH FUND Working Cash Fund Summary Exhibit A Combined Statement of Revenues, Expenditures and Changes in Fund Balance Exhibit B Official Budget Exhibit C General Fund Revenue Sources Audited Financial Statements means the combined financial statements of the District prepared in accordance with accounting principles mandated by ISBE. REPORTABLE EVENTS DISCLOSURE The District covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission or the State at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The Events are: Principal and interest payment delinquencies Non-payment related defaults, if material Unscheduled draws on debt service reserves reflecting financial difficulties -43-

51 Unscheduled draws on credit enhancements reflecting financial difficulties Substitution of credit or liquidity providers, or their failure to perform Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security Modifications to the rights of security holders, if material Bond calls, if material, and tender offers Defeasances Release, substitution or sale of property securing repayment of the securities, if material Rating changes Bankruptcy, insolvency, receivership or similar event of the District The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material Appointment of a successor or additional trustee or the change of name of a trustee, if material CONSEQUENCES OF FAILURE OF THE DISTRICT TO PROVIDE INFORMATION The District shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the District to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specific performance by court order to cause the District to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Bond Resolution, and the sole remedy under the Undertaking in the event of any failure of the District to comply with the Undertaking shall be an action to compel performance. This 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 governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. -44-

52 AMENDMENT; WAIVER Notwithstanding any other provision of the Undertaking, the District by resolution authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the District, or type of business conducted; or (ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the District (such as Bond Counsel). In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the District shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. TERMINATION OF UNDERTAKING The Undertaking shall be terminated if the District shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Resolution. The District shall give notice to the MSRB in a timely manner if this paragraph is applicable. ADDITIONAL INFORMATION Nothing in the Undertaking shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the District chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the District shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. -45-

53 DISSEMINATION OF INFORMATION; DISSEMINATION AGENT When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through EMMA for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. AUDITED FINANCIAL STATEMENTS The audited financial statements of the District for the fiscal year ended June 30, 2015 (the Audit ), contained in Appendix A, including the independent auditor s report accompanying the Audit, have been prepared by Smith, Koelling, Dykstra & Ohm, P.C., Bourbonnais, Illinois (the Auditor ), and approved by formal action of the Board. The District has not requested the Auditor to update information contained in the Audit nor has the District requested that the Auditor consent to the use of the Audit in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Audit has not been updated since the date of the Audit. The inclusion of the Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the District since the date of the Audit. Specific questions or inquiries relating to the financial information of the District since the date of the Audit should be directed to the Chief School Business Official of the District. BOOK-ENTRY ONLY SYSTEM DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. -46-

54 Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. -47-

55 Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detailed information from the District or Registrar, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Registrar, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from DTC, and the District takes no responsibility for the accuracy thereof. The District will have no responsibility or obligation to any Securities Depository, any Participants in the Book-Entry System or the Beneficial Owners with respect to (a) the accuracy of any records maintained by the Securities Depository or any Participant; (b) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount or redemption price of, or interest on, any Bonds; (c) the delivery of any notice by the Securities Depository or any Participant; (d) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (e) any other action taken by the Securities Depository or any Participant. -48-

56 CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinions of Chapman and Cutler LLP, Chicago, Illinois ( Chapman and Cutler ), Bond Counsel, who has been retained by, and acts as, Bond Counsel to the District. Chapman and Cutler has also been retained by the District to serve as Disclosure Counsel to the District with respect to the Bonds. Although as Disclosure Counsel to the District, Chapman and Cutler has assisted the District with certain disclosure matters, Chapman and Cutler has not undertaken to independently verify the accuracy, completeness or fairness of this Official Statement or other offering material related to the Bonds and does not guarantee the accuracy, completeness or fairness of such information. Chapman and Cutler s engagement as Disclosure Counsel was undertaken solely at the request and for the benefit of the District, to assist it in discharging its responsibility with respect to the Official Statement, and not for the benefit of any other person (including any person purchasing Bonds from the Underwriter), and did not include any obligation to establish or confirm factual matters, forecasts, projections, estimates or any other financial or economic information in connection therewith. Further, Chapman and Cutler makes no representation as to the suitability of the Bonds for investment by any investor. NO LITIGATION No litigation is now pending or threatened restraining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds or any proceedings of the District taken with respect to the issuance or sale thereof. A certificate to this effect will be delivered by the District with the other customary closing papers when the Bonds are delivered. UNDERWRITING Pursuant to the terms of a Bond Purchase Agreement (the Agreement ) between the District and Robert W. Baird & Co. Incorporated, St. Charles, Illinois (the Underwriter ), the Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $7,379, The purchase price will produce an underwriting spread of 1.50% of principal amount if all Bonds are sold at the initial offering prices. The Agreement provides that the obligation of the Underwriter is subject to certain conditions precedent and that the Underwriter will be obligated to purchase all of the Bonds if any of the Bonds are purchased. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts, accounts or funds) and others at prices different than the initial public offering price. After the initial public offering, the public offering price of the Bonds may be changed from time to time by the Underwriter. -49-

57 AUTHORIZATION This Official Statement has been approved by the District for distribution to prospective purchasers of the Bonds. The Board, acting through authorized officers, will provide to the Underwriter at the time of delivery of the Bonds, a certificate confirming that, to the best of its knowledge and belief, the Official Statement with respect to the Bonds, together with any supplements thereto, at the time of the adoption of the Bond Resolution, and at the time of delivery of the Bonds, was true and correct in all material respects and did not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated where necessary to make the statements therein in light of the circumstances under which they were made, not misleading. February 22, 2016 /s/ Jim Andresen President, Board of Education School District Number 159, Will County, Illinois -50-

58 EXHIBITS Exhibit A shows the District s recent financial history. Exhibit B provides information on the District s 2016 budget. Exhibit C provides information on the general fund revenue sources of the District. EXHIBIT A COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE, FISCAL YEARS ENDED JUNE 30, GENERAL FUND (1) SPECIAL REVENUE (2) DEBT SERVICE CAPITAL PROJECTS (3) MEMORANDUM TOTAL Beginning Balance, July 1, 2010 $ 8,215,601 $1,957,409 $1,284,975 $971,926 $12,429,911 Revenues 16,949,064 1,573,715 1,849,694 61,502 20,433,975 Expenditures 17,185,277 1,341,182 1,837, ,084 20,636,103 Transfers Other Ending Balance June 30, 2011 $ 7,979,388 $2,189,942 $1,297,109 $761,344 $12,227,783 Beginning Balance, July 1, 2011 $ 7,979,388 $2,189,942 $1,297,109 $761,344 $12,227,783 Revenues 15,985,244 1,299,005 1,932, ,216,989 Expenditures 16,097,102 1,344,973 1,908,061 1,250 19,351,386 Transfers Other Ending Balance June 30, 2012 $ 7,867,530 $2,143,974 $1,321,322 $760,560 $12,093,386 Beginning Balance, July 1, 2012 $ 7,867,530 $2,143,974 $1,321,322 $760,560 $12,093,386 Revenues 17,783,097 1,668,877 2,287, ,739,987 Expenditures 16,434,945 1,408,631 2,158,427 1,250 20,003,253 Transfers (17,940) 0 17, Other Ending Balance June 30, 2013 $ 9,197,742 $2,404,220 $1,468,292 $759,866 $13,830,120 Beginning Balance, July 1, 2013 $ 9,197,742 $2,404,220 $1,468,292 $759,866 $13,830,120 Revenues 17,929,601 1,506,889 2,294, ,730,872 Expenditures 17,739,272 1,614,327 2,260, ,614,472 Transfers (17,940) 0 17, Other (21,118) (21,118) Ending Balance June 30, 2014 $ 9,349,013 $2,296,782 $1,519,405 $760,202 $13,925,402 Beginning Balance, July 1, 2014 $ 9,349,013 $2,296,782 $1,519,405 $760,202 $13,925,402 Revenues 18,864,632 1,322,113 2,408, ,595,289 Expenditures 19,274,674 1,512,489 2,398, ,186,154 Transfers 714, ,436 (753,879) 0 Other 153, ,095 Ending Balance June 30, 2015 $ 9,806,509 $2,106,406 $1,568,392 $ 6,325 $13,487,632 Source: The audited financial statements of the District for the years ending June 30, June 30, (1) Includes the Educational Fund, the Operations and Maintenance Fund, the Working Cash Fund and the Tort Fund. (2) Includes the Transportation Fund and the IMRF Fund. (3) Includes the Site and Construction Fund and the Fire Prevention and Safety Fund.

59 EXHIBIT B BUDGET, FISCAL YEAR ENDING JUNE 30, 2016 GENERAL FUND (1) SPECIAL REVENUE (2) DEBT SERVICE CAPITAL PROJECTS (3) WORKING CASH TOTAL FUND BALANCE AS OF 7/1/15 $ 7,714,257 $2,121,259 $1,568,392 $6,327 $1,877,501 $13,287,736 ESTIMATED REVENUE 17,895,416 1,410,832 2,475, ,754 21,847,858 ESTIMATED EXPENDITURES 19,827,177 1,720,978 2,473, ,021,655 OTHER/BOND PROCEEDS ESTIMATED FUND BALANCE 6/30/16 $ 5,782,496 $1,811,113 $1,570,748 $6,327 $1,943,255 $11,113,939 Source: Budget for the District for the year ending June 30, Please note that the beginning fund balance represents an estimate by the District at the time the budget was produced. As such, the beginning fund balance may not match the ending fund balances for the year ended June 30, 2015, due to timing. (1) Includes the Educational Fund and the Operations and Maintenance Fund. (2) Includes the Transportation Fund, the Tort Fund and the IMRF Fund. (3) Includes the Site and Construction Fund and the Fire Prevention and Safety Fund.

60 EXHIBIT C GENERAL FUND REVENUE SOURCES, FISCAL YEARS ENDED JUNE 30, YEAR YEAR YEAR YEAR YEAR ENDED JUNE 30, 2011 ENDED JUNE 30, 2012 ENDED JUNE 30, 2013 ENDED JUNE 30, 2014 ENDED JUNE 30, 2015 Local Sources 82.13% 82.87% 85.40% 84.76% 86.84% State Sources: General Aid 6.32% 6.19% 4.78% 4.59% 4.33% Supplementary General Aid 0.00% 0.00% 0.00% 0.00% 0.00% Mandated Categorical 5.83% 6.48% 5.14% 4.46% 3.39% Other State Sources 0.82% 0.34% 0.39% 0.70% 0.09% Total State Sources 12.97% 13.01% 10.31% 9.75% 7.82% Federal Sources 4.90% 4.12% 4.29% 5.49% 5.34% TOTAL % % % % % Source: The annual financial reports of the District for the years ending June 30, 2011-June 30, For purposes of this Exhibit, the General Fund includes the Educational Fund and the Operations and Maintenance Fund.

61 APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2015

62 MOKENA SCHOOL DISTRICT NO. 159 Annual Financial Report As of and for the Year Ended June 30, 2015

63 Mokena School District No. 159 As of and for the Year Ended June 30, 2015 Table of Contents Independent Auditor's Report.... I -2 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 A udiring Standards Independent Auditor's Report on Compliance For Each Major Federal Program and on Internal Control Over Compliance Required By OMB Circular A S-6 Management's Discussion and Analysis (MD&A) Basic Financial Statements Government-\ ide Financial Statements Statement ofnet Position- Modified Cash Basis... l4 Statement of Activities- Modified Cash Basis Fund Financial Statements Balance Sheet- Modified Cash Basis - Governmental Funds Reconci liation of the Governmental Funds Balance Sheet to the State1nent ofnet Position Statement of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis- Governmental Funds Reconcil iation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Fiduciary Net Position - Modified Cash Basis Notes to Basic Financial Statements Other Supplementary Information TRS Schedule of the District's Proportionate Share of the Net Pension Liability and Schedule of District Contributions; TMRF Schedule of Changes in the Net Pension Liability and Related Ratios and Schedule of District Contributions Tort 1 n1n1un ity Expenditures Combining Balance Sheet- Modified Cash Basis- General Fund Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis- General Fund Comb ining Balance Sheet - Modified Cash Basis- Governmental Non-Major Funds... 49

64 Mokena School District No. 159 As of and for the Year Ended June 30, 2015 Table of Contents Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances- Mod ified Cash Basis - Governmental Non-Maj or Funds., Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual - Modified Cash Basis: Educational Fund Sl -57 Operations and Maintenance Fund Debt Service Fund Transportation Fund Municipal Retirement/Social Security Fund Capital Projects Fund Working Cash Fund Tort Fund Assessed Valuations, Tax Rates and Extensions Schedule of Bonded Debt Federal Awards Section Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Slllnrnary of Auditor's Results Schedule of Findings and Questioned Costs Summary Schedul e of Prior Year Find ings Corrective Action Plan for Current Year Audit Findings... 76

65 \1ark l- mi1h Wame D. Koelling Lt.,Tence K. Ohm l.unis L Dykstra Richard Stenzinger ~faroe ~f.-e m Kolberg Michael!.. S1ruud Kd l.h B. Ohm \tell!.. n... Young Smith, Koelling, Dykstra& Ohm,P.c. CenHied J>ublic Accountants and Ad, isur~ INDEPENDENT AUDITOR'S REPORT 1605 N. Convent Buurbonn.U. ll. 609!1 (81!'>) Fax: (8 15) 93!'>-03till lkt ther ( 708) tl Muni (8 15) !'>4 Hench cr (81!'>) Pt'OIOI\t" (70H) \\'ilmingtun (R l!i) To the Board of Education Mokena School District No. 159 I 1244 Willowcrest Lane Mokena, Illinois We have audited the accompanying modified cash basis financial statements of the governmental activities, each major fund, and aggregate remaining fund information of Mokena School District No. I 59, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Mokena School District No. I 59's basic financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note I; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatements, whether due to error or fraud. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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. Member of American In thute of Certified Public Accountants I Illinois CPA Society

66 Opinions ln our opinion, the financial statements referred to above present fairly, in a ll material respects, the respective modified cash basis financial position of the governmental activities, each major fund and the aggregate rema ining fund information of Mokena School District No. 159 as of June 30, 201 5, and the respective changes in modified cash basis fina ncial position for the year then ended in accordance with the modified cash basis of accounting described in Note I. Basis of Accounting We draw attention to Note I of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. Report on Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The other supplementary inforn1ation as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governmenrs, and Non-Profit Organizations, and is also not a required pan of the basic financial statements. The other supplementary information and schedule of expenditures of federal awards are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the basic financ ia l 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 fin ancial statements or to the financial statements themselves, and other additjonal procedures in accordance with auditing standards generally accepted in the United States of America. ln our opinion, the other supplementary information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole on the basis of accounting described in Note 1. Management's Discussion and Analysis on pages 7-13 has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on such information. Other Reporting Required by Govemment Auditing Standards ln accordance with Government Auditing Standards, we have a lso issued our report dated October 19, 2015, on our consideration of Mokena School District No. I 59'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 contro l over fin ancial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Mokena School Distri ct No. 159's internal contro l over financial reporting and compliance. Bourbonnais, Illinois October 19, Swt:i:JA I~ I~ ~~ ~C. 2

67 Mark L. Smith Wavne D. Koelling l..a"n'nce K. Ohm Cunas L. Dykstnl Richard S. Steminger Marcie Meems Kolberg M1rhael L Stroud 1-.ellh B. Ohm \'j( ki L De\'oun~o: Smith, Koelling, Dykstra& Ohm,P.C. Cenified Public AccoumanL< and Ad isor< 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 1605 N. Convem Bourlxmnai,, IL (815) Fax: (8 15) W "'~vw.skdocpa.com Beecher (70R) Morm (815) :>4 HcNh<'r (8 15) ! Peowne (701!) Wilmu1~o:wn!!!t! l 47M-t77 To the Board of Education Mokena School District No Willowcrest Lane Mokena, Illinois We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Mokena School District No. 159, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Mokena School District No. I 59's basic financial statements and have issued our report thereon dated October I 9, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of epressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified_ However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant de ficiencies. 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. We consider the deficiency described in the accompanying schedule of findings and questioned costs in Finding I to be a material weakness_ 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_ We consider the deficiency described in the accompanying schedule of findings and questioned costs in Finding 20 I to be a significant deficiency. 3 Member of American Institute of Certified Public Accountants / Illinois CPA Sociecy

68 Compliance and Other Matters As part of obtaining reasonable assurance about whether the 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 mate rial effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an obj ective 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. Mokena School District No. 159's Response to Findings Mokena School District No.!59's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal contro l 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 Di strict's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Bourbonnais, Jllinois October 19,

69 ~ l arj.. L Smitl1 \I avne D. Koelling La" ence K. Ohm Curtis L. Dykstrd Richard S. StcnLinger '.larci" '.teems Kolberg "1Jclldel L. Su-oud Kci1h B. O hm \'icli L. DeYoung Smith, Koelling, Drkstra& Ohm,P.c. Ct-nified Public Accoun~ants nrl Ad imrs INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A N. C01wenl Bourbonnais, IL (8 15) 937-1!)97 Fax: (81!1) 9~5-036«1 "'"w.skdocpa.cnm Beecher (708)!1-1 ~3232 Morris (11 15) Herscher (8 1:;) 42~98UH Peoto n e (708) 25S.0300 \\ilmmkton (8 15) To the Board of Education Mokena School District No Willowcrest Lane Mokena, Illinois Report on Compliance for Each Major Federal Program We have audited Mokena School District No.!59'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 Mokena School District No.!59's major federal programs for the year ended June 30, Mokena School District No.!59'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 optmon on compliance for each of the District's major federal programs based on our audit of the type 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 perfonn 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 Mokena School District No. I 59's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District's compliance. Member of Ame rican Institute of Certified Public Accountan ts I Tlli nois CPA Society 5

70 Opinion on Each Major Federal Program In our opinion, the District complied, in all material respects, with the types of compl iance requirements referred to above that could have a direct and material effect on each of its major federal programs for the yearendedjune30, Report on Internal Control Over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the ty pe of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal progran1 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 effective ness of the District's internal control over com pi iance. 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 perform ing 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 infernal 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 significanf deficiency in infernal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compl iance 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 identi fy 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 C ircular A Accordingly, this report is not suitable for any other purpose. Bourbonnais, Illinois October 19,

71 Mokena School District No. 159 Management's Discussion and Analysis As of and for the Year Ended June 30, 2015 As management of Mokena School District No. 159 (the District), ' e offer readers of the District's Annual Financial Report this narrative and analysis of the financial activities of the District for the fiscal year ended June 30, Financial Highlights The assets of the District exceeded its liabilities at the close of the most recent fiscal year by $23,88 1,851 (net position). Governmental activities have unrestricted net position of$1 1,602,353. The total net position of the District decreased by $204, 181 during fi scal year Fund balance of the District's governmental funds decreased by $437,770 resulting in an ending fund balance of $ 13,487,632. During the current fiscal year, the fund balance in the District's General Fund increased by $457,496. The District's bonded debt decreased by $838,268 to $3,964,308 as a result of current year scheduled payments. Overview of the Financial Statements Management's discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The basic financial statements presented on pages are comprised of three components: ( I) Government-wide financial statements, (2) Fund financial statements, and (3) notes to basic financial statements. This report also contains combining and individual fund financial statements and schedules and other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader of the District's Annual Financial Report a broad overview of the financial activities in a manner similar to a private sector business. The government-wide financial statements include the statement of net position-modi fied cash basis and the statement of activities-modified cash basis. The statement of net position-modified cash basis presents information about a ll of the District's assets and liabilities as reported using the modified cash basis of accounting. The difference between assets and liabilities is reported as net position. Over time, changes in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. 7

72 The statement of activities-modified cash basis presents information showing how the net position of the District changed during the current fiscal year. Changes in net position are recorded in the statement of activities using the modified cash basis of accounting. The modified cash basis of accounting is described in the notes to basic financial statements. The government-wide financial statements distinguish functions of the District that are supported by taxes and intergovernmental revenues (governmental activities). Governmental activities consolidate governmental funds including general, special revenue, debt service and capital projects funds. The government-wide financial statements can be found on pages of this report. Fund Financial Statements Fund financial statements are designed to demonstrate compliance with finance-related requirements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific objectives. Fund financial statements for the District include governmental funds and fiduciary funds. Governmental funds account for essentially the same information reported in the governmental activities of the government-wide financial statements. However, unlike the government-wide statements, the governmental fund financial statements focus on near-term financial resources and fund balances. Such information may be useful in evaluating the financing requirements in the near term. Since the governmental funds and the governmental activities report information using the same functions, it is useful to compare the information presented. Because the focus of each report differs, reconciliation is provided in the fund financial statements to assist the reader in comparing the near-term requirements with the long-term needs. The District maintains nine different governmental funds and sub-funds. The major funds are the General Fund, Debt Services Fund and the Transportation Fund. They are presented separately in the fund financial statements with the remaining governmental funds combined into a single aggregated presentation labeled other nonmajor governmental funds. Individual fund information for the nonmajor funds is presented as Other Supplementary Information in this report. The District adopts an annual budget for each of the governmental funds. schedules are presented as Other Supplementary Information in this report. Budgetary comparison The basic governmental fund financial statements can be found on pages of this report. Notes to Basic Financial Statements The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. The notes can be found on pages ofthis report. 8

73 Government-wide Financial Analysis The assets of the District are classified as cash and investments and capital assets. Cash and investments are current assets. These assets are available to provide resources for the near-term operations of the District. Capital assets are used in the operations of the District. These are land, improvements, buildings, equipment, and vehicles. Capital assets are discussed in greater detail in the section titled Capital Assets and Debt Administration, elsewhere in this analysis. C urrent and long-term liabilities are classified based on anticipated liquidation either in the near-terrn or in the future. C urrent liabilities include short-terrn debt obligations. Long-terrn liabilities, such as longterm debt obligations, will be liquidated from resources that w ill become available after fi scal year The assets of the District's activities exceed liabilities by $23,881,851 with an unrestricted balance of $ 11,602,353. Total net position of the District does not include internal balances. A net investment of $ 10,394,219 in land, improvements, buildings, equipment, and veh icles to provide services to the District's students represents 44 percent of the District's net position. Net position of $6,325 has been accumulated for future construction projects, $ 1,568,392 has been accumulated to provide resources to liquidate the long-terrn debt principal and re lated interest payments, $295,710 has been accumulated for retirement purposes and $ 14,852 has been accumulated for tort immunity purposes. The net position of the District as of June 30, 2015 and 2014 is summarized as follows: Net Position Assets: Current assets Capital assets Tota l assets Liabilities: Noncurrent liabilities Total liabilities Net Pos ition: Net investment in capital assets Restricted Unrestricted Total net position $ 13,487,632 14,472,186 27,959, ,967 4, ,394,2 19 1,885,279 11, $ $ 13,925,402 14,963,206 28,888,608 4,802, , I 60,630 2,5 I 7,32 I II, $

74 Governmental Activities Governmental activities decreased the net position of the District by $204, 181. Changes in net position of the District for years ended June 30, 2015 and are as fol lows: Changes in Net Position Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants General revenues: Property taxes Personal property replacement taxes State grants Investment income Miscellaneous Total revenues $ 643,231 5, 165,074 15,720, , ,607 17, , ,941 $ 714,131 4,550, ,000 15,3 13, , ,885 14, , Expenses: Governmental activities: Instructional Pupil support Administration Transportation Other support fnterest Total expenses Change in net position Net position at beginning of year Net position at end of year 14,986, ,965 1,443, ,869 3,2 14,905 I,521,287 22,758,122 (204,181) 24,086,032 $ll.b.b1.,851 13, I 03, ,568 1,514, ,059 3,329,627 I,388, ,061, ,479 23,416,553 $24,Q86,Q32 Key elements of the change in net position for governmental activities are as follows: Overall property tax revenues increased by $407, 147 over the prior year to $ 14,986, 175. This increase was primarily due to an increase in the tax levy. Property tax revenue is expected to increase at the rate of inflation (CPI which is expected to be 0.8 percent for the levy. State and Federal revenues are expected to remain flat or possibly decrease in future years. Revenue received from operating grants for instruction, excluding on behalf receipts, decreased by approximately $200,000 while instructional expenses, excluding on behalf payments, increased by almost $900,000 in comparison with last year. 10

75 Financial Analysis of the District's Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. The focus of the District's governmental funds is to provide information on near-term inflows and outflows, and balances of spendable resources. Such infom1ation is useful in assessing the District's financing requirements. Jn particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fi scal year, the District's governmental funds reported a combined ending fund balance of $ 13,487,632, a decrease of$437,770 in comparison with the prior year. The unassigned fund balance ofthe District at the end of the fiscal year was $7,914, 156. The remainder ofthe fund balance is restricted, committed or assigned for ( I) future tort related items, (2) repayment of outstanding long-term debt obligations, (3) future construction activity, (4) transportation costs, (5) retirement benefit and Social Security costs, and (6) working cash. The General Fund is the chief operating fund of the District. The District enrollment remains stable with a modest decline in total enrollment projected over the next few years due to graduation of large grade classes. The return of full day kindergarten will serve to mitigate these losses. The Debt Services Fund has adequate resources accumulated including real estate tax collections subsequent to the end of the year to make the December 20 I 5 principal and interest payments. The property tax levy to accumulate resources for the June 20 I 6 bond principal and interest payments will be approved in December General Fund Budgetary Highlights The General Fund consists of the Educational, Operations and Maintenance and Working Cash Funds. As a measure of the General Fund's liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Actual expenditures of the General Fund on the budgetary basis amounted to $15,718,318 which was below the budgeted amount of $16,458,598 by $740,280. Unassigned fund balance of $7,914,156 represents SO% of expenditures. I I

76 Capital Assets and Debt Administration Capital Assets - The District's investment in capital assets for its governmental activities as of June 30, 20 IS amounted to $ 14,472,186 (net of accumulated depreciation). This investment in capital assets included land, improvements, buildings, equipment and vehicles. Capital Assets (net of accumulated depreciation) Land Land improvements Buildings Equipment Vehicles Total capital assets 201S $ 1,092,698 S00,376 12,S77,073 27S,70S 26,334 $14, $ 1,092,698 SIS,S34 13,174, , ,1Sl $ Additional information on the District's capital assets can be found 111 statements. Note S to the basic financial Long-tenn debt - At June 30, 20 IS, the District had total debt outstanding, including capital leases, of $4,077,967. Total bonded long-tenn debt for the District decreased during the current fiscal year according to the normal schedule of payments. Additional infonnation on the District's long-tenn debt can be found in Note 4 to the basic financial statements. Economic Factors and Next Year's Budget The State of Illinois supports public schools through a complicated method based on student attendance and overall local property values. Anticipated growth in future overall property value in the District may cause further decreases in state aid to the District. For the IS school year, the District received about $383,334 Jess in state funds than in school year Senate Bi ll 1 seeks to reduce this state funding even further. The District has also received funds for programs such as pre-school, reading instruction, and student transportation. The State has cut funding levels for each of these vital programs and the responsibility for continuing them has shifted to Mokena District 1S9. Othe r sources of funding for Mokena District 1S9 are investment earnings and the local property tax. The U.S. and global economic situation have caused negative impacts on both of these revenue sources. The dramatic decrease in interest rates has decreased income on investments in the past few years. The local property tax provides a large share of the revenue for the District. The District is subject to the Property Tax Extension Limitation Law which allows an increase in property taxes on existing property by the consumer price index. The poor condition of the overall economy had a painful effect on many fami lies in the District which has resulted in negative fin ancial implications for the District. The state's pension crisis continues to weigh on the minds of school board members, administrators, and teachers alike. The unknown of pension cost shifting from the State to the District is difficult to plan and budget. With the passage of the Affordable Care Act, the District continues to monitor healthcare regulations and their likely financial implications to the District. Furthennore, Senate Bill I looms on the horizon with a vote possible in the fa ll veto session. This bill, if passed by the House, would reduce the District's current state funding by approximately $ dollars. 12

77 The economy is, however, showing signs of slow recovery both locally and nationally. Housing starts in Mokena are up modestly, and the stock market has recovered from the great recession. However, the lack of a FY 16 State budget has resulted in no fund allocations to school districts throughout the State of Illinois. The District expects that as the market continues its slow recovery, that demographics wi ll return to pre-recession levels and student populations will rise slowly as a result. In fiscal year 2015, the District had an operating deficit of $590,865. However, after several years of conservation of funds in the face of economic uncertainty, the District is still poised to continue reinvesting in the schools and community. The reinvestment process will include infrastructure improvements such as replacing roofs, doors, and windows. Many challenges remain; however, through careful budgeting, continued use of strategic financial planning and monitoring of revenues and spending, the District is moving forward and will continue to provide the best possible educational experience to our students. Requests for Information This financial report is designed to provide a general overview of the District's finances for a ll those with an interest in the District. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Office of the Superintendent Mokena School District No Willowcrest Lane Mokena, lllinois

78 Mokena Scbool District No. 159 Statement of Net Position-Modified Casb Basis June 30, 2015 Assets Cash and investments Prepaid items Capital assets, net of accumulated depreciation Total assets Liabilities Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Net Position Net investment in capital assets Restricted for: Debt service Capital projects Other purposes Unrestricted Total net position Governmental Activities $ 13,377, , , ,843 3,219, ,967 10,394,219 I,568,392 6, II,602,353 $ The accompanying notes are an integral part of the fi nancial statements. 14

79 Mokena School District No. 159 Statement of Acth ities-modified Cash Basis For the year ended J une 30, 2015 Func tions/pro![ams: Ex~nscs ProGram Revenues Charges for Operating Grants Capital Services and Contributions Grants et (Expense) Revenue and Changes in Net Position Governmental Activities Governmental activities Instruction: Regular programs $ 6,484,985 Pre-K programs Special education programs Other instructional programs 295,566 State retirement contributions 3.403,26 1 Support services: Pupils 597,965 Instructional staff 337,077 General administration 549,909 chool administration 894,0 12 Business Transportation Operation and maintenance 2.065,264 Central Community services Interest and fees Total governmental activities $ , 122 $ $ $ , $ $ 5, $ $ ( ) (92.370) (3.654,034) ( ) ( ) ( ) (549,909) (894,0 12) (237,234) (613,968) (2, ) (260,160) ( 16,5 15) p,52 1,287) ( 16, ) General revenues: Taxes: Property taxes Corporate personal property replacement taxes State grants Investment income M iscellru1eous Total general revenues Change in net position Net position -beginning Net position -ending ,607 17, ,745,636 (204,18 1) ,032 $ ,85 1 The accompanying notes are an integral part of the (jnancial statements 15

80 Mokena School District No. 159 Governmental Funds Balance Sheet-Modified Cash Basis June 30,2015 General Fund Debt Service Total Total Non-major Governmental Transportation Funds Funds Assets: Cash and investmems Prepaid items Total assets $ 9,696,509 $ ,000 $ 9,806,509 $ $ ,696 $ $ 13,377, ,000 $ ,696 $ 302,035 $ Fund balances: Restricted for: Municipal retirement/social security Debt service Capital projects Tort Committed for: Working cash Assigned Unassigned , , 156 $ $ $ 295,7 10 $ ,568, , , ,9 14, 156 Total fund balances Total liabilities and fund balances 9.806, ,392 $ $ , $ 1, $ 302,035 $ 13, The accompanying notes are an integral part of the fi nancial statements. 16

81 Mokena School District No. 159 Statement of Fiduciary Net Position-Modified Cash Basis June 30, 2015 Assets Cash $ Agency Funds 23,223 Liabilities Due to acti vity fund organizations $ 23,223 The accompanying notes are a n integral part of the financial statements. 17

82 Mokena School District No. 159 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30,2015 Total fund balances - governmental funds $ 13,487,632 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 in the funds as assets Long-term liabilities are not due and payable in the current period and therefore, are not reported as a fund liability in governmental funds Net position of governmental acti vities 14,472,186 ( 4,077,967) $ 23,881,851 The accompanying notes are an integral part of the financial statements. 18

83 ~I o ke n a School District o. I 59 Go\ ernmental Funds Statement of Revenues, Expenditures and Changes in Fund Bala nces-modified Cash Basis For the year ended June Debt General rn'ice Revenues: Local sources: Property taxes $ 12,430,794 $ Corporate personal property replacement taxe 68,866 Other 940,103 State sources 1, Federal sources 8 15,50-1 Investment income ,3 15 Total revenues 15, , Revenues for "on behalf ' payments Total revenues 18, ,542 Expenditures: Current: Instruction Regular progrdms 5,890,195 Prc-K Programs 84,250 Special education programs 1,689,858 Other instructional programs 29 1,422 Supponing services Pupils 504,81 2 Instructional sta ff General admin istration School administrntlon Business Transponation Food Operations and mamtenance 1, Central 233,623 Commun ity services 16,515 Payments to other distncts/governmental unus 2,93 1,283 Debt services: Principal 877,704 Interest 1.506,732 Other 14,555 Capita l outlay Total direct expenditures ,991 Expenditures for "on behalf' payments 3.403,261 Total expenditures 19, ,991 Excess (de ficiency) of revenues over expenditures ~ ) 9,55 1 Other financing sources (uses): Other sources 153,095 Transfer (to) from other funds 714, Total other financing sources (uses) 867,538 39,436 Net change in fund balance ,987 Fund balance - beginning of year 9, Fund balance -end of year $ 9, $ 1,568,392 T otal T ota l on- lajor Govunmental T ransl!ortation Funds Funds $ $ $ 15,720, , , , , , , , , ,028 3,403, , ,945 5,994, 140 8, , ,775,133 7, , , , ,077 13, , , , , ,797 25, , ,462 1,968, , ,695 2,992, ,704 1,506,732 14, , ,712 19,782, , ,712 23, I (25 1,275~ 60,90 1 {590,865) 153,095 (753,879) ( ) (251,275) (692,978) (-137,770) 2,061, , ,925,402 s 1,8 10,696 $ $ 13,487,632 The accompanying notes are an integral pan of the fi nancial statements. 19

84 Mokena chool District No. 159 Reconciliation of the Statement of Revenues, Expenditures, and C hanges in Fund Balances of Governmental Funds to the Statement of Activities For the year ended June 30,2015 Net c hange in fund balances - total governmental funds $ (437,770) Amounts reported for governmental activities in the statement of activities are different because: The payment of principal on long-term debt is reflected as an expense on the fund level statements, but is reported as a reduction of liabil ities on the entity wide statements 'lhe proceeds of principal on long-term debt is reflected as revenue on the fund level statements, but is reported as an increase of liabilities on the entity w ide statemen ts 877,704 ( 153,095) Depreciation on capital assets and gains/losses on disposals of assets are not re flected on the fund level statements, but are reported as expense/revenue on the entity wide statements (688,627) Proceeds, if any. from the sale/disposal o f capital assets are reported as revenue on the fund level statements, but only the gain/loss on the disposal is reported on the entity wide state ments (4 1,348) The acquisition of capital assets is reported as an expense on the fund level statements, but is capitalized as an asset on the entity wide statements Change in net position of governmental acti vities- entity wi de statements 238,955 $ (204, The accompanying notes are an integral part of the financial statements. 20

85 Mokena School District No Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note I - Summary of Significant Accounting Policies Mokena School District No. 159 (the "District") operates as a public school system governed by the Board of Education. The District is organized under the School Code of the State of Illinois, as amended. The accounting principles of the District conform to accounting principles generally accepted in the United States of America (GAAP), as applicable to local government units of this type. The following is a summary of the more significant accounting polic ies of the District: Reporting Entity Accounting principles generally accepted in the United States of America require that the fi nancial statements of the reporting entity inc lude: ( I) the primary government, (2) organizations for which the primary government is financially accountable, and (3) other organizations fo r which the natme and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financ ial statements to be misleading or incomplete. T he criteria provided by the Government Accounting Standards Board have been considered and there are no agenc ies or entities which should be presented with the District. Using the same criteria, the District is not included as a component un it of any other governmental entity. Basis ofpresentation Government-wide Financial Statements The government-wide financial statements (i.e. the statement of net position and the statement of activities) report information on all of the nonfiducia1y activities of the District. The effect of interfund activity has been removed from these statements. The District's operating activities are all considered "governmental activities", that is, activities normally suppo1ted by taxes and governmental revenues. The District has no operating activities that would be considered ''business activities". The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include: ( I) amounts paid by the recipient of goods or services offered by the program, and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Governmental Funds Financial Statements Governmental Funds financial statements are organized and operated on the basis of funds and are used to account for the District's general governmental activities. Fund accounti ng aggregates fun ds according to their intended purpose, and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. A fund is an independent fiscal and accounting entity with a selfbalancing set of accounts that comprise its assets, liabilities, reserves, fu nd balance, revenues, and expenditures. The m inimum number of funds is maintained consistent with legal and managerial requirements. Separate financial statements are provided for governmental funds and fiduciary funds; the fiduciary funds are excluded from the government-wide financial statements. 21

86 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 1 -Summary of Significant Accounting Policies (Continued) Measurement Focus and Basis of Accounting Measurement Focus Measurement focus is a term used to describe what transactions or events are recorded within the various fin anc ia l statements. Basis of accounting re fers to when and how transactions or events are recorded, regardless o f the measurement focus applied. The government-wide financ ial statements are reported using the economic resources measurement focus within the limitations of the modified cash basis of accounting. Governmental fund and the fiduciary fund financial statements are re ported using a "current financial resources" measurement focus within the limitations of the modified cash basis of accounting. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as the ir measure of available spendable financial resources at the end of the period. Basis o f Accounting The fin ancial statements are presented using a mod ifi ed cash basis of accounting, which is a basis of accounting other than GAAP as established by GASB. This basis recognizes assets, liabilities. net position, receipts, and expenditures when they result from cash transactions with a provision for depreciation in the government-wide statements. As a result of the use of this modified cash basis of accounting, certain assets and their related revenues (such as accounts receivable and revenue for billed or provided services not yet collected) and certain liabilities and their re lated expenses (such as accounts payable and exp enses for goods and services received but not yet paid, and accrued expenses and liabilities) are nor recorded in these financial statements. In addition, other economic assets, de ferred outflows, liabilities, and deferred inflows that do not result from a cash transaction or event are not reported, and the measurement o f reported assets and liabi lities does not involve adjustment to fair value. Lastly the net pension liability as calculated under GASB 68 has not been recorded, and pension expense in the financia l statements represents cash paid du ring the year rather than the amount calculated under GASB 68. If the Di strict utilized the basis of accounting recogni zed as genera lly accepted in the United States of America, the fund financial statements for governmental funds would use the modified accrual basis of accounting. All government-wide financ ials would be presented on the accrual basis of accounting. Major Governmental Funds: General Fund - The general operating fund of the District consists o f the Educational, O perations and Maintenance, Working Cash, and Tort Funds. It accounts for and reports a ll financ ial resources not accounted for in another fund. This fund is primarily used for most of the instructional and administrative aspects of the District's operati ons. Revenues consist largely of local property taxes and state government a id. 22

87 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 1 - Summary of Significant Accounting Policies (Continued) Debt Service Fund - accounts for the accumulation of resources for, and the payment of, longterm debt principal, interest and related costs. The primary revenue source is local property taxes levied specifically for debt service. Transportation Fund - accounts for all revenues and expenditures for student transportation. Revenue is derived primarily from local property taxes and state reimbursement grants. Non-major Funds: Municipal Retirement/Social Security Fund - accounts for the District's portion of pension contributions to the Illinois Municipal Retirement Fund, payments to Medicare, and payments to the Social Security System. Re enue to finance the contributions is derived primarily from local property taxes and personal property replacement taxes. Capital Projects Fund - accounts for the financial resources to be used for the acquisition or construction of, and/or addition to, m~or capital facilities. Fire Prevention and Safety Fund - accounts for revenue levied for purposes of fire prevention, safety, energy conservation or school security and related expenditures. Fiduciary Funds - account for assets held by the Distri ct in a trustee capacity or as an agent for individuals, private organizations. other governments or other funds. Agency Funds - include Student Activity Funds, Convenience Accounts and Trust and Agency Funds. These funds are custodial in nature and do not present results of operations or have a measurement focus. Although the Board of Education has the ultimate responsibi lity for Activity Funds, they are not local education agency funds. Student Activity Funds account for assets held by the District which are owned, operated and managed generally by the student body, under the guidance and direction of adu lts or a staff member, for educational, recreational, or cultural purposes. Convenience Accounts track and record assets that are nom1ally maintained by a local education agency as a convenience for its faculty, staff, etc. Deposits and lnvesrments Cash and investments of the District are poo led into a common pooled account in order to maximi ze investment opportunities. Each fund whose mon ies are deposited into the pooled account has equity herein, and interest earned on the investment of these monies is allocated based upon relative equity at month end. An individual fund's equity in the pooled account is available upon demand and is considered to be a cash equi valent when preparing these financial statements. Each fund's portion of the pool is displayed on its respective statement of assets and fund balance arising from cash transactions as "cash and investments" along with the fund's non-pooled cash and investments. Investments are reported at cost, which approximates fair value. The reported value of the Illinois Funds and the Illinois School District Liquid Asset Fund is the same as the fair va lue of each Fund's shares. 23

88 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 1 - Summary of Significant Accounting Policies (Continued) Property Tax Revenues The District must fil e its tax levy resolution by the last Tuesday in December of each year. The District's levy resolution was approved during the December I 7, 2014 Board of Education meeting. The District's property tax is levied each year on all taxab le real property located in the District and it becomes a lien on the property on January I of that year. The owner of real property on January I in any year is liable for taxes of that year. Property taxes are collected by the County Treasurer, who remits to the District its share of collections. Taxes levied in one year become due and payable in two equal installments the following year: the first due on June I and the second due on September I. Property taxes are normally collected by the District within 30 days of the respective installment dates. The portion of the 2013 levy received after June 30, 2014, and the portion of the 2014levy received on or before June 30,2015. are reported as income during fiscal year Personal Property Replacement Taxes Personal property replacement taxes are first allocated to the Municipal Retirement/Social Security Fund, and the balance is then allocated to the remaining funds at the discretion of the District. Capital Assets Capital assets, which include land, land improvements, bu ildings, building improvements, vehicles and various equipment, are repor1ed in the government-wide financial statements. Capital assets are defined by the District as assets with an initial individual cost of more than $5,000 and useful life greater than one year. Such assets are recorded at historical cost or estimated historical costs if purchased or constructed. Donated capital assets are not recorded since they do not result from a cash transaction. Depreciation of capital assets is provided using the straight-line method over the fo llowing estimated useful lives: Assets Land improvements Buildings Equipment Vehicles Years In the fund fin ancial statements, capital assets used in governmental fu nd operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and di scounts are deferred and amortized over the life of the applicable bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as a current expense when incurred. 24

89 Mokena School District No. 159 Notes to Basic Financial Statements As of and for tbe Year Ended June 30, 2015 Note 1 - Summary of Significant Accounting Policies (Continued) In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the period incurred. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Balance Classificalions In the governmental fund financial statements, fund balances are classified as follows: Non-spendable: amounts that are in nonspendable form (such as in ventory) or are required to be maintained intact. Restricted: amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. Committed : amounts constrained to spec ific purposes by the District itself, using its highest level of decision-making authority (i.e., Board of Education). To be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest level action to remove or change the constraint. Assigned: amo unts the District intends to use for a specific purpose. Intent can be expressed by the Board of Education or by an individua l or body to wh ich the District delegates the authority. Unassigned: includes the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned c lassification is used to report deficit balances. The Board of Education establishes (modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a designation or commitment of the fund. Assigned fund balance is established by the Board of Education through adoption or amendment of the budget as intended for specific purpose. The School District typically uses restricted fund balances first whenever possible, fo llowed by committed fund balances next, and then assigned fund balances third, be fore using any unassigned fund balances last, as described above. However, the School District reserves the right to spend unassigned resources first and defer the use of the other classified funds if the Board of Education and Administration feel it is in the best interest of the School District to do so. During fiscal year 201 3, the Board adopted a minimum fund balance policy. The Superintendent or designee shall maintain fund balances adequate to ensure the District's ability to maintain levels of service, maintain its credit rating, and pay its obl igations in a prompt manner in spite o f unforeseen events or unexpected expenses. The Superintendent shall inform the Board whenever the District must draw upon reserves or borrow money. The District sha ll seek to maintain the year-end average fund balance to no less than 33% and no greater than 65% of the annual expenditures. In the event that the year-end average fund balance falls outside of this range, the Superintendent or designee shall provide the Board with an explanatory report detai ling plans for operating outside the established range and a timeline for returning within this range. 25

90 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 1 - Summary of Significant Accounting Policies (Continued) Eliminations and Reclassifications In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances were el iminated or reclassified. Other In accordance w ith GASB No. 24, on-behalf payments (payments made by a third party for the benefit of the District, such as payments made by the state to the Teachers' Retirement System) have been recognized in the fin ancial statements. Use of Restricted Resources When an expense is incurred that can be paid using e ither restricted or unrestricted resources, the District's policy is to first apply the expense toward restricted resources and then toward unrestricted resources. Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure o f contingent assets and liabilities, and the reported revenues and expenses/expenditures. Actual results could differ from those estimates. Note 2- Budgetary lnformation The budget is prepared on the cash basis of accounting for all governmental funds which is an acceptable method as prescri bed by the Illinois State Board of Education and is essentially the same basis that is used for finan cial repor1ing. This a llows for comparability between budget and actua l amounts. The budget appropriations lapse at the end of each fi scal year. The District fo llows these procedures in establishing the budgetary data reflected in the financ ial statements. I. The administration subm its to the Board of Education a proposed operating budget for the fi scal year commencing July I. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted and the proposed budget is available for inspection to obtain taxpayer comments. 3. Prior to September 30, the budget is legally adopted through passage of a resolution. Prior to the last Tuesday in December, a tax levy resolution is filed w ith the County Clerk to obta in tax revenues. 26

91 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 2- Budgetary Information (Continued) 4. The Superintendent is authorized to transfer up to I 0% of the total budget between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the Board of Education. 5. Formal budgetary integration is employed as a management control device during the year. 6. The Board of Education may amend the budget (in other ways) by Lhe same procedures required of its original adoption. Excess Actual Expenditures Over Budget The following funds had excess actual expenditures over the budget amount for the year ended June 30, 20 15: Budget Actual Actual over Budget Major governmental funds: Tort Fund Debt Service $ 100,500 $2,358,500 $ 112,930 $2,398,991 $ ( ) $ (40,49 1) Note 3 - Deposits and Investments At year-end, the District's cash and investments were comprised of the following: Cash Investments $ 644,918 12,732,719 $ As of June 30, 20 I 5, the District had the fo llowing investments: Fair Value/ Type of Investment Cost Carrying Amount Average Credit Quality/ Ratings Percentage Cer1iftcates of deposit $ 5,986,004 $ 5,999,295 Pooled investments: Money market funds: Illinois Portfolio, lllt Class 19,727 19,727 Illinois School District Liquid Asset Fund Plus - Max Class 63, ,516 lllinois School District Liquid Asset Fund Plus - Term Series 6,550,000 6,550,000 The Ill inois Funds 11 3, ,472 Total investmen ts $ ~ $J 2,146,0 I Q N/A % AAAm 0.15% A A Am 0.50% N/A % AAAm 0.89% }QQ. QQ~Q 27

92 Mokena cbool District No. 159 Notes to Basic Financial Statement As of and for the Year Ended June 30, 2015 Note 3- Deposits and Investments (Continued) Custodial Credit Risk- With respect to deposits, custodial credit ri sk refers to the risk that, in the event of a bank failure. the District's deposits may not be recovered. The District's investment policy limits the exposure to deposit custodial credit risk by requiring all deposits in excess of FDIC insurable limits to be secured by collatera l to the extent of II 0%. As o f June 30, 20 IS, the District's deposits were insured or collateralized w ith securities held by the pledging fi nanc ial institution's agent in the Di strict's name. Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District's investment policy does not limit the investment maturities as a means of managing its exposure to fair val ue losses arising from increasing interest rates. However. the policy requires the District's investment portfolio to be sufficiently liquid to enable the District to meet all operating requirements as they become due. A portion of the portfolio is required to be invested in readily available funds to ensure proper liquidity. Credit Risk. Under State law, limits are imposed as to in estments in commercial paper, corporate bonds. and mutual funds in which the District may invest. Additionally according to the District's investment policy investments in corporate paper are further restricted and cannot comprise more that ten percent of the total investment portfolio. The Illino is School District Liquid Asset Fund Plus (ISDLAF+) is a not-for-profit investment trust formed pursuant to the Illi nois Municipal Code and managed by a Board of Trustees e lected from participating members. It is not registered with the SEC as an investment company. Investments are va lued at share price, which is the price for wh ich the investment could be sold. Illinois Funds is an investment pool managed by the tate of Ill inois, Office of the Treasurer. \\hich allows governments within the State to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of Investments in Illinois Funds are alued at Illinois Funds' share price, which is the price for which the investment could be sold. Illinois Trust is an investment pool managed by a board of trustees, which allows Illinois public investors to pool their funds for investment purposes. The Ill ino is Portfolio Fund lilt C lass is an investment option o f the Trust designed for public entities other than park d istricts, conservation districts. joint recreationa l programs. and forest preserve districts within the State. The Fund administrator and advisor is PFM Asset Management, LLC. Investments in the fund are valued at the Trust's share price, which is the price for which the investment could be sold. Audited financial statements can be obtained from Ill inois Trust. Concentration of Credit Risk is the risk of loss attributed to the magnitude of the District's investment in a single issuer. The District's investment policy requires diversification of the investment portfolio to minimize risk of loss from over-concentration in a particular type of security, risk factor, issuer, or maturity. The investment policy requires that the Board of Education receive a report detailing the current investments on a quarterly basis to review com pi iance with the objectives of the pol icy. 28

93 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 4- Long-Term Liabilities Changes in General Long-Term Liabilities. The fo llowing is long-term liability activi ty for the District for the year ended June 30, Beginning Balance Additions Payments Ending Balance General obligation bonds: Series 2000 $4,689,848 $ $780,257 $3,909,591 Series ,728 58, $ $ $ QH $ Capital lease obligations: Com puters $ $ 153,Q25 $ 32,436 $ llti5..2 Series 2000 bonds. original issue $8,439,978, dated June I, 2000, provide for serial retirement of principal on December I and interest payable on June I and December 1 of each year at rate of percent. The purpose of this bond issue was to prov ide the District with proceeds for a building project. Series 1996 bonds, ori ginal issue $ 1,288,352, dated April 30, 1996, provide for serial retirement of principal on December 1 and interest payable on June 1 and December 1 of each year at rate of percent. The purpose of this bond issue was to provide the District with funding tor operations. Capital lease for computer eq ui pment, dated March I, 20 15, providing for annual payments of $39,436, including interest at a rate of 2.877% through August Amount recorded as equipment at June 30, was $ 153,095, with accumulated depreciation of $5, I 03. Future minimum lease payments are as follows: Total minimum lease payments Less: amount representing interest Present va lue of mi nimum lease payments $ 39,436 39,436 39, ,308 (4,649) $ Annual debt service requirements to maturity for long term liabilities are as follows for governmental type activities: Principal Interest Total $ 858,843 $ 1,640,793 $ 2,499, ,693 1,775,743 2,624, ,769 1,921,667 2,754, ,395 2,072,605 2,850, ,267 2,229,733 2, Total $4.Q $ 2,64Q,54 1 $ 13,:Z l 8,5Q8 29

94 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 5- Capital Assets Capital asset activity for the District for the year ended June 30, 20 15, was as follows: Beginning Balance Increases CaQital assets not being deqreciated: Land $ 1.092,698 $ Total capital assets not being depreciated 1,092,698 Cagital assets being deqreciated: Land improvements 1,082,938 33,360 Buildings 25,867,428 Equipment 1,994, ,595 Vehicles 290,548 Total capital assets being depreciated 29, ,955 Less Accumulated DeQreciation for: Land improvements 567,404 48,518 Buildings 12,692, ,369 Equipment 1,846,070 36,923 Vehicles 258, Total accumulated depreciation 15,364, ,627 Net capital assets being depreciated 13,870,508 (449,672) Net governmental activities capital assets $,Li.263,2QQ $1~6 12) Decreases $ 89, ,700 48,352 48, ,348 $ Ending Balance $ 1.092,698 I,092,698 1, 116,298 25,867,428 2, ,548 29,384, ,922 13,290,355 1,834, ,214 16,005, ,379,488 $14,412,186 Depreciation expense was charged to functions/programs as follows: Governmental activities: Instructional Pupil support Operations and maintenance Transportation Administration Business Central support $490,845 68,985 97,235 11,377 10,336 6,425 3,424 $ Note 6 - Restricted Net Position The government-wide statement of net position reports $1,885,279 of restricted net position, of which $31 0,562 is restricted by enabling legislation. 30

95 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 7 - Legal Debt M argin T he legal debt margin is calculated as follows: Assessed valuation Debt limit - 6.9% of assessed valuation Less general long-term debt - bonds payable and capital lease Legal debt margin $527, $36.420, 183 4,077,967 $~.216 Note 8 - Interfund Transfers The District made the following transfers during the year: From To Amount Reason Capital Projects Fund General (Operations & Maintenance Fund) $753,878 Excess bond proceeds General (Educational Fund) Debt Service Fund $ 39,436 Payment of capital lease Note 9 - Risk Management The District is exposed to various risks of loss re lated to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Jn order to protect against such losses, the Di strict has j oined an insurance cooperative. T he cooperative currently operates as a common risk management and insurance program for local govemmental entities in the State of Ill inois. T he District pays annual premiums to the cooperative for its general insurance coverage. The agreement for formation of the cooperative provides that it will be self-s ustaining through member premiums and w ill reinsure through commercial companies for losses in excess of various limits established for each type of coverage. The amount of coverage has not decreased nor have the amount of settlements exceeded coverage in the current year or any o f the past three years. Note 10 - Pension Plans General Information about the TRS Pension Plan TRS Plan Description The District participates in the Teacher's Retirement System of the State of fllino is (TRS). TRS is a costsharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers employed outside the c ity of Chicago. TRS members include all active non-annuitants who are employed by a TRS-covered employer to provide services for which teacher licensure is required. The lllinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan can be made only by legislative action with the Govemor's approval. The TRS Board oftrustees is responsible for the System's administration. TRS issues a publicly available fma ncial report that can be obtained at ill inois.gov/pubs/cafr; by writing to TRS at W. Washington, PO Box 19253, Springfield, ll 62794; or by call ing (888) , option

96 Mokena Scbool District No. 159 Notes to Basic Financial Statements As of and for tbe Year Ended June 30, 2015 Note 10 - Pension Plans (Continued) TRS Benefits Provided TRS provides retirement, disability, and death benefits. Tier I members have TRS or reciprocal system service prior to January I, 20 I I. Tier I members qualify for retirement benefits at age 62 with fi ve years of service, at age 60 with I 0 years, or age 55 with 20 years. The benefit is determined by the average of the four highest years of creditable earnings within the last 10 years of creditable service and the percentage of average salary to which the member is entitled. Most members retire under a formula that provides 2.2 percent of final average salary up to a maximum of 75 percent with 34 years of serv ice. Disability and death benefits are also provided. T ier][ members qualify for retirement benefits at age 67 with I 0 years of service, or a discounted annuity can be paid at age 62 with I 0 years of service. Creditable earnings for retirement purposes are capped and the final average salary is based on the highest consecutive eight years of creditable service rather than the last four. Disability provisions for Tier II are identical to those o f Tier l. Death benefits are payable under a formula that is different from Tier I. Essentially all Tier 1 retirees receive an annual 3 percent increase in the current retirement benefit beginning January I following the attainment of age 61 or on January I following the member' s first anniversary in retirement, whichever is later. Tier II annual increases will be the lesser of three percent of the original benefit or one-half percent of the rate of inflation beginning January I following attainment of age 67 or on January I follow ing the member's tirst anniversary in retirement. whichever is later. TRS Contributions The State of Illinois maintains the pr imary responsibil ity for funding TRS. The Illinois Pension Code, as amended by Public Act and subsequent acts, provides that for years 20 I 0 th rough the minimum contribution to the System for each fiscal year shall be an amount detennined to be sufficient to bring the total assets of the System up to 90 percent of the tota l actuarial liabilities of the System by the end of fiscal year Contributions from active members and TRS contributing employers are also required by the lllinois Pension Code. The contr ibution rates are specified in the pension code. The active member contribution rate for the year ended June 30, 20 15, was 9.4 percent of credita ble earnings. The me mber contribution, which may be paid on behalf of employees by the employer, is submitted to TRS by the employer. On behalf contributions to TRS. The state of Illinois makes employer pension contributions on behalf of the employer. For the year ended June 30, 201 5, state o f Illinois contributions recognized by the employer were based on the state's proportionate share of the collective net pension liability associated w ith the employer, and the District recognized revenue and expenditures of $3,329,487 in pension contributions from the state of Illinois. 2.2 formula contributions. Employers contribute 0.58 percent of total creditable earnings for the 2.2 formula change. The contribution rate is specified by statute. Contributions for the year ended June 30, 201 5, were $4 1,950, and would be de ferred under GAAP because they were paid a fter the June 30, 2014 measurement date. 32

97 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note HI - Pension Plans (Continued) Federal and special trust fund contributions. When TRS members are pa id from federal and special trust funds administered by the employer, there is a statutory requirement for the employer to pay an employer pension contribution from those funds. Under a policy adopted by the TRS Board o f Trustees that has been in effect since the fi scal year ended June 30, 2006, employer contributions for employees pa id from federal and special trust funds w ill be the same as the state contribution rate to TRS. Public Act now requires the two rates to be the same. For the year ended June 30, the District pension contribution was 33.0 percent of salaries paid from federal and special trust funds. For the year ended June 30, 2015, salaries totaling $67,853 were paid from federa l and special trust funds that required District contributions of $22,39 1. These contributions would be deferred under GAAP because they were paid after the June 30, 2014 measurement date. TRS Employer retirement cost contribution. Under GASB Statemen t No. 68, contributions that an employer is required to pay because of a TRS member retiring are categorized as specific liability payments. The employer is required to make a one-time contribution to TRS for members retiring under the Early Retirement Option (ERO). The payments vary depending on the member's age and salary. The max imum employer ERO contribution under the current program is percent and applies when the member is age 55 at retirement. For the year ended June , the District paid $-0- to TRS for District ERO contributions. T he employer is also required to make a one-time contribution to TRS for members granted salary increases over 6 percent if those salaries are used to calcul ate a retiree's fin al average salary. A one-time contribution is also required for members granted sick leave days in excess of the norma l annual allotment if those days are used as T RS service credit. For the year ended June 30, 201 5, the District paid $627 to T RS for employer contributions due on salary increases in excess of 6 percent and $-0- for sick leave days granted in excess of the normal annua l a llotment. TRS Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to P ensions At June 30, 2015, the District had a liability (which is not reported on the fin anc ial statements) for its proportionate share of the net pension liability (first amount shown below) that re fl ected a reduction for state pension support provided to the District. The state 's support and total are for disclosure purposes only. The amount of the net pension I iability, the related state support, and the total portion of the net pension liability that was associated w ith the District were as fo llows: District's proportionate share ofthe net pension liability State ' s proportionate share of the net pension liability associated with the District Total T he net pension liability was measured as of June 30, 2014, and the total pension liabil ity used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 20 13, and ro lled forward to June 30, The employer's proportion of the net pension liability was based on the employer' s share of contributions to T RS for the measurement year ended June 30, 201 4, relati ve to the projected contributions of all participating TRS employers and the state duri ng that period. At June 30, 2014, the District's proportion was percent. 33

98 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 10 - Pension Plans (Continued) The net pension liability as of the beginning of this first measurement period under GASB Statement No. 68 was measured as of June 30, 20 13, and the total pension liability was based on the June 30, 2013, actuarial valuation without any roll-up. The employer's proportion of the net pension liabi lity as of June 30, 2013, was based on the employer's share of contri butions to TRS for the measurement year ended June 30, 2013, relative to the projected contributions of all participating TRS employers and the state during that period. At June 30, 20 13, the District's proportion was percent. On the cash basis of accounting for the year ended June , the District recognized pension expense of $64,341 and revenue of $3,329,487 for support provided by the state. Under GAAP at June 30, 2015, the District would have reported deferred outfl ows of resources and deferred inflows of resources related to pensions from the fo llowing sources: Deferred Outfl ows Deferred Inflows Differences between expected and actual experience Net difference between projected and actual earnings on pension plan investments C hanges of assumptions C hanges in proportion and differences between District contributions and proportionate share of contributions Total deferred amounts to be recognized in pension expense in future periods District contributions subsequent to the measurement date Total of Resources $ ,341 $ of Resources $ 51, , 112 $215,112 Under GAAP, $64,341 reported as deferred outflows of resources related to pensions resulting from Di strict contributions subsequent to the measurement date would be recognized as a reduction of the net pension liability in the reporting year ended June 30, Other amounts report ed as deferred outflows of resources and deferred (inflows) of resources related to pensions would be recognized in pension expense as follows: Year Ended June 30: $(57,309) (57.309) (57,309) (57,309) (5,336) TRS Actuarial Assumptions The total pension liability in the June 30, actuarial val uation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 3.00 percent 5.75 percent, average, including inflation 7.50 percent, net of pension plan investment expense, inc luding inflation 34

99 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 10 - Pension Plans (Continued) Mortality rates were based on the RP-2000 White Collar Table with proj ections using scale AA that vary by member group. For GASB disclosure purposes, the actuarial assumptions for the years ended June 30, 2014 and were assumed to be the same. However. for funding purposes, the actuarial valuations for those two years were different. The actuarial assumptions used in the June 30, 2014 valuation were based on updates to economic assumptions adopted in which lowered the investment return assumption from 8.0 percent to 7.5 percent. The salary increase and inflation assumptions were a lso lowered. The actuarial assumptions used in the June 30, va luation were based on the actuarial experience analysis and first adopted in the June 30, valuation. The investment return assumption was lowered from 8.5 percent to 8.0 percent and the salary increase and inflation assumptions were also lowered. Mortality assumptions were adjusted to anticipate continued improvement in mortality. The long-term expected rate of return on pension plan in estments 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 cl ass. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class that were used by the actuary are summarized in the following table: Asset Class U.S. large cap G lobal equi ty excluding U.S. Aggregate bonds U.S. TIPS NCREIF Opportunistic real estate ARS Risk parity Diversified inflation strategy Private equity Total Taa get Allocation 18% II I _H 100% Long-Term Expected Real Rate of Return 8.23% 8.58% 2.27% 3.52% 5.81 % 9.79% 3.27% 5.57% 3.96% 13.03% TRS 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 that employee contri butions, employer contributions, and state contributions will be made at the current statutorily-required rates. 35

100 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 10-Pension Plans (Continued) Based on those assumptions, TRS's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members and all benefit recipients. Tier l's liability is pa1tially-funded by T ier II members, as the T ier II member contribution is higher than the cost of Tier II benefits. Due to this subsidy, contributions from future members in excess o f the service cost are also included in the determinati on of the discount rate. Therefore, the long-term expected rate of return on TRS in vestments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the employer's proportionate share of the net pension liability to changes in the discount rate for TRS The following represents the employer's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the employer's proportionate share of the net pension liability would be if it were calculated using a discount rate that is!-percentage-point lower (6.5 percent) or!-percentage-point higher (8.5 percent) than the current rate. District's proportionate share of the net pension liab ility Current Discount I% Decrease (6.5%) Rate (7.5%) 1% Increase (8.5%) $1,263,539 $ 1,023,149 $824,079 TRS fiduciary net position Detailed information about the TRS's fiduciary net position as of June 30, IS avail able m the separately issued T RS Comprehensive Annual Financial Report. Illinois Municipal Retirement Fund (IMRF) IMRF Plan Description The District's defined benefit pension plan for regular employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The District's plan is managed by the Illino is Municipal Retirement Fund (IMRF), the administrator of an agent multiple-employer pension fund. A summary of JMRF' s pension benefits is provided in the " Benefits Provided" section of this footnote. Details of all benefits are available from lmrf. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Comprehensive Annual Financial Report that includes financ ia l statements, detailed infonnation about the pension plan's tiducia1y net position, and required supplementary information. The report is available for download at www. imrf.ont IMRF Benefits Provided IMRF has three benefit plans. The vast majority of lmrf members participate in the Regular Plan (RP). The Sheriffs Law Enforcement Personne l (SLEP) plan is for sheriffs, deputy sheriffs, and selected po lice chiefs. Counties could adopt the Elected County Officia l (ECO) plan for offi cials elected prior to August 8, 20 II (the ECO plan was closed to new participants after that date). 36

101 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note JO - Pension Plans (Continued) All three IM RF benefit plans have two tiers. Emp loyees hired before January I, 2011, are eligible for Tier I benefits. Tier I employees are vested for pension benefits when they have at least eight years of qualify ing service credit. Tier I employees who retire at age 55 (at reduced benefits) or after age 60 (at fu ll benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after I 5 years to a maxim um of 75% of their final rate of earnings. Final rate of earn ings is the highest total earnings during any consecutive 48 months withi n the last I 0 years of service, divided by 48. Under Tier I, the pension is increased by 3% of the original amount on January I every year after retirement. Employees hired 0 11 or after January I, 20 II, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participat ing employees who retire at age 62 (at reduced benefits) or after age 67 (at fu ll benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the fina l rate of earnings for the first 15 years of service credit, plus 2% for each year of service cred it after 15 years to a maximum of 75% of their final rate of earni ngs. Final rate of earnings is the highest total earnings during any 96 consecuti ve months within the last I 0 years of service, di vided by 96. Under Tier 2, the pension is increased on January I every year after retirement. upon reachin g age 67, by the lesser of: 3% of the original pension amount, or Y2 of the increase in the Consumer Price index of the original pension amount. IMRF Employees Covered by Benefit Terms As of December 3 I , the following employees were covered by the benefit terms: Retirees and beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members Total Il IMRF Contributions As set by statute, the District's Regular Plan Members are required to contribute 4.5% of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to fina nce the retirement coverage of its own employees. The District's required annual contribution rate for calendar year 2014 was 13.67%. For the calendar year ended December 3 I, 2014, the District contributed $287,334 to the plan. The District also contributes for disabi lity benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF's Board of Trustees, while the supplemental retirement benefits rate is set by statute. IMRF Net Pension Liability The District's net pension liability ' as measured as of December 31, The total pension liability used to calculate the net pension liabi li ty was determined by an actuarial va luation as of that date. 37

102 Mokena Scbool District No. 159 Notes to Basic Financial Statements As of and for tbe Year Ended June 30, 2015 Note 10 - Pension Plans (Contin ued) IMRF Actuarial Assumptions The following are the methods and assumptions used to determine total pension liabi lity at December 3 I, 2014: The Actuarial Cost Method used was Entry Age onnal. The Asset Valuation Method used was Ma rket Value of Assets. The Inflation Rate was assumed to be 3.5%. Salary increases were expected to be 3.75% to 14.50%, including inflation. The In vestment Rate of Return was assumed to be 7.50%. Projected Retirement Age was from the Experience-based Table of Rates, specific to the type of eligibil ity condition, last updated for the 2014 valuation according to an experience study from years 20 II to The IM RF-specific rates for Mortality (for non-disabled retirees) were developed from the RP-2014 Blue Collar Heahh Annuitant Mortality Tabl e with adjustments to match current lmrf experience. For Disabled Retirees, an I 1RF-specific mortal ity table was used with fully generational proj ection scale MP (base year 2014). The lmrf-specific rates were developed from the RP Disabled Retirees Mortali ty Table, applying the same adjustments that were applied for non-disabled lives. For Acti ve Members, an IMRF-specific mortality table was used with fu lly generational projecti on scale MP (base year 20 14). The IM R F-specific rates were developed from the RP-2014 Employee Morta lity Table with adj ustments to match current IMRF experience. The long-term expected rate of return on pension plan investments " as detennined 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. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates o f return to the target asset allocation percentage and adding expected inflation. The target a llocation and best estimates of geometric real rates of return for each major asset class are summar ized in the following table: Portfolio Long-Tenn Target Expected Rea I Asset Class Percentage Rate of Return Domestic equity 38% 7. 60% International equity 17% 7. 80% Fixed income 27% 3.00% Real estate 8% 6. 15% Alternative investments 9% % Cash equ ivalents 1% 2.25% Total 100% 38

103 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 10 - Pension Plans (Continued) IMR.F Single Discount Rate A Single Discount Rate of 7.48% was used to measure the total pension liability. The projection of cash flow used to detennine this Sing le Discount Rate assumed that the plan members' contributions wi ll be made at the current contribution rate. and that employer contributions will be made at rates equal to the difference between actuarially detennined contribution rates and the member rate. The Single Discount Rate refl ects: I. The long-term expected rate of return on pension plan investments (during the period in which the fid uciary net position is projected to be sufficient to pay benefits), and 2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rati ng (which is published by the Federa l Reserve) as of the measurement date (to the extent that the contributions for use >.: ith the long-te1m expected rate of rerum are not met). For the purpose of the most recent aluation, the expected rate of return. on plan investments is 7.50%, the munic ipal bond rate is 3.56%, and the resulting single discount rate is 7.48%. Changes in the IMRF Net Pension Liability Total Pension Plan Fiduc iary Net Pension Liabi lity Net Position Liability (Asset) (A) (B) (A)-( B) Balances at December 3 I $10.230,559 $ $ Service cost 249, ,878 Interest on the Total Pension Liability 763, ,638 Changes of benefit terms Differences between expected and actual experience of the total pension liability 270, ,566 Changes of assumptions 463, ,784 Contributions-employer 287,334 (287,334) Contributions -employees 100,7 17 ( ) Net investment income 586,704 (586,704) Benefit payments, includ ing refunds of employee contributions (347,323) (347,323) Other (net transfer) 81,593 (81,593) Net changes 1, ,5 18 Balances at December 31, 2014 $1 ],631.1 Q2 $) Q,3Q6,16Q $1,321,342 39

104 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30, 2015 Note 10 - Pension Plans (Continued) IMRF Sensitivity of the Net Pension Liability to Cha nges in the Discount Rate The following presents the plan' s net pension liability, calculated using a Single Discount Rate of 7.48%, as well as what the pl an's net pension liabil ity would be if it were calculated using a Single Discount Rate that is 1% lower or I% higher. Net Pension Liability (Asset) 1% Lower (6.48%) $2,950,373 Current Discount (7.48%) $ 1,324,342 1% Hi gher (8.48%) $(623) Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to IMRF Pensions For the year ended June 30, 2015, the District recognized pension expense of $3 02,030 on the cash basis of accounting at June 30, Under GAAP, the District would have reported deferred outflows or resources and deferred inflows of resources related to pensions from the foll owing sources: Deferred Amounts Related to IMRF Pensions Def erred Amounts under GAAP that would be recognized in Pension Expense in Future Periods Differences between expected and actual experience Changes o f assumptions Net difference between projected and actual earnings on pension plan investments Total deferred amounts to be recognized in pension expenses in future periods Pension Contributions made subsequent to the Measurement Date Total Deferred Amounts Related to Pensions Deferred Outflows of Resources $ 193, , , , , 133 $ Deferred Inflows of Resources $ $== Under GAAP, amounts reported as deferred outfl ows of resources and deferred infl ows of resources re lated to pensions would be recognized in pension expense in future periods as follows: Year Ending December T hereafter Total Net Defen ed Outflows of Resources $235, , ,861 27,54 1 $636. I 76 40

105 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 10 - Pension Plans (Continued) Under GAAP, pension-re lated amounts for all pension plans are shown below in the aggregate. Employer fiduciary net position Deferred outflows of resources Employer total pension liability Employer net pension liability (asset) Deferred inflows of resources Pe nsion expense (benefit) TRS (6/30/ 14) N ot available $ 64,881 Not available I,023, , IMRF (1 2/3 1/ 14) Total $ 10,306,760 $10,306, , , ,631, ,63 1,102 I,324,342 2, , , ,474 Note ll - Social Security Employees not qualifying for coverage under the Teachers' Retirement System are covered under Social Security. The District paid $ 149,734, the total required contribution for the current fi scal year. Note 12 - Other Post-Employment Benefits THIS Fund Employer Contributions The Di strict participates in the Teacher Health Insurance Security (THIS) Fund, a cost-sharing, multipleemployer defined benefit post-employment healthcare plan that was established by the Il linois legislature for the benefit of retired Il linois public school teachers employed outside the city of C hicago. T he THI S Fund provides medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life insurance benefits to annuitants of the Teachers Retirement System (TRS). Annuitants not enrolled in Medicare may participate in the state-administered participating provider option plan or choose from several managed care options. Annuitants who are enrolled in Medicare Parts A and B may be eligible to enroll in a Medicare Advantage plan. The State Employees Group Insurance Act of (5 flcs 3 75) outlines the benefit provisions of the TI-llS Fund and amendments to the plan can be made only be legislative action with the Governor' s approval. Effective July 1, 20 12, in accordance with Executive Order 12-01, the plan is administered by the Illinois Department of Central Management Services (CMS) with the cooperation of TRS. Section 6.6 of the State Employees Group Insurance Act of 1971 requires all active contributors to TRS who are not employees of the state to make a contribution to the THIS Fund. The percentage of employer required contributions in the future w ill not exceed I 05 percent of the percentage of salary actually required to be paid in the previous fiscal year. On behalf contributions to the THIS Fund The state o f Illinois makes employer retiree health insurance contributions on behalf of the employer. State contributions are intended to match contributions to the THIS Fund from active members which were 1.02 percent of pay during the year ended June 30, State of Illinois contributions were $73,774 and the District recognized revenue and expenditures of thi s amount during the year. 4 1

106 Mokena School District No. 159 Notes to Basic Financial Statements As of and for the Year Ended June 30,2015 Note 12 - Other Post-Employment Benefits (Continued) State contributions intended to match active member contributions during the years ended June 30, 2014 and June 30, 2013 were 0.97 and 0.92 percent, respectively. State contributions on behalf of District employees were $65,017 and $58,623, respectively. Employer contributions to the THIS Fund The District also makes contributions to the THJS Fund. The District THIS Fund contribution was percent during the year ended June 30, 20 I 5 and and 0.69 percent during the years ended June 30, 2014 and June 30, 2013, respectively. For the year ended June 30, 20 IS, the District paid $54,969 to the THIS Fund. For the years ended June 30, 2014 and June 30, 201 3, the District paid $48,260 and $43,967, respectively, which was 100 percent of the required contribution. Further information on TIDS Fund The publicly available financial report of the THJS Fund may be found on the website of the Illinois Auditor General: inois.gov/audit-repotts/abc-list.asp. The current reports are listed under "Central Management Services". Prior reports are available under "Healthcare and Family Services". Note 13 - Joint Agreement The District, in conjunction with five other area school districts, has created the Lincoln-Way Area Special Ed ucation Cooperative. The Cooperative's board of directors is composed of one member from each of the six participating school districts. The Cooperative charged the District $3,252,208 for special education, transportation, and related expenditures during the year ended June 30, Note 14- Contingencies The District has received funding from state and federal grants in the current and prior years which are subject to audits by the granting agencies. The District believes any adj ustments that may arise from these audits wi ll be insign ificant to District operations. Note 15- Subsequent Events The District entered into a lease purchase agreement for computer equipment, effective July I During the fiscal year ended June 30, 201 5, the District made the first payment for this lease of $1 10,000. This payment has been recorded as a prepaid item as of June 30,

107 Mokena School District No. 159 Supplementary Information June 30, 2015 TRS SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Teachers' Retirement System of the State of Illinois Fiscal Year 2015* Di strict's proportion of the net pension liability Di strict' s proportionate share of the net pension liability State's proportionate share o f the net pension liability associated with the District Total District' s covered-employee payroll 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 The amounts presemed were determined as of the prior fiscal year-end % $ 1,023, , $42, $ 7,232, % 43.0% SCHEDULE OF DISTRICT CONTRIBUTIONS Teachers' Retirement System of the State of Illinois Fiscal Year 2015 Contracn1ally-required contribution Contributions in relation to the contractually-required contribution Contribution defi ciency (excess) District's covered-employee payroll Contributions as a percentage of covered-employee payroll $ 64, $ -0- $7,232, % Notes to Schedules Changes of Assumptions Amounts reported in reflect an investment rate of return of 7.5 percent, an inflation rate of 3.0 percent and real return of 4.5 percent, and a salary inc rease assumption of 5.75 percent. In 20 13, assumptions used were an investment rate of return of 8.0 percent, an inflation rate of 3.25 percent and real return of 4.75 percent, and salary increases of 6.00 percent. However, the total pension liability at the beginning and end of the year was calculated using the same assum ptions, so the difference due to actuaria l assumptions was not calculated or allocated. 43

108 Mokena School District No. 159 Supplementary Information June 30, 2015 lmrf Schedule of Changes in the Net Pension Liability and Related Ratios Most Recent Calendar Year Calendar Year Ended December 3 I, Total Pension Liability Service Cost Interest on the total pension liabi lity Changes of benefit tenns Differences between expected and actual experience of the total pension liabi lity Changes of assumptions Benefit payments, including refunds of empl oyee contributions Net change in total pension liability Total Pension Liability- Beginning Total Pension Liability- End (A) Plan Fiduciary Net Position Contributions- District Contributions - Employees Net investment income Benefit payments, including refunds of employee conh ibutions Other (net transfer) Net change in plan fiduciary net position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position- Ending (B) Net Pension Liability (Asset)- Ending (A) - (B) Plan fiduciary net position as a percentage of the total pension liability Covered valuation payroll Net pension liability (asset) as a percentage of covered valuation payroll $ 249, , , ,784 (347,323) I,400,543 I $ $ 287, , ,704 (347,323) 81, ,025 9,597,735 $ _Q $ I % $ 2,201, % Notes to Schedule: This schedule is presented to illustrate the requirement to show information for I 0 years. However, unti l a fu ll 10-year trend is compiled, information is presented for those years for which information is ava ilable. Calendar Year Ended December Actuarially Determined Contribution $287,334 Schedule of District Contributions Most Recent Calendar Year AchJal Contribution $287,334 Contribution Defi ciency (Excess) $-0- Covered Valuation Payro ll $2.20 1,792 Actual Contribution as a Percentage of Covered Valuation Pavro ll 13.05% 44

109 Mokena School District No. 159 Supplementary Information June 30,2015 Notes to Schedule: Summary of Actuarial Metlwds and Assumptions Used in the Calculation of the 2014 Contribution Rate* Valuation Date: Notes Actuarial ly determined contribution rates are calculated as of December 3 1, each year, which are 12 months prior to the beginning of the fiscal year in whic h contributions are reported. Methods and Assumptions Used to Determine 2014 Contribution Rates: Actuarial Cost Method: Aggregate entry age= nonnal Amortization Method: Level percentage o f payroll, closed Remaining Amortization Period: 29-year closed period Assel Valuation Method: 5-year smoothed market; 20% corridor Wage Growth: 4% Price Inflation: 3% approximate; No explicit price in flation assumption is used in this valuation Sa/my Increases: Investment Rate of Return: Retirement Age: 4.40% to 16%, inc luding inflation 7.50% Experience-based table of rates that are specific to the type o f eligibi lity condition: last updated for the 20 II va luation pursuant to an experience study of the period 2008 to 20 I 0 Mortality: RP-2000 Combined Healthy Mortality Table, adj usted for mortality improvements to 2020 using projection scale AA. For men, 120% o f the table rates were used. For women, 92 percent of the table rates were used. For disabled li ves, the mortality rates are the rates applicable to non-disabled li ves set forward I 0 years. Other Information: Notes: There were no benefit changes during the year. *Based on Valuation Assumptions used in the December 31, actuarial valuation: note two year lag between valuation and rate setting. T his schedule is presented to illustrate the requirement to show information for I 0 years. However, until a fu ll l 0-year trend is compiled, information is presented for those years for which information is available. 45

110 Mokena School District No. 159 Supplementary Information June 30, 2015 Tort Immunity Expenditures Tort immunity expenditures for the year ended June 30, 2015 are summarized as fo llows: Workers' compensation Liability insurance Total $ 46,934 65,996 $1 12,930 46

111 Mokena School District No. 159 Combining Balance Sheet- Modified Cash Basis General Fund June 30, 2015 Educa tional Assets: Cash and investments $ 5,646,687 Prepaid items 110,000 Total assets $ 5,756,687 O pera tions a nd Working Maintenance Cash T ort Total $ 2,157,469 $ 1.877,50 1 $ 14,852 $ 9,696, ,000 $ 2,157,469 $ I,877,501 $ 14,852 $ 9,806,509 Liabilities: Payroll withho1dings $ $ $ $ $ Total liabilities found balances: Re tricted for: Ton Committed for: Working cash Unassigned 5,756,687 Total fund balance 5,756,687 Total liabilities and fund ba lance $ 5,756,687 14,852 14,852 1,877,501 1,877,50 1 2, ,914,156 2,157,469 I,877,501 14,852 9,806,509 $ 2, 157,469 $ 1,877,501 $ 14,852 $ 9,806,509

112 Mokena School District 'o. 159 Combining Schedule of Revenues, Expenditu res, and Changes in Fund Balances. Modi lied Cash Basis General Fund For the yea r ended J une Operations and Working Ed ucational Maintenance Cash Tort Tolal Revenues: Local sources. Property taxes $ II,066)00 $ ,8 14 $ $ 124,857 $ 12,430,794 Corporate personal property replacement taxes 68,866 68,866 Other 784, , ,103 State sources 929, ,643 1,193,660 Federal sources 815, ,504 Investment mcome 6,299 3, 106 3, ,444 Total revenues 13,670,475 1,599,077 66, ,461,37 1 Revenues for "on behalf' payments 3,403,261 3,403,26 1 Total revenues 17,073,736 1,599,077 66, ,879 18,864,632 Expenditures: Instruction Regular programs 5,890,195 5,890, 195 Prc-K Programs 84,250 84,250 Spec1al educat1on programs 1,689,858 1,689,858 Other instructional programs 29 1, ,422 Supporting services Pupils 504, ,8 12 Instructional stait 327, ,6 10 General admimstrallon 4 13, ,358 School admimstration 847, ,329 Business 182, ,648 Food 299, ,988 Operations and mamtcnance 290,92 1 1, ,806,567 Central 233, ,623 Commumty serv1ccs 16,515 16,5 15 Payments to other districts/governmental units 2,889, , 170 2,93 1,283 Capital outlay 153, Total direct expenditures 14, 114, ,930 15,87 1,41 3 Expenditures for "on behalr' payments 3, ,403,26 1 Total expenditures 17, ,643, ,930 19)74,674 Excess (deficiency) of revenues over expenditures (444,332) (44,599) II,949 (4 10,042) Other tinancing sources (uses) Other sources 153, Transfer (to) from other ftmds (39,436) ,443 Total other financmg sources (uses) , ,538 Net change in fund balance (330,673) 709,280 66,940 11, ,496 Fund balance- beginning of year 6,087,360 I !!9 1,810,56 1 2, ,013 Fund balance end of year $ 5,756,687 $ 2, $ 1,877,50 1 $ 14,852 $ 9,806,509 48

113 Mokena School District No. 159 Combining Ba lance S heet- Modified Cash Basis Governmental Non-Major Funds June 30,2015 Municipal Retirement/ Fire Total Social Capital Prevention Non-major Security Projects and Safety Funds Assets: Cash $ 295,710 $ 5,523 $ 802 $ 302,035 Total assets $ 295,7 10 $ 5,523 $ 802 $ 302,035 Fund balances: Restricted for: Municipal retirement/social security $ 295,710 $ $ $ 295,7 10 Capital projects 5, ,325 Total fund balances 295,710 5, ,035 Total liabilities and fund balances $ 295,7 10 $ 5,523 $ 802 $ 302,035 49

114 Mokena School District No. 159 Combining Schedule of Revenues, Expenditures, and C hanges in Fund Balances - Modified Cash Basis Governmental Non-Major Funds For the year ended June 30, 2015 Municipal Retirement/ Fire Total Social Capital Prevention Non- 'lajor Sec uri!)' Projects and Sa fct ~ Funds Revenues: Local sources: Property taxes $ $ $ $ Corporate personal property replacement taxes ,345 Investment income Total revenues Expenditures: Lnstruction: Regular programs Pre-K Programs Special education programs ,275 Other instructional programs 7,72 1 7,721 Supporting services: Pupils Instructional staff ,467 General administration School admin istration 46, Business 2 1, I Transportation Food ,427 Operations and maintenance Central Total expenditures ,7 12 Excess (deficiency) ofrevcnues over expenditures Other financing sources (uses): Transfers to other funds {753,879) (753,879) Total other financing sources (uses) (753,879) (753,879) Net change in fund balance (753,878) (692,978) Fund balance- beginning of year , ,013 Fund balance- end of year $ $ 5,523 $ 802 $ 302,035 so

115 Mokena School District No. 159 Educational Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual-Modified Cash Basis For the year ended J une 30, 2015 Original & Final Budget Revenues: Local Sources: General tax levy $ ,227 Special education levy 628,357 Corporate personal property replacement taxes 68,151 Regular tuition from pupils or parents Earnings on investments 5,000 Food services 19 1,000 Pupil activities 67,500 Textbooks 240,000 Rentals 45,000 Contributions and donations 60,000 Prior year refunds 100,000 Other 56,350 Total local sources 12, 13 1,585 State sources: General state aid 393,630 Special education - private facility tuition 180,000 Special education - extraordinary 240,000 Special education - personnel 190,000 Special education - orphanage- individual Special education - summer school 1,000 CTE- secondary program improvement (CTEI) Bilingual ed- downstate- TPI and TBE 12, 15 1 State free lunch & breakfast 1,800 Learning improvement - change grants Total state sources 1,0 18,5 8 1 Federal sources: National lunch program 11 0,000 Title!- low income 97,20 1 Special education- preschool flow-through 21,702 Special education- LD.E.A. flow-through 399,000 Title Jl-teacher quality 49,795 Medicaid administrative outreach 100,000 Medicaid fee for service Total federal sources 777,698 Total revenues 13,927,864 Actual Actual Over Or (Under) Budget $ 10,638,636 $ ( ) 427,564 (200,793) 68, ,299 1, ,245 (2,755) 106,032 38, ,9 11 ( 19,089) 82,305 37,305 40,339 ( 19,661) 103,806 3,806 42,826 ( 13,524) 11,925,954 (205,631) 396,964 3, ,687 (48,3 13) 150,099 (89,90 I) 217,487 27,487 16,766 16,766 1, ,290 1,290 9,942 (2,209) 937 (863) 2,457 2, ,0 17 (89,564) I 07,323 (2,677) 123,320 26, , ,557 15,557 44,425 {5,370) 2 1,855 (78, 145) 82,322 82, ,504 37,806 13,670,475 ~257,389) 51

116 Mokena School District No. 159 Educational Fund Schedule of Revenues, Ex penditures a nd Changes in Fund Balances Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Expenditures: Original & Final Budget Actual Actual Over Or (Under) Budget Instruction: Regular programs: Salaries $ Employee benefits Purchased services Supplies and materials Other Non-capitalized equipment 6,600 Total regular programs Pre-K Programs Salaries 78,364 Employee benefits upplies and materials Total pre-k programs 85,461 Special education programs: Salaries 1, Employee benefits Purchased services 33,200 upplies and materials Other Total special education programs I Remedial and supplemental programs K-1 2: Salaries 58,263 Employee benefits Purchased services 300 Suppl ies and materials Total remedial and supplemental programs $ ( ) 677, ,874 (30.476) ,564 ( 1,936) 6,428 ( 172) 5.890,195 (84.375) (2.825) , (482} ( I,2 11) (38.303) 2 13, ,456 ( ) (4.994) (4,230) ( ) , ,526 (300) (7.256) 188, ,028 (Continued) 52

117 Mokena School District No. 159 Educational Fund Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final Budget Actual Budget CTE programs: Suppl ies and materials ( I,000) Total CTE programs ( Interscholastic programs: Purchased services 1,000 ( 1,000) Supplies and materials , Other 1,500 1,335 ( 165) Total interscholast ic programs 14,400 32,142 17,742 Bi lingual programs: Salaries 58,698 65,965 7,267 Employee benefits 2, Purchased services (98) Supplies and materials 2, 100 2,092 (8) Non-capitalized equipment 7,000 (7,000) Total bilingual programs , Total instruction 7, ,955,725 (21,439) Support services: Attendance and social work services: Salaries (9,003) Employee benefits 27,822 29,67 1 1,849 Total attendance and social work services ,77 1 (7,154) Health services: Salaries 99, (5,913) Employee benefits ( 12,678) Supplies and materials ,840 ( 160) Total health services ,285 ( 18,75 1) Psychological services: Salaries 143, ,430 ( 11,402) Employee benefits , Total psychological services (7, 193) (Continued) 53

118 Mokena School District No. 159 Educational Fund Schedule of Revenues, Expenditures a nd Changes in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final Budget Actual Budget Tort immunity services: Purchased services Total tort immunity servi ces ,056 School admin istration: Office of the principal: Salaries 622, ,06 1 (9,527) Employee benefits 209, , Purchased services 6,400 12, Supplies and materials 4,500 6,880 2,380 Capital outlay 5,000 (5,000) Other , Non-capitalized equipment 3,369 3,369 Total office of the principal ,329 (2. 780) Business: Direction of business support services: Salaries ,388 7 Employee benefits Purchased services 1, Supplies and materials Total business support services ,662 2,207 Fisc a I services: Salaries 88, (4) Employee benefits , Purchased services 8,500 5,272 (3,228) Supplies and materials , Total fiscal services , Operations and maintenance: Salaries 154, ,687 66,819 Employee benefits ,240 16,848 Purchased services ,994 ( 12,006) Supplies and materials 500 {500} Total operations and maintenance , , 16 1 (Continued) 54

119 Mokena School District No. 159 Educational Fun d Schedule of Revenu es, Expenditures and Changes in Fund Balances- Budget to Actual-Mod ified Cash Basis For the year end ed June 30, Actual Over Original & Or (U nder) Final Budget Actual Budget Other support services-pupils: Purchased services (30.000~ Total other support services-pupils: (30,000) Instructional staft: Improvement of instruction services: Salaries ( ) Employee benefits ,020 (776) Purchased services 86,787 42,706 ( ) Supplies and materials (5.685) Total improvement of instruction services 386, ,758 (80,696) Education media services: Salaries 25,000 (25.000) Employee benefits 10,8 18 ( 10,8 18) Supplies and materials Total education media services (29.724) Assessment and testing: Purchased services (7.000) Supplies and materials ,758 (5.242) Total assessment and testing ,758 ( 12,242) General administration: Board of education: Salaries 2,500 1,2 17 ( I,283) Purchased services 9 1, ,884 (19,6 16) Supplies and materials 10,000 10, Other 7,000 8, Total board of education 111,000 91,574 ( 19,426) Executive administration: Salaries 2 11, Employee benefits ,060 Purchased servi ces Supplies and materials 6, Capital outlay 2,500 (2,500) Non-capitalized equipment 7, Total executive administrat ion , (Conti nued) 55

120 Mokena School District No. 159 Educational Fund Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Original & Final Budget Food services: Salaries Employee benefits Purchased services Supplies and materials Capital outlay Other Total food services Centra]: Information services: Purchased services 63,200 Total infom1ation services 63,200 Staff services: Employee benefits 2,500 Purchased services 2,200 Total staft services Data processing services: Salaries Employee benefits 29,364 Purchased services Supplies and materials Capital outlay Non-capitalized equipment 100,000 Total data processing services Total support services 3,3 19,7 10 Actual 159, ,395 1, ,988 46,580 46,580 2, , ,433 14, ,095 8, ,454 Actual Over Or (Under) Budget ( ) 827 (2,220) ( 12,955) (5,000) 325 (30,057) {16,620) (16.620) (2,500) 382 (2, 11 8) ,805 5,433 ( 19, 133) 153,095 (9 1,2 11 ) 8 1,348 ~66, 256) (Continued) 56

121 Mokena School District No. 159 Educational Fund Schedule of Revenues, Expenditures and C hanges in Fund Balances Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Original & Final Budget Community services: Salaries Employee benefits Purchased services 6,200 Supplies and materials 17,9 16 Total community services 38, 116 Payments to other di stricts and governmental units Payments-special education-purchased services 2.823,949 Payments-special education-tuition Total payments to other districts/gov't units Provision for contingencies Total expenditures 14,608,939 Excess (deficiency) of revenues over expenditures before other financing sources (uses) ( ) Other financing sources {uses): Other sources Revenue pledged to pay capital leases Total other financing sources (uses) Excess (deficiency) of revenues over expenditures $ ( ) Fund balance, beginning of year Fund balance. end of year Actual Actual Over Or (Under) Budget (6.000) 8, 129 1,929 ( 17,916) 16,515 ( ) 2,753,92 1 (70,028) , 192 2, ( ) ( ) (444,332) ( ) 153,095 ( ) (39,436) ( ) (330,673) $ (350,402) 6,087,360 $ 5.756,687 57

122 Mokena School District No. 159 Operations a nd Maintenance Fund Schedule of Revenues, Expenditures and C hanges in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actua l Over Original & Or (Under) Final Budget Actual Budget Revenues: Local sources: General tax levy $ ,733 $ 1, $ ( 12,919) Earnings on investments ,106 1, 106 Rentals 50, ( ) Cont ributions and donations from private sources 60, Impact fees -lo.ooo 58, Other (69.094) Total local sources I, I, (2 1,299) State sources: General state aid , Total state sources ,643 2,223 Total revenues 1.618, ,077 (19.076) Expenditures: Operations and maintenance of plant services: Salaries (40,1 37) Employee benefits ,389 (3.862) Purchased services 289, ,252 (50, 198) Supplies and materials (64.654) Capital outlay 90, (4. 140) Non-capitali zed equipment 25, ( 13,033) Total operations and maintenance of plant services 1, ,506 ( 176,024) Payments to other government units Purchased services (29.959) Total payments to other government units (29.959) Provision for contingencies 560,000 ( ) Total expenditures , ( ) Excess (deficiency) of revenues over expenditures before other fi nancing sources (uses) ( ) (44.599) ( ) Other financing sources (uses): Transfer (to) from other funds ,879 ( I) Total other financing sources (uses) 753, ,879 ( I ) Excess (deficiency) of revenues over expenditures $ (3 7,628) 709,280 $ (746,9082 Fund balance, beginning of year 1, Fund balance, end of year $ ,469 58

123 Mokena School District No. 159 Debt Service Fund Schedule of R evenues, Expenditures a nd Changes in F und Bala nces- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final B udget Actua l Budget Revenues: Local sources: Genera l tax levy $ 2,402,509 $ 2,407,227 $ 4,718 Earnings on investments 750 1, Total local sources 2,403, ,542 5,283 Total revenues 2,403,259 2,408,542 5,283 Expenditures: Debt service: Bond/lease principa l retired 877, ,704 Bond/lease interest 2,358,500 I,506, 732 (85 1,768) 2,358,500 2,384,436 25,936 Debt service - other 14,555 14,555 Tota l expenditures 2,358,500 2,398, ,49 1 Excess (de fi ciency) of revenues over expend itures before other financing sources (uses) 44,759 9, ,208 Other fi nanc ing sources (uses): Transfer for payment of capital leases 39, Total other fi nanc ing sources (uses) 39,436 39,43 6 Excess (deficiency) of revenues over expenditures $ 44,759 48,987 $ ( 4,228) Fund balance, beginning of year I,5 19,405 Fund balance, end of year $ I,568,392 59

124 Mokena School District No. 159 T ansportation Fund Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30,2015 Actual Over Original & Or (Under) Final Budget Actual Budget Revenues: Local sources: General tax levy $ 305,097 $ 296,61 5 $ (8,482) Regular transportation fees from pupils/parents 116, ,854 5,254 Regular transportation fees from other sources 10,000 6,064 (3,936) Earnings on investments 2,000 2, Total local sources 433, ,5 19 (6, 178) State sources: Transportation - regular 150,000 15, 163 ( 134,837) Transportation - special educatio n 330, ,820 (93, 180) Total state sources 480, ,983 (228,0 17) Total revenues 913, ,502 (234, 195) Expenditures: Support services: Other support services- pupils: Purchased services 10,000 10,000 Pupi I transportation services: Salaries 292, ,4 10 (20,309) Employee benefits 17,068 17,068 Purchased services 577, ,470 (77,950) Supplies and materials 92,000 64,235 (27,765) Other 5,000 5, Total pupi l transportation services 984, ,082 ( 125,1 25) Payments to other government units (in-state) Special education programs 61,077 61, Total payments to other government units (in-state) 61,077 61, Total expenditures 1,045, ,777 (114,507) Excess (deficiency) of reven ues over expenditures $ ( 13 1,587) (25 1,275) $ (119,688) Fund balance. beginning of year 2,061,971 Fund balance, end of year $ I,810,696 60

125 Mokena School District No. 159 Municipal Retirement/Social Security Fund Schedule of Revenues, Expenditures and C hanges in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final Budget Actual Budget Revenues: Local sources: General tax levies $ 297,455 $ 292,989 $ (4.466) Social security/medicare only levy 297, (4,466) Corporate replacement taxes , Earnings on investments Total local sources ,6 11 (8, 158) Total revenues ,6 11 (8, 158) Expenditures: Instruction: Regu lar programs ( ) Pre-K Programs Special education programs (3.244) Remedial and supplemental programs K Bilingual programs Total instruction 219, ,06 1 ( ) Support services: Pupils: Attendance and social work services 3,1 04 2,97 1 ( 133) Health services ( 1,975) Psychological services ( 190) Instructional staff: Improvement of instructional staff (2 15) Educational medi a (5.33 I) General adm inistration: Board of education (28 1) Executive administration (45) School administration: Office of the principal (3.83 1) Business: Direction of business support (400) Fiscal services 18, ( I,025) Operation and maintenance of plant 162, (725) Pupil transportation (4,939) Food services ( I, 100) Central: Data processing 17,235 23, ,878 Total support services 390, ( 14,3 12) Total expenditures ,7 12 (28.309) Excess (deficiency) of revenues over expenditures $ $ ( ) Fund balance, beginning of year 234,8 11 Fund balance, end of year $ 295,

126 Mokena School District No. 159 Capital Projects Fund Schedule of Revenues, Expenditures and C hanges in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final Budget Actual Budget Revenues: Local sources: Earnings on investments $ $ $ Total revenues Expenditures: Facil ities acquis ition and construction services: Purchased services 1,250 (1.250) Total facil ities acquisition and construction services ( 1,250) Total expenditures 1,250 ( I,250) Excess (deficiency) of revenues over expenditures before other fi nancing sources (uses) ( I,250) Other financing sources (uses): Transfers to other funds (753,878) (753,879) ( I) Excess (de fi ciency) of revenues over expenditures $ (755, 128) (753,878) $ 1,250 Fund balance, beginning of year 759,40 I Fund balance, end of year $ 5,523 62

127 Mokena School District No. 159 Working Cash Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual-Modified Cash Basis For the year ended June 30,2015 Original & Final Budget Actual Actual Over Or (Under) Budget Local sources: General tax levy $ 64,948 Earnings on investments 2,000 Total local sources 66,948 Total revenues 66,948 Excess (deficiency) of revenues over expenditures $ 66,948 Fund balance, beginning of year Fund balance, end of year $ 63,923 $ ( 1,025) 3,01 7 1,017 66,940 (8) 66,940 (8) 66,940 $ (8) 1,8 10,56 1 $ 1,877,501 63

128 Mokena School District No. 159 Tort Fund Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget to Actual-Modified Cash Basis For the year ended June 30, 2015 Actual Over Original & Or (Under) Final Budget Actual Budget Revenues: Local Sources: General tax levy $ 11 8,98 1 $ 124,857 $ 5,876 Earnings on investments (28) Total local sources ,848 Total receipts 119, , Expendi tures: Support services-general administration: Workers' compensation ,934 insurance payments (34,504) Total support services-general administration ,430 Total expenditures ,430 Excess (deficiency) of revenues over expenditures $ ,949 $ (6,582) Fund ba lance, beginni ng of year Fund balance. end of year $ 14,852 64

129 Mokena chool District No. 159 A sessed Va luation, Tax Rates and Extensions 201-t Assessed valuation $ 527,828,734 $ 536,496,945 $ 565,025,263 $ 595,333,347 Tax rates Educational Tort immunity Special education Operations and maintenance Bond and interest Transportation Municipal retirement Social security Working cash Total Extensions Educational $ 10,756,622 $ I 0,488,5 15 $ l 0,365,388 $ 10,019,460 Tort immunity 137, , ,417 48,817 Special education 446, , , ,943 Operations and maintenance 1,181,366 1, 168,490 I, 181, ,608 Bond and interest 2,500, ,340 Transportation 297, , ,943 Municipal retirement 305, , , ,818 Social security 305, , ,8 18 Working cash 64, ,023 58,343 Total $ 15,995,5 14 $ 15, $ 15,082,784 $ 14, Total collected $ 8,247,922 $ ,851 $ 15,048,520 $ Percentage collected % % 99.77% 99.78% 65

130 Mokena School District No. 159 Schedule of Bonded Debt Due Year End June 30. General Obligation School Bonds 1996 Principal Interest General Obligation School Bonds 2000 Total Princi~a l Interest Bonds $ 54,7 17 $ 130, Total $ 54,717 $ 130,482 $ $ 766,061 $ I,508,940 $ 2,460, ,432 1,773,568 2,585, ,436 1,920,564 2,7 15, ,395 2,072,605 2,850, , ,733 2,990, ,591 $ 9.505,41 0 $ ,200 66

131 Page 40 Page 40 Mokena School District SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ending June 30, 2015 Federal Grantor/Pass-Through Grantor/ Program or Cluster Title and Major Program Designation CFDA Number' (A) ISBE Project# Receipts/Revenues Expenditure/Disbursements (1st 8 digits) Year Year Year Year or Contract #3 7/1/13-6/30/14 7/1/14-6/30/15 7/1/13-6/30/14 7/1/14-6/30/15 (B) (C) (D) (E) (F) Obligations/ Final Budget Encumb. Status (G) (H) (I) US DEPARTMENT OF EDUCATION: Passed through Illinois tate Board of EducaiJon Title I, Part A. Title I Low Income A ,653 42, , , ,850 Tille I Low Income A , , ,511 ~ To tal TWe I, Part A 72, , , ,275 -f- - f- Title /1, Teacher Qua/tty Tille 11- Teacher Quality Trtle II- Teacher Quality Total Title II, Teacher Quality I r-- -- Total ~assed through lllonats tate Board of Educatoon I I A , ,030 0.I A ,070 I 22,450 44,425 44,030 42, ' 167, I I 0 44,030 50, ,194 I (M) Program was audited as a major program as defined by OMB Circular A-133. The accompanying notes are an integral part of this schedule. ' ' ' To meet state or other requorements, auditees may decode to onclude certaon nonfederal awards (for example, state awards) on thos schedule If such nonfederal data are presented. they should be segregated and clearly designated as nonfederal The trtle of the schedule should also be modlfoed to ondicate that nonfederal awards are included When the CFDA number os not avaolable, the audrtee should ondocate that the CFDA number is not available and include in the schedule the program's name and, if applicable, other identifying number When awards are received as a subrecipient, the identifying number assigned by the pass-through entity should be included in the schedule. Circular A-133 requires that the value of federal awards expended on the form of non-cash assistance. the amount of insurance in effect during the year, and loans or loan guarantees outstanding at year end be included in either the schedule or a note to the schedule AHhough it is not required, Circular A-133 states that rt is preferable to present this information in the schedule (versus the notes to the schedule) If the audrtee presents non-cash assostance on the notes to the schedule, the auditor should be aware that such amounts must still be oncluded in part Ill of the data collectjon form.

132 Page 40 Page 40 Mokena School District SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ending June 30, 2015 IS BE Project# Receipts/Revenues Expenditure/Disbursements Federal Grantor/Pass-Through Grantor/ CFDA (1st 8 digits) Year Year Year Year Program or Cluster Title and Number' or Contract#l 7/1/13-6/30/14 7/1/14-6/30/15 7/1/13-6/30/14 7/ 1/14-6/30/15 Major Program Designation - (A) (B) (C) (D) _ (E) (F) Passed through Lincoln-Wa:t ~~ al!;ducat1on Dist 843 J Obligations/ Final Budget Encumb. Status (G) (H) (I) - Special Education Cluster (IDEA): (M) Spec Ed - IDEA Flow through (M) Spec Ed- IDEA Flow through (M) Spec Ed- Preschool Flow through (M) Spec Ed - Preschool Flow through (M) Total ~assed through Lincoln-Wa:i ~~coal Education D1stnct , , , , r , nla nla 399,473 0 n/a n/a _ - TOTAL DEPARTMENT OF EDUCATION 504, , , ,520 US DEPARTMENT OF HEALTH AND HUMAN SERVICES: Passed through Illinois Heahbcare and Famil:i Services: Medical Assistance - I , ,153 0 Medical ASSIStance , TOTAL US DEPARTMENT OF HEALTH AND HUMAN SERVICES 3,828 22,765 10,153 27,791 nla nla nla nla n/a nla (M) Program was audited as a major program as defined by OMB Circular A-133 The accompanying notes are an Integral part of this schedule. ' ' 1 To meet state or other requtrements. audrtees may decide to 1nclude certatn nonfederal awards (for example. state awards) in this schedule If such nonfederal data are presented, they should be segregated and clearly designated as nonfederal. The trtle of the schedule should also be modified to tndtcate that nonfederal awards are tncluded. When the CFDA number is not available, the audrtee should lnd1cate that the CFDA number is not available and Include in the schedule the program's name and. if applicable, other identifying number. When awards are received as a subrecipient, the identifying number ass1gned by the pass-through entity should be included in the schedule. Circular A-133 requires that the value of federal awards expended 1n the form of non-cash assistance, the amount of 1nsurance 1n effect dunng the year, and loans or loan guarantees outstanding at year end be included in erther the schedule or a note to the schedule. Ahhough it is not required. Circular A-133 states that it is preferable lo present this information in the schedule (versus the notes to the schedule). If the audrtee presents non-cash assistance in the notes to the schedule, the auditor should be aware that such amounts must still be included 1n part Ill of the data collection form 0\ 00

133 Page 40 Page 40 Mokena School District SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ending June 30, 2015 IS BE Project# Receipts/Revenues Expenditure/Disbursements Federal Grantor/Pass-Through Grantor/ CFDA (1st 8 digits) Year Year Year Year Program or Cluster Title and Number < or Contract #3 7/1/13-6/30/14 7/1/14-6/30/15 7/1/13-6/30/14 7/1/14-6/30/15 Major Prog ram Designation (A) (B) _ (C) (D) (E) (F) US DEPARTMENT OF AGRICULTURE: Obligations/ Final Budget Encumb. Status (G) (H) (I) Passed through llhno1s tate!;loard of Education: Child Nutrition Cluster: National School Lunch Program ,026 15,578 95,026 15,578 n/a n/a n/a National School Lunch Program National School Lunch Commod~ies (non-cash) Nahonal School Lunch - Commodities (non-cash) , ,745 - r , , , , n/a n/a n/a n/a n/a n/a nla n/a n/a TOTAL US DEPARTMENT OF AGRICULTURE - 120, , , ,511 TOTAL FEDERAL AWARDS 628, , , , (M) Program was audited as a major program as defined by OMB Circular A-133. The accompanying notes are an Integral part of this schedule. ' To meet state or other requirements, auditees may decide to Include certain nonfederal awards (for example, state awards) m this schedule If such nonfederal data are presented. lhey should be segregated and clearly designated as nonfederal The title of the schedule should also be modified to Indicate that nonfederal award s are included. ' When the CFDA number is not available, the auditee should ind1cate that the CFDA number is not available and include in the schedule the program's name and. ~applicable, other identifying number. When awards are received as a subrecipient, the identifying number assigned by the pass-through entity should be included in the schedule. Circular A-133 reqwes that the value of federal awards expended in the form of non-cash assistance, the amount of tnsurance in effect during the year, and loans or loan guarantees outstanding at year end be Included 1n erther the schedule or a note to the schedule. A~hough it is not reqwed. Ctrcular A-133 states that it is preferable to present this information in the schedule (versus the notes to the schedule). If the auditee presents non-cash assistance in the notes to the schedule, the auditor should be aware that such amounts must still be included 1n part Ill of the data collection form.

134 Mokena School District No. 159 Notes to the Schedule of Expenditures of Federal Awards As of and for the year ended June 30, 2015 The accompanying schedule of expenditures of federal awards inc ludes the federal grant activity of Mokena School District No. 159 and is presented on the cash basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-1 33, 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 basic financ ial statements. Other Disclosures Subrecipients - None Amount of federal insurance in e ffect during the year - None Loan/Loan guarantees outstanding at year-e nd - $-0-70

135 Mokena School District No. 159 Summary of Auditor's Results As of and for the year ended June 30, 2015 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unmodified Internal contro l over financial reporting: Material weakness(es) identified? _K_yes no Significant deficiency(ies )? X yes none reported Noncompliance material to financial statements noted? ---.!yes _K_no Federal Awards Internal control over major programs: Material weakness(es) identified? yes _ X_ no Significant deficiency(ies) identified? yes X_ none rep01ted Type of auditor s report issued on compliance on major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 5 1 O(a) of Circular A-133? yes _ X_ no Identification o(major programs CFDA Number(s) , Name o f Federal Program or Clu ster Special Education Cluster (IDEA) Dollar threshold used to distinguish between type A and type B programs: $ Auditee qualified as low-risk auditee? yes X_ no 71

136 Mokena School District No. 159 Schedule of Findings and Questioned Costs As of and for the year ended June 30, 2015 Section U - Financial Statement Findings Required to be Reported Under Generally Accepted Government Auditing Standards Finding: Criteria or specific requirement: Condition: Context: Effect: Cause: Recommendation: School districts in Illinois must implement the requirements for accounting, budgeting, and financial rep01ting issued by the Illinois State Board of Education (ISBE) in Title 23 of the lllinois Administrative Code, Part 100, a lso known as IPAM (Illinois Program Accounting Manual). Substantial misclassifications of receipts and disbursements occurred during FY Audit adjustments were posted to correct known misstatements. Audit tests and analytical procedures detected misclassiftcations for various obj ect codes, but no significant issues were found regarding classifications of functions. Audit adjustments were posted to reclassify receipts and disbursements such as fee income, software and repairs and maintenance. Misclassifications of receipts and disbursements can affect calculations on ISBE's AFR such as the Financial Profile Designation, the Operating Expense per Pupil, the Per Capita Tuition Charge, the Indirect Cost Rate, and Administrative Costs. The Di strict's procedures for initiating and reviewing classifications were ineffective. The District should implement effective procedures for initiating and reviewing classifications in accordance w ith T itle 23 of the Illinois Administrative Code, Part 100. The Chief School Business Official (CSBO) should review purchase requests for proper c lassification as part of the approval process. As necessary, the CSBO should provide training to those employees who initiate purchase requests. 72

137 Mokena School District No. 159 Schedule of Findings a nd Questioned Costs As of and for tbe year ended June 30, 2015 Section II - Financial Statement Findings Required to be Reported Under Generally Accepted Government Auditing Standards Finding: Criteria or specific requirement: Condition: Context: Effect: Cause: Recommendation: On the cash basis of accounting, only revenues received or expenditures paid prior to and inc luding June 30 should be recorded on the general ledger for the fiscal year. The District wrote a check prior to June 30, 2015, and recorded it as an expenditure on the general ledger for fi scal year However, the District did not re lease the check to the vendor until October The amount of the check was $89.900, and an audit adjustment was posted to remove it from fiscal year expenditures. Cash was understated and expenditures were overstated by $89,900 in the Educational Fund prior to the audit adjustment. The District was not satis fied w ith the vendor's work, and therefore he ld the check until the endor's work was acceptable. Jf a check is held for any reason at year-end, an adjustment should be posted or the check should be voided to pre e nt overstating fi scal year expenditures. 73

138 Mokena School District No. 159 Schedule of Findings a nd Questioned Costs As of and for the year ended June 30, 2015 Section ill-federal Award Findings and Questioned Costs Current Y ear Findings: one 74

139 Mokena School District No. 159 Summary Schedule of Prior Year Endings As of and for the year ended June 30, 2015 Summary Schedule of Prior Year Findings Finding N umber: Condition: Current Status: I Substantial misclassifications of receipts and disbursements occurred during FY Audit adjustments were posted to correct the misstatements. Finding was repeated as Finding No I. 75