ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS SARATOGA COUNTY, NEW YORK (the District )

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1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstance shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 21, 2017 NEW ISSUE BOOK-ENTRY-ONLY BONDS SERIAL BONDS RATING S&P GLOBAL RATINGS: See Bond Rating, herein In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, under existing statutes and court decisions and assuming continuing compliance with certain tax certifications described herein, (i) interest on the Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In addition, in the opinion of Bond Counsel to the District, under existing statues, interest on the Bonds is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. See Tax Matters herein. Code. The District will designate the Bonds as qualified tax-exempt obligations pursuant to the provision of Section 265(b)(3) of the ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS SARATOGA COUNTY, NEW YORK (the District ) $2,080,000* SCHOOL DISTRICT SERIAL BONDS 2017 (the Bonds ) See Bond Maturity Schedule Herein Security and Sources of Payment: The Bonds are general obligations of the District and will contain a pledge of the faith and credit of the District for the payment of the principal thereof and interest thereon and, unless paid from other sources, the Bonds are payable from ad valorem taxes which may be levied upon all the taxable real property within the District without limitation as to rate or amount. Prior Redemption: The Bonds are not subject to redemption, prior to maturity. (See Optional Redemption under THE BONDS, herein.) Form and Denomination: The Bonds will be issued as registered bonds, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), New York, New York, which will act as the Securities Depository for the Bonds. Individual purchases of the Bonds may be made only in book-entry form in denominations of $5,000 or integral multiples thereof. Bondholders will not receive certificates representing their interests in the Bonds purchased. (See Book-Entry-Only System under THE BONDS, herein.) Payment: Payment of the principal of and interest on the Bonds to the Beneficial Owners of the Bonds will be made by DTC Participants and Indirect Participants in accordance with standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in street name. Payment will be the responsibility of the DTC Participant or Indirect Participant and not of DTC or the District, subject to any statutory and regulatory requirements as may be in effect from time to time. (See Book-Entry-Only System under THE BONDS, herein.) Proposals for the Bonds will be received at 11:00 A.M. (Prevailing Time) on December 5, 2017 at the offices of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York The Bonds are offered subject to the final approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel, and certain other conditions. It is expected that delivery of the Bonds in book-entry form will be made through the facilities of DTC on or about December 20, 2017 in New York, New York. THIS PRELIMINARY OFFICIAL STATEMENT IS IN A FORM DEEMED FINAL BY THE DISTRICT FOR THE PURPOSE OF SECURITIES AND EXCHANGE COMMISSION RULE 15c2-12 (THE RULE ) EXCEPT FOR CERTAIN INFORMATION THAT WILL BE UPDATED FOLLOWING THE DATE THEREOF. FOR A DESCRIPTION OF THE DISTRICT S AGREEMENT TO PROVIDE CONTINUING DISCLOSURE FOR THE BONDS, AS DESCRIBED IN THE RULE, SEE DISCLOSURE UNDERTAKING HEREIN. *Preliminary, subject to change.

2 ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS SARATOGA COUNTY, NEW YORK $2,080,000* SCHOOL DISTRICT SERIAL BONDS BOND MATURITY SCHEDULE Dated: Date of Delivery Principal Due: December 15, , inclusive Interest Due: June 15, 2018, December 15, 2018 and semi-annually thereafter on June 15 and December 15 in each year to maturity Amount* Maturity Rate Price or Yield CUSIP # $305,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, ,000 December 15, 2027 *Preliminary, subject to change.

3 ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS SARATOGA COUNTY, NEW YORK Saratoga Springs, New York Telephone: 518/ Fax: 518/ BOARD OF EDUCATION JoAnne Kieran, President Heather Reynolds, Vice President John Ellis Anjeanette Emeka Steve Grandin Jennifer Leidig Brad Thomas Dr. Stephen C. Verral Jim Wendell Superintendent of Schools Michael Piccirillo Assistant Superintendent for Business Timothy Hilker District Clerk Timothy Hilker * * * BOND COUNSEL Hawkins Delafield & Wood LLP New York, New York * * * MUNICIPAL ADVISOR MUNISTAT SERVICES, INC. Municipal Finance Advisory Service 12 Roosevelt Avenue Port Jefferson Station, N.Y (631) info@munistat.com Website:

4 No dealer, broker, salesman or other person has been authorized by the District to give any information or to make any representations, other than those contained in this Official Statement and if given or made, such other information or representations must not be relied upon as having been authorized by the District. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained by the District from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. TABLE OF CONTENTS THE BONDS... 1 DESCRIPTION OF THE BONDS... 1 OPTIONAL REDEMPTION... 1 BOOK-ENTRY-ONLY SYSTEM... 1 CERTIFICATED BONDS... 3 AUTHORIZATION AND PURPOSE... 3 SECURITY AND SOURCE OF PAYMENT... 4 REMEDIES UPON DEFAULT... 4 SECTION 99-B OF THE STATE FINANCE LAW APPLICABLE TO SCHOOL DISTRICTS... 5 NO PAST DUE DEBT... 6 BANKRUPTCY... 6 THE DISTRICT... 6 DESCRIPTION... 6 FORM OF SCHOOL GOVERNMENT... 7 ENROLLMENT HISTORY... 7 PROJECTED FUTURE ENROLLMENT... 7 DISTRICT FACILITIES... 8 EMPLOYEES... 8 ECONOMIC AND DEMOGRAPHIC INFORMATION... 8 POPULATION TRENDS... 8 INCOME DATA... 9 SELECTED LISTING OF LARGER EMPLOYERS IN THE DISTRICT... 9 UNEMPLOYMENT RATE STATISTICS INDEBTEDNESS OF THE DISTRICT CONSTITUTIONAL AND STATUTORY REQUIREMENTS STATUTORY PROCEDURE COMPUTATION OF DEBT LIMIT AND DEBT CONTRACTING MARGIN DETAILS OF SHORT-TERM INDEBTEDNESS OUTSTANDING TREND OF OUTSTANDING INDEBTEDNESS DEBT SERVICE REQUIREMENTS - OUTSTANDING BONDS BUILDING AID ESTIMATE AUTHORIZED AND UNISSUED DEBT CALCULATION OF ESTIMATED OVERLAPPING AND UNDERLYING INDEBTEDNESS DEBT RATIOS FINANCES OF THE DISTRICT INDEPENDENT AUDIT INVESTMENT POLICY FUND STRUCTURE AND ACCOUNTS BASIS OF ACCOUNTING BUDGET PROCESS i Page

5 TABLE OF CONTENTS - CONTINUED REVENUES Real Property Taxes State Aid RECENT EVENTS AFFECTING STATE AID TO NEW YORK SCHOOL DISTRICTS EXPENDITURES THE STATE COMPTROLLER S FISCAL STRESS MONITORING SYSTEM AND OSC COMPLIANCE REVIEWS EMPLOYEE PENSION SYSTEM OTHER POST EMPLOYMENT BENEFITS TAX INFORMATION REAL PROPERTY TAXES TAX COLLECTION PROCEDURE THE TAX LEVY LIMIT LAW STAR - SCHOOL TAX EXEMPTION TAX LEVIES, COLLECTIONS AND RATES SELECTED LISTING OF LARGE TAXABLE PROPERTIES LITIGATION MARKET MATTERS AFFECTING FINANCINGS OF THE MUNICIPALITIES OF THE STATE TAX MATTERS OPINION OF BOND COUNSEL CERTAIN ONGOING FEDERAL TAX REQUIREMENTS AND CERTIFICATIONS CERTAIN COLLATERAL FEDERAL TAX CONSEQUENCES ORIGINAL ISSUE DISCOUNT BOND PREMIUM INFORMATION REPORTING AND BACKUP WITHHOLDING MISCELLANEOUS LEGAL MATTERS DISCLOSURE UNDERTAKING PRIOR COMPLIANCE HISTORY RATING MUNICIPAL ADVISOR ADDITIONAL INFORMATION APPENDIX A: FINANCIAL INFORMATION APPENDIX B: AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 APPENDIX C: FORM OF BOND COUNSEL OPINION APPENDIX D: FORM OF CONTINUING DISCLOSURE Page ii

6 OFFICIAL STATEMENT ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS SARATOGA COUNTY, NEW YORK $2,080,000* SCHOOL DISTRICT SERIAL BONDS 2017 [BOOK ENTRY ONLY BONDS] This Official Statement and appendices hereto presents certain information relating to the Enlarged City School District of the City of Saratoga Springs, in the County of Saratoga, in the State of New York (the "District" and "State," respectively) in connection with the sale of $2,080,000* School District Serial Bonds (the "Bonds"). All quotations from and summaries and explanations of provisions of the Constitution and laws of the State and acts and proceedings of the District contained herein do not purport to be complete and are qualified in their entirety by reference to the official compilations thereof and all references to the Bonds and the proceedings of the District relating thereto are qualified in their entirety by reference to the definitive form of the Bonds and such proceedings. THE BONDS Description of the Bonds The Bonds will be dated date of delivery, and will mature in the principal amounts on December 15 in each of the years 2018 to 2027, inclusive, as set forth on the inside cover page hereof. The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases of the Bonds may be made in book-entry form only, in denominations of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds. Interest on the Bonds will be payable on June 15, 2018, December 15, 2018 and semiannually thereafter on June 15 and December 15 in each year to maturity. Principal and interest will be paid by the District to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as described herein. The Bonds may be transferred in the manner described on the Bonds and as referenced in certain proceedings of the District referred to therein. date. The Record Date of the Bonds will be the last business day of the calendar month preceding each interest payment Optional Redemption The Bonds will not be subject to redemption prior to maturity. Book-Entry-Only System DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities, 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 and deposited with DTC. DTC is limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilities the posttrade 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 certificates. *Preliminary, subject to change 1

7 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 ). Effective August 9, 2011, Standard & Poor s assigns a rating of AA+ to DTC. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of 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 or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except in the event that u se of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co., or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping accounts of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them or notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to the 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. 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 Issuer as soon as possible after the record date. The omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest 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 detail information from the District on the 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 (nor its nominee) 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, 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. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered. 2

8 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. Source: The Depository Trust Company, New York, New York. The information contained in the above section concerning DTC and DTC s book-entry system has been obtained from sample offering document language supplied by DTC, but the District takes no responsibility for the accuracy thereof. In addition, the District will not have any responsibility or obligation to participants, to indirect participants or to any beneficial owner with respect to: (i) the accuracy of any records maintained by DTC, and participant or any indirect participant; (ii) the payments by DTC or any participant or any indirect participant of any amount with respect to the principal of, or premium, if any, or interest on the bonds or (iii) any notice which is permitted or required to be given to Bondowners. THE DISTRICT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY PARTICIPANTS, OR ANY INDIRECT PARTICIPANT; (II) THE PAYMENT BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OR ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF OR INTEREST ON THE BONDS; (III) ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO HOLDERS; OR (IV) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER. THE DISTRICT CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE TO DIRECT PARTICIPANTS OR THAT DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (I) PAYMENTS OF THE PRINCIPAL OF OR INTEREST ON THE BONDS; (II) CONFIRMATION OF THEIR OWNERSHIP INTEREST IN THE BONDS; OR (III) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO. AS NOMINEE, AS REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SO SERVE AND ACT IN THE MANNER DESCRIBED IN THE OFFICIAL STATEMENT. Certificated Bonds DTC may discontinue providing its services with respect to the Bonds at any time by giving notice to the District and discharging its responsibilities with respect thereto under applicable law, or the District may terminate its participation in the system of book-entry-only transfers through DTC at any time. In the event that such book-entry-only system is discontinued, and a replacement book-entry securities depository is not appointed, the Bonds will be issued in registered form in denominations of $5,000, or integral multiples thereof. Principal of and interest on the Bonds when due will be payable at the principal corporate trust office of a bank or trust company to be named by the District as the fiscal agent; certificated Bonds may be transferred or exchanged at no cost to the owner of such bonds at any time prior to maturity at the corporate trust office of the fiscal agent for bonds of the same or any other authorized denomination or denominations in the same aggregate principal amount upon the terms set forth in the certificate of the President of the Board authorizing the sale of the Bonds and fixing the details thereof and in accordance with the Local Finance Law. Authorization and Purpose The Bonds are being issued in accordance with the Constitution and statutes of the State of New York, including the Education Law and the Local Finance Law, and Bond Resolutions duly adopted by the Board of Education of the District on March 24, 2016 and March 21, 2017, respectively for the improvements to the transportation facility and the acquisition of school buses and vehicles, respectively. For further information regarding bond authorizations of the District for capital purposes and other matters relating thereto see Indebtedness of the District, herein. 3

9 Security and Source of Payment Each Bond when duly issued and paid for will constitute a contract between the District and the holder thereof. The Bonds will be general obligations of the District and will contain a pledge of the faith and credit of the District for the payment of the principal of and interest thereon. For the payment of such principal and interest, the District has power and statutory authorization to levy ad valorem taxes on all real property in the District subject to taxation without limitation as to rate or amount. Under the Constitution of the State, the District is required to pledge its faith and credit for the payment of the principal of and interest on the Bonds, and the State is specifically precluded from restricting the power of the District to levy taxes on real estate therefor. On June 24, 2011, the Governor signed into law Chapter 97 of the Laws of 2011, as amended, (the Tax Levy Limit Law ) which imposes a limitation on the power of local governments and school districts, including the District, to increase their annual tax levy above a certain specified amount. However, the Tax Levy Limit Law expressly provides an exception from the annual tax levy limitation for any taxes levied to pay debt service on bonds or notes issued to finance voter approved capital expenditures. As the Bonds are being issued to finance voter-approved capital expenditures, the Bonds qualify for such exception to the Tax Levy Limit Law. (See The Tax Levy Limit Law, herein.) REMEDIES UPON DEFAULT Neither the Bonds, nor the proceedings with respect thereto, specifically provide any remedies which would be available to owners of the Bonds should the District default in the payment of principal of or interest on the Bonds, nor do they contain any provisions for the appointment of a trustee to enforce the interests of the owners of the Bonds upon the occurrence of any such default. The Bonds are general obligation contracts between the District and the owners for which the faith and credit of the District are pledged and while remedies for enforcement of payment are not expressly included in the District s contract with such owners, any permanent repeal by statute or constitutional amendment of a bondholder s and/or noteholder s remedial right to judicial enforcement of the contract should, in the opinion of Bond Counsel, be held unconstitutional. Upon default in the payment of principal of or interest on the Bonds at the suit of the owner, a Court has the power, in proper and appropriate proceedings, to render judgment against the District. The present statute limits interest on the amount adjudged due to contract creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been judicially subjected to execution or attachment to satisfy a judgment. A Court also has the power, in proper and appropriate proceedings, to order payment of a judgment on such bonds or notes from funds lawfully available therefor or, in the absence thereof, to order the District to take all lawful action to obtain the same, including the raising of the required amount in the next annual tax levy. In exercising its discretion as to whether to issue such an order, the Court may take into account all relevant factors, including the current operating needs of the District and the availability and adequacy of other remedies. Upon any default in the payment of the principal of or interest on the Bonds, the owner of such Bonds could, among other remedies, seek to obtain a writ of mandamus from a Court ordering the governing body of the District to assess, levy and collect an ad valorem tax, upon all taxable property of the District subject to taxation by the District sufficient to pay the principal of and interest on the Bonds as the same shall come due and payable (and interest from the due date to date of payment) and otherwise to observe the covenants contained in the Bonds and the proceedings with respect thereto all of which are included in the contract with the owners of the Bonds. The mandamus remedy, however, may be impracticable and difficult to enforce. Further, the right to enforce payment of the principal of or interest on the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws and equitable principles, which may limit the specific enforcement of certain remedies. In 1976, the New York Court of Appeals, the State s highest court, held in Flushing National Bank v. Municipal Assistance Corporation for the City of New York, 40 N.Y.2d 731 (1976), that the New York State legislation purporting to postpone the payment of debt service on New York City obligations was an unconstitutional moratorium in violation of the New York State constitutional faith and credit mandate included in all municipal debt obligations. While that case can be viewed as a precedent for protecting the remedies of Bondholders, there can be no assurance as to what a Court may determine with respect to future events, including financial crises as they may occur in the State and in municipalities of the State, that require the exercise by the State of its emergency and police powers to assure the continuation of essential public services. (See also, Quirk v. Municipal Assistance Corporation for the City of New York, 41 N.Y.2d 644 (1977), where the Court of Appeals described the pledge as a direct Constitutional mandate.) 4

10 As a result of the Court of Appeals decision, the constitutionality of that portion of Title 6-A of Article 2 of the Local Finance Law enacted at the 1975 Extraordinary Session of the State legislature authorizing any county, city, town or village with respect to which the State has declared a financial emergency to petition the State Supreme Court to stay the enforcement against such municipality of any claim for payment relating to any contract, debt or obligation of the municipality during the emergency period, is subject to doubt. In any event, no such emergency has been declared with respect to the District. Pursuant to Article VIII, Section 2 of the State Constitution, the District is required to provide an annual appropriation of monies for the payment of due and payable principal of and interest on indebtedness. Specifically, this constitutional provision states: If at any time the respective appropriating authorities shall fail to make such appropriations, a sufficient sum shall be set apart from the first revenues thereafter received and shall be applied to such purposes. The fiscal officer of any county, city, town, village or school district may be required to set aside and apply such revenues as aforesaid at the suit of any holder of obligations issued for any such indebtedness. This constitutes a specific non-exclusive constitutional remedy against a defaulting municipality or school district; however, it does not apply in a context in which monies have been appropriated for debt service but the appropriating authorities decline to use such monies to pay debt service. However, Article VIII, Section 2 of the Constitution of the State also provides that the fiscal officer of any county, city, town, village or school district may be required to set apart and apply such revenues at the suit of any holder of any obligations of indebtedness issued with the pledge of the faith of the credit of such political subdivision. In Quirk v. Municipal Assistance Corp., 41 N.Y.2d 644 (1977), the Court of Appeals described this as a first lien on revenues, but one that does not give holders a right to any particular revenues. It should thus be noted that the pledge of the faith and credit of a political subdivision in the State is a pledge of an issuer of a general obligation bond or note to use its general revenue powers, including, but not limited to, its property tax levy, to pay debt service on such obligations, but that such pledge may or may not be interpreted by a court of competent jurisdiction to include a constitutional or statutory lien upon any particular revenues. The Constitutional provision providing for first revenue set asides does not apply to tax anticipation notes, revenue anticipation notes or bond anticipation notes. While the courts in the State have historically been protective of the rights of holders of general obligation debt of political subdivisions, it is not possible to predict what a future court might hold. In prior years, certain events and legislation affecting a holder s remedies upon default have resulted in litigation. While courts of final jurisdiction have generally upheld and sustained the rights of bondholders and/or noteholders, such courts might hold that future events, including a financial crisis as such may occur in the State or in political subdivisions of the State, may require the exercise by the State or its political subdivisions of emergency and police powers to assure the continuation of essential public services prior to the payment of debt service. SECTION 99-B OF THE STATE FINANCE LAW APPLICABLE TO SCHOOL DISTRICTS Section 99-b of the State Finance Law (the "SFL") provides for a covenant between the State and the purchasers and the holders and owners from time to time of the bonds and notes issued by school districts in the State for school purposes that it will not repeal, revoke or rescind the provisions of Section 99-b of the SFL, or amend or modify the same so as to limit, impair or impede the rights and remedies granted thereby. Said section provides that in the event a holder or owner of any bond or note issued by a school district for school purposes shall file with the State Comptroller, a verified statement describing such bond or note and alleging default in the payment thereof or the interest thereon or both, it shall be the duty of the State Comptroller to immediately investigate the circumstances of the alleged default and prepare and file in his office a certificate setting forth his determinations with respect thereto and to serve a copy thereof by registered mail upon the chief fiscal officer of the school district which issued the bond or note. Such investigation by the State Comptroller shall set forth a description of all such bonds and notes of the school district found to be in default and the amount of principal and interest thereon past due. Upon the filing of such a certificate in the office of the State Comptroller, he shall thereafter deduct and withhold from the next succeeding allotment, apportionment or payment of such State aid or assistance due to such school district such amount thereof as may be required to pay (a) the school district's contribution to the State Teachers' Retirement System, and (b) the principal of and interest on such bonds and notes of such school district then in default. In the event such State aid or assistance initially so withheld shall be insufficient to pay said amounts in full, the State Comptroller shall similarly deduct and withhold from each succeeding allotment, 5

11 apportionment or payment of such State aid or assistance due such school district such amount or amounts thereof as may be required to cure such default. Allotments, apportionments and payments of such State aid so deducted or withheld by the State Comptroller for the payment of principal and interest on the bonds and notes shall be forwarded promptly to the paying agent or agents for the bonds and notes in default of such school district for the sole purpose of the payment of defaulted principal of and interest on such bonds or notes. If any such successive allotments, apportionments or payment of such State aid so deducted or withheld shall be less than the amount of all principal and interest on the bonds and notes in default with respect to which the same was so deducted or withheld, then the State Comptroller shall promptly forward to each paying agent an amount in the proportion that the amount of such bonds and notes in default payable to such paying agent bears to the total amount of the principal and interest then in default on such bonds and notes of such school district. The State Comptroller shall promptly notify the chief fiscal officer of such school district of any payment or payments made to any paying agent or agents of defaulted bonds or notes pursuant to said section of the SFL. NO PAST DUE DEBT No principal or interest payment on District indebtedness is past due. The District has never defaulted in the payment of the principal of and/or interest on any indebtedness. BANKRUPTCY The Federal Bankruptcy Code (Chapter IX) allows public bodies, such as municipalities, recourse to the protection of a Federal Court for the purpose of adjusting outstanding indebtedness. Title 6-A of the Local Finance Law specifically authorizes any municipality in the State or its emergency control board to file a petition under any provision of Federal bankruptcy law for the composition or adjustment of municipal indebtedness. While this Local Finance Law provision does not apply to school districts, there can be no assurance that it will not become applicable in the future. As such, the undertakings of the District should be considered with reference, specifically, to Chapter IX, and, in general, to other bankruptcy laws affecting creditors rights and municipalities. Bankruptcy proceedings by the District if authorized by the State in the future could have adverse effects on bondholders and/or noteholders including (a) delay in the enforcement of their remedies, (b) subordination of their claims to those supplying goods and services to the District after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings and (c) imposition without their consent of a reorganization plan reducing or delaying payment of the Bonds. The above references to said Chapter IX are not to be construed as an indication that the State will consent in the future to the right of the District to file a petition with any United States district court or court of bankruptcy under any provision of the laws of the United States, now or hereafter in effect for the composition or adjustment of municipal indebtedness or that the District is currently considering or expects to resort to the provisions of Chapter IX if authorized to do so in the future. THE DISTRICT Description The District, which contains the City of Saratoga Springs in its entirety, major portions of the Towns of Greenfield and Wilton, and minor portions of the Towns of Malta, Milton and Saratoga, encompasses approximately 110 square miles and has an estimated population of 39,000. The District is fiscally and administratively independent of the City of Saratoga Springs. It is located 35 miles north of Albany, in the foothills of the Adirondack Mountains. Saratoga Springs is a commercial and industrial center for the surrounding area. A number of manufacturing facilities producing textiles, electronics and machinery and the Metal Container Division of Ball Corporation, are located here. In addition to these and other industries, Saratoga Springs offers complete retail trading and banking. Residents find employment locally or commute to State offices and private enterprises nearby in Albany (the State Capital), Troy, Schenectady and other locations in the Capital District. 6

12 Saratoga Springs is also well known for its cultural and recreational facilities. It is the site of the Saratoga Spa with its natural mineral springs, the Saratoga Performing Arts Center, Saratoga Racetrack, Saratoga Raceway, the Saratoga National Historic Park, and the National Museum of Racing. Higher education is available at Skidmore College, located in Saratoga Springs, and nearby at Rennselaer Polytechnic Institute in Troy, the State University in Albany and Union College in Schenectady, among others. Rail transportation is provided by the Delaware and Hudson Railroad. Air passenger service is available at the Albany County Airport. Interstate Route 87 (the Northway) extends south to the New York State Thruway and north to the Canadian border. Form of School Government The Board of Education, which is the policy-making body of the District, consists of nine members with overlapping three-year terms so that an equal number is elected to the Board each year. The President and the Vice President are selected by the Board members. The administrative officers of the District, whose duty it is to implement the policies of the Board of Education and who are appointed by the Board, include the Superintendent of Schools, the School District Clerk and the Assistant Superintendent of Business. Enrollment History The following table presents the past school enrollment for the District. School Year School Enrollment , , , , ,263 Source: District Officials. Projected Future Enrollment The following table presents the projected future school enrollment for the District. School Year School Enrollment , , , , ,705 Source: District Officials. 7

13 District Facilities The District operates nine schools and offices; statistics relating to each are shown below. Name of School Year Built Type Capacity Insured Value Lake Avenue School 1924 K $19,547,690 Caroline Street School 1956 K ,578,030 Division Street School 1956 K ,415,080 Geyser Road School 1976 K ,806,750 Greenfield School 1971 K ,709,930 Dorothy Nolan School 1971 K-5 1,019 21,293,500 Maple Avenue School ,252 62,825,250 High School , ,063,320 Transportation Facility ,883,200 Employees The District provides services through approximately 1,025 employees who are represented by the following units of organized labor, plus non-union employees not represented. Name of Union Expiration Date of Contract Approx. No. of Members Saratoga Springs Teachers Association 06/30/ Civil Service Employees Association 06/30/ Saratoga Springs School District Administrators Association 06/30/19 17 Southern Adirondack Substitute Teachers Alliance 06/30/19 Var. ECONOMIC AND DEMOGRAPHIC INFORMATION Year Population Trends City of Saratoga Springs Saratoga County New York State , ,276 17,990, , ,635 18,976, , ,069 19,541, , ,607 19,392, , ,774 19,673,174 Source: U.S. Bureau of the Census. 8

14 Income Data Income data is not available for the District as such. The smallest areas for which such statistics are available (which includes the District) is the County of Saratoga. The information set forth below with respect to such County and State is included for information purposes only. It should not be implied from the inclusion of such data in this Statement that the District is necessarily representative of the County or State or vice versa. Per Capita Money Income a City of Saratoga Springs $15,876 $26,250 $35,519 $40,673 Saratoga County 15,644 23,945 32,664 35,922 New York State 16,501 23,389 30,791 33,236 United States 14,420 21,587 26,942 28,930 Median Household Income a City of Saratoga Springs $40,638 $59,281 $61,184 $70,187 Saratoga County 41,936 58,213 65,100 71,496 New York State 39,741 51,691 55,603 59,269 United States 35,225 50,046 51,914 53,889 Source: United States Bureau of the Census a. Note: Based on American Community Survey 5-Year Estimate ( ) Selected Listing of Larger Employers in the District (As of 2015) Name of Employer Nature of Business Employees Saratoga Springs City School District Public School 988 QuadGraphics Manufacturing 825 Saratoga Hospital Healthcare 823 Skidmore College Higher Education 713 Wesley Health Care Healthcare 356 New Country Motor Car Group Retail 350 Four Winds - Saratoga Healthcare 315 City of Saratoga Springs Municipality 311 Ball Corporation Manufacturing 230 Espey Manufacturing & Electronics Co. Manufacturing 200 9

15 Unemployment Rate Statistics Unemployment statistics are not available for the District as such. The smallest areas for which such statistics are available (which includes the District) is the County of Saratoga. The information set forth below with respect to such County and State is included for information purposes only. It should not be implied from the inclusion of such data in this Statement that the District is necessarily representative of the County or State or vice versa. Annual Averages: Saratoga County (%) Albany Schenectady- Troy (SMSA) (%) New York State (%) (9 Month Average) Source: Department of Labor, State of New York INDEBTEDNESS OF THE DISTRICT Constitutional and Statutory Requirements The New York State Constitution and Local Finance Law limit the power of the District (and other municipalities and school districts of the State) to issue obligations and to contract indebtedness. Such constitutional and statutory limitations include the following, in summary form, and are generally applicable to the District and the Bonds: Purpose and Pledge. The District shall not give or loan any money or property to or in aid of any individual, or private corporation or private undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation. The District may contract indebtedness only for a District purpose and shall pledge its faith and credit for the payment of principal of and interest thereon. Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the date such indebtedness shall have been contracted and ending no later than the period of probable usefulness of the object or purpose determined by statute or the weighted average maturity thereof; no installment may be more than fifty per centum in excess of the smallest prior installment, unless the District has authorized the issuance of indebtedness having substantially level or declining annual debt service. The District is required to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts required in such year for amortization and redemption of its serial bonds, bond anticipation notes and capital notes. General. The District is further subject to constitutional limitation by the general constitutionally imposed duty on the State Legislature to restrict the power of taxation and contracting indebtedness to prevent abuses in the exercise of such power; however, the State Legislature is prohibited by a specific constitutional provision from restricting the power of the District to levy taxes on real estate for the payment of interest on or principal of indebtedness theretofore contracted. There is no constitutional limitation on the amount that may be raised by the District by tax on real estate in any fiscal year to pay principal of and interest on all indebtedness. However, the Tax Levy Limit Law imposes a statutory limitation on the power of the District to increase its annual tax levy. (See The Tax Levy Limit Law herein). Statutory Procedure In general, the State Legislature has, by the enactment of the Local Finance Law, authorized the powers and procedure for the District to borrow and incur indebtedness subject, of course, to the constitutional provisions set forth above. The power to spend money, however, generally derives from other law, including the Education Law. 10

16 The District is generally required by such laws to submit propositions for the expenditure of money for capital purposes to the qualified electors of the District. Upon approval thereby, the Board of Education may adopt a bond resolution authorizing the issuance of bonds and notes in anticipation of the bonds. With respect to certain school building construction projects, the District is not permitted to spend in excess of $100,000 until the plans and specifications for such project have been approved by the Commissioner of Education of the State. The Local Finance Law also provides a twenty-day statute of limitations after publication of a bond resolution, together with a statutory form of notice which, in effect, estops legal challenges to the validity of obligations authorized by such bond resolution except for alleged constitutional violations. The District has complied with such procedure with respect to the Bonds. The Board of Education, as the finance board of the District, also has the power to authorize the sale and issuance of bonds and notes, including the Bonds. However, such finance board may delegate the power to sell the Bonds to the President of the Board of Education, the chief fiscal officer of the District, pursuant to the Local Finance Law. Debt Limit. Pursuant to the Local Finance Law, the District has the power to contract indebtedness for any school district purpose authorized by the Legislature of the State of New York provided the aggregate principal amount thereof shall not exceed five per centum of the average full valuation of the taxable real estate of the District and subject to certain enumerated deductions such as State aid for building purposes. The constitutional and statutory method for determining full valuation is by taking the assessed valuation of taxable real estate for the last completed assessment roll and applying thereto the ratio (equalization rate) which such assessed valuation bears to the full valuation; such ratio is determined by the State Board of Real Property Services. The Legislature also is required to prescribe the manner by which such ratio shall be determined by such authority. The following table sets forth the computation of the debt limit of the District and its debt contracting margin: 11

17 Computation of Debt Limit and Debt Contracting Margin (As of November 21, 2017) Fiscal Year Ending June 30: Full Valuation $6,168,265, ,216,202, ,379,330, ,538,415, ,771,043,558 Total Five Year Full Valuation $32,073,257,827 Average Five Year Full Valuation 6,414,651,565 Debt Limit - 5% of Full Valuation 320,732,578 Inclusions: b Outstanding Bonds $29,580,000 Refunded Bonds 2,925,000 Total Indebtedness $32,505,000 Exclusions (Appropriations) c 6,365,000 Total Net Indebtedness Before Issuing the Bonds 26,140,000 The Bonds 2,080,000 Less: Bond Anticipation Notes Being Redeemed 0 Net Effect of the Bonds 2,080,000 Total Net Indebtedness After Issuing the Bonds 28,220,000 Net Debt Contracting Margin $292,512,578 Per Cent of Debt Contracting Margin Exhausted (%) 8.80% a. The latest completed assessment roll for which a State Equalization Rate has been established. b. Tax Anticipation Notes, Energy Performance Lease and Revenue Anticipation Notes are not included in computation of the debt contracting margin of the District. 12

18 Details of Short-Term Indebtedness Outstanding As of the date of this Official Statement, the District has no short-term indebtedness outstanding. Trend of Outstanding Indebtedness As at June 30: Bonds $42,740,000 $38,205,000 $40,102,500 $33,795,000 $29,580,000 BANs Other Total $42,740,000 $38,205,000 $40,102,500 $33,795,000 $29,580,000 Debt Service Requirements - Outstanding Bonds a Fiscal Year Ending June 30: Principal Interest Total 2018 $6,930,000 $1,113,865 $8,043, ,030, ,626 7,844, ,110, ,237 7,631, ,720, ,388 1,937, ,755, ,112 1,927, ,335, ,988 1,464, ,000 91, , ,000 73, , ,000 62, , ,000 51, , ,000 38, , ,000 26, , ,000 13, ,300 Totals $29,580,000 $3,326,041 $32,906,041 a. Does not include payments made to date. Building Aid Estimate While a City School District may not deduct State building aid in determining its net indebtedness, the District does receive such aid. The District estimates it will receive building aid in the approximate amount shown below. When such building aid is applied, total net indebtedness would be revised as follows: a. Represents 7.62% of the Debt Limit of $342,850,752. Total Capital Project Indebtedness $29,580,000 Less: Estimated Building Aid 6,365,000 Total Net Indebtedness After Building Aid a $23,215,000 13

19 Authorized and Unissued Debt The District has authorized but unissued indebtedness outstanding in the amount of $1,009,250 for the construction of improvements to the transportation facility and $1,130,877 for the purchase of buses. The Bonds will finance a portion of such amounts. Overlapping Units Calculation of Estimated Overlapping and Underlying Indebtedness Date of Report Percentage Applicable (%) Applicable Total Indebtedness Applicable Net Indebtedness County of Saratoga 06/22/ $15,633,294 $14,510,721 City of Saratoga Springs 06/22/ ,428,242 36,350,747 Town of Greenfield 12/31/ Town of Malta 12/31/ ,544 5,544 Town of Milton 12/31/ Town of Saratoga 12/31/ , ,316 Town of Wilton 12/31/ Fire Districts (Est.) 12/31/2015 Var. 800, ,000 Totals $65,972,396 $51,772,328 Sources: Annual Reports of the respective units for the most recently completed fiscal year on file with the Office of the State Comptroller or more recently published Official Statements. Debt Ratios (As of November 21, 2017) Amount Per Capita a Percentage of Full Value (%) b Total Direct Debt $32,505,000 $ Net Direct Debt 26,140, Total Direct & Applicable Total Overlapping Debt 98,477,396 2, Net Direct & Applicable Net Overlapping Debt 77,912,328 1, a. The current population of the District is 39,000. b. The full valuation of taxable property is $6,587,015,044. FINANCES OF THE DISTRICT Independent Audit The financial affairs of the District are subject to periodic compliance review by the Office of the State Comptroller to ascertain whether the District has complied with the requirements of various state and federal statutes. The financial statements of the District are audited each year by an independent public accountant. The last such audit covers the fiscal year ended June 30, A copy of such report is included herein as Appendix B. 14

20 Investment Policy Pursuant to State law, including Sections 10 and 11 of the GML, the District is generally permitted to deposit moneys in banks or trust companies located and authorized to do business in the State. All such deposits, including special time deposit accounts and certificates of deposit, in excess of the amount insured under the Federal Deposit Insurance Act, are required to be secured in accordance with the provisions of and subject to the limitations of Section 10 of the GML. The District may also temporarily invest moneys in: (1) obligations of the United States of America; (2) obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America; (3) obligations of the State of New York; (4) with the approval of the New York State Comptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality, school district, or district corporation, other than those notes issued by the District, itself; (5) certificates of participation issued in connection with installment purchase agreements entered into by political subdivisions of the State pursuant to Section 109-b(10) of the GML; (6) obligations of a New York public benefit corporation which are made lawful investments for municipalities pursuant to the enabling statute of such public benefit corporation; or (7) in the case of moneys held in certain reserve funds established by the District pursuant to law, in obligations of the District. All of the foregoing investments are required to be payable or redeemable at the option of the owner within such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable in any event, at the option of the owner, within two years of the date of purchase. Unless registered or inscribed in the name of the District, such instruments and investments must be purchased through, delivered to and held in custody of a bank or trust company in the State pursuant to a written custodial agreement as provided by Section 10 of the GML. The Board of Education of the District has adopted an investment policy and such policy conforms with applicable laws of the State governing the deposit and investment of public moneys. All deposits and investments of the District are made in accordance with such policy. Fund Structure and Accounts The General Fund is the general operating fund for the District and is used to account for substantially all revenues and expenditures of the District. The District also maintains a special aid fund and school lunch fund. In addition, a capital projects fund is used to record capital facility projects, while a trust and agency fund accounts for assets received by the District in a fiduciary capacity. Basis of Accounting The district-wide and fiduciary fund financial statements are reported on the accrual basis of accounting using the economic resources measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Nonexchange transaction, in which the District gives or receives value without directly receiving or giving equal value in exchange, include real property taxes, grants and donations. On an accrual basis, revenue from real property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied and the related expenditures are incurred. The fund statements are reported on the modified accrual basis of accounting using the current financial resources measurement focus. Revenues are recognized when measurable and available. The District considers all revenue reported in the governmental funds to be available if the revenues are collected within 180 days after the end of the fiscal year, except for real property taxes, which are considered to be available if they are collected within 60 days after the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Source: Audited Financials of the District. 15

21 Budget Process The District s fiscal year begins on July 1 and ends on June 30. Starting in the fall or winter of each year, the District s financial plan and enrollment projection are reviewed and updated and the first draft of the next year s proposed budget is developed by the central office staff. During the winter and early spring, the budget is developed and refined in conjunction with the school building principals and department supervisors. The District s budget is subject to the provisions of the Tax Levy Limit Law, which imposes a limitation on the amount of real property taxes that a school district, including the District, may levy, and by law is submitted to voter referendum on the third Tuesday of May each year. (See The Levy Limit Law herein). On May 16, 2017, the District s budget for the fiscal year was approved by a majority of the voters of the District voting thereon. Summaries of the District s Adopted Budgets for the fiscal years and may be found in Appendix A, herein. Revenues The District receives most of its revenue from a real property tax on all non-exempt real property situated within the District and State aid. A summary of such revenues for the five most recently completed fiscal years may be found in Appendix A. Real Property Taxes State Aid See "Tax Information" herein. The District receives appropriations from the State of State aid for operating, building and other purposes at various times throughout its fiscal year, pursuant to formulas and payment schedules set forth by statute. While the State has a constitutional duty to maintain and support a system of free common schools that provides a sound basic education to children of the State, there can be no assurance that the State appropriation for State aid to school districts will be continued in future years, either pursuant to existing formulas or in any form whatsoever. State aid appropriated and apportioned to the school districts can be paid only if the State has such monies available for such payment. The following table sets forth General Fund revenues and State aid revenues during the last five fiscal years and the amounts budgeted for the fiscal year ending June 30, Fiscal Year Ending June 30: General Fund Total Revenue State Aid State Aid To Revenues (%) 2013 $102,877,997 $27,918, ,334,276 28,271, ,384,952 29,090, ,506,586 31,054, ,129,341 33,061, (Budgeted) a 122,712,342 34,258, a. Budgeted Revenues include the application of reserves and fund balances. In addition to the amount of State Aid budgeted annually by the District, the State makes payments of STAR aid representing tax savings provided by school districts to their taxpayers under the STAR Program (See STAR School Tax Exemption herein). The District has received timely STAR aid from the State for the current fiscal year. 16

22 There can be no assurance that the State appropriation for State aid to school districts will be continued in future years, either pursuant to existing formulas or in any form whatsoever. State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefore. The availability of such monies and the timeliness of such payment could be affected by a delay in the adoption of the State budget or other circumstances including State fiscal stress. In any event, State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefore. Potential reductions in Federal aid received by the State. The State receives a substantial amount of Federal aid for education. Many of the policies that drive this Federal aid are subject to change under the current presidential administration and Congress. However, the State s current financial projections concerning Federal aid, and the assumptions on which they are based, are subject to revision as more information becomes available about the proposals for Federal tax policy and legislation, health care, including amendments to the Affordable Care Act, infrastructure, taxation, the Budget Control Act of 2011 (as amended), Federal regulatory reform, and other issues that may arise. Reductions in Federal funding levels could have a materially adverse impact on the State budget. In addition to the potential fiscal impact of policies that may be proposed and adopted by the new administration and Congress, the State budget may be adversely affected by other actions taken by the Federal government, including audits, disallowances, and changes to Federal participation rates or other medicaid rules. There can be no assurance that the State s financial position will not change materially and adversely from current projections. If this were to occur, the State would be required to take additional gap-closing actions. Such actions may include, but are not limited to: reductions in State agency operations; delays or reductions in payments to local governments or other recipients of State aid including school districts in the State. Reductions in the payment of State aid could adversely affect the financial condition of school districts in the State. Should the District fail to receive State aid expected from the State in the amounts and at the times expected, occasioned by a delay in the payment of such monies or by a mid-year reduction in State aid, the District is authorized by the Local Finance Law to provide operating funds by borrowing in anticipation of the receipt of uncollected State aid. Litigation regarding apportionment of State aid. In January 2001, the State Supreme Court issued a decision in Campaign for Fiscal Equity ( CFE ) v. State of New York mandating that the system of apportionment of State aid to school districts within the State be restructured by the Governor and the State Legislature. On June 25, 2002, the Appellate Division of the State Supreme Court reversed that decision. On June 26, 2003, the State Court of Appeals, the highest court in the State, reversed the Appellate Division, holding that the State must, by July 30, 2004, ascertain the actual cost of providing a sound basic education, enact reforms to the system of school funding and ensure a system of accountability for such reforms. The Court of Appeals further modified the decision of the Appellate Division by deciding against a Statewide remedy and instead limited its ruling solely to the New York City school system. After further litigation in 2006, the Court of Appeals held that $1.93 billion of additional funds for the New York City schools - as initially proposed by the Governor and presented to the State Legislature as an amount sufficient to provide a sound basic education - was reasonably determined. State legislative reforms enacted in the wake of the decision in Campaign for Fiscal Equity ( CFE ) v. State of New York, included increased accountability for expenditure of State funds and collapsing over 30 categories of school aid into one classroom operating formula referred to as foundation aid. Foundation aid prioritizes funding distribution based upon student need. Litigation is continuing however as a statewide lawsuit entitled NYSER v. State of New York has been filed recently on behalf of the State s public school students and is scheduled to be heard on appeal on May 30, The lawsuit asserts that the State has failed to comply with the decision of the New York State Court of Appeals in CFE v. State of New York. The complaint asks the court for an order requiring the State to immediately discontinue the cap on State aid increases and the supermajority requirements regarding increases in local property tax levies. The complaint also asks the court to order the State to develop a new methodology for determining the actual costs of providing all students the opportunity for a sound basic education, revise the State funding formulas to ensure that all schools receive sufficient resources, and ensure a system of accountability that measures whether every school has sufficient resources and that all students are, in fact, receiving the opportunity to obtain a sound basic education. It is not possible to predict the outcome of this litigation. 17

23 Recent Events Affecting State Aid to New York School Districts State aid to school districts in the State has declined in some recent years. School district fiscal year ( ): Total State aid for the fiscal year was maintained at the levels in part due to the use of Federal aid made available as part of the American Reinvestment and Recovery Act of 2009 ( ARRA ). During said fiscal year, the District s receipt of State aid was delayed as a result of several initiatives adopted by then Governor Paterson in response to the State s ongoing and worsening fiscal crisis. Despite such delays, the District did receive all of the State aid due to it for the fiscal year ended June 30, School district fiscal year ( ): The total reduction in State aid for the fiscal year was approximately $2.1 billion; however, this amount was partially offset by $726,000,000 in Federal aid for education, including funding from ARRA and other federal initiatives. As a result, the net State aid reduction totaled approximately $1.4 billion. School district fiscal year ( ): The total reduction in State aid for the fiscal year was $1.3 billion or 6.1 percent from the previous year, and all aid was received on time. School district fiscal year ( ): The State Legislature adopted the State budget on March 30, The budget included an increase of $751 million in State aid for school districts. School district fiscal year ( ): The State Legislature adopted the State budget on March 29, The budget included an increase of $936.6 million in State aid for school districts. School district fiscal year ( ): The State Legislature adopted the State budget on March 31, The Enacted State Budget included a $1.1 billion or 5.3% increase in State aid to school districts for the school year. High-need school districts received 70% of the state aid increase. The Enacted State Budget restored $602 million of Gap Elimination Adjustment reductions that had been imposed on school districts from to The Enacted State Budget invests $1.5 billion over five years to support the phase-in of a statewide universal full-day pre-kindergarten program. School district fiscal year ( ): The State Legislature adopted the State budget on March 31, Said budget included an increase of $1.4 billion in State aid for school districts, that was tied to changes in the teacher evaluation and tenure process. School districts must obtain approval of their revised teacher evaluation plans by November 15, 2015 in order to receive their allotted increase in State aid. School district fiscal year ( ): The Enacted State Budget included a school aid increase of $991 million over , $863 million of which consisted of traditional operating aid. In addition to full-funding of expense based aids ($408 million), the Enacted State Budget included a $266 million increase in Foundation Aid and an $189 million restoration to the Gap Elimination Adjustment (the GEA ). The majority of the remaining increase ($100 million) related to Community Schools Aid, a newly adopted aid category, to support school districts that wish to create community schools. Such funds may only be used for certain purposes such as providing health, mental health and nutritional services to students and their families. School district fiscal year ( ): The Enacted State Budget provides for school aid of approximately $25.8 billion, an increase of $1.1 billion in school aid spending from the school year. The majority of the increases have been targeted to high need school districts. Expense-based aids to support school construction, pupil transportation, BOCES and special education were continued in full, as is the State s usual practice. Transportation aid increased by 5.5% and building aid increased by 4.8%. The Enacted State Budget continues to link school aid increases for and to teacher and principal evaluation plans approved by September 1 of the current year in compliance with Education Law Section 3012-d. In addition, the Enacted State Budget allows the Governor to reduce aid to school districts mid-year if receipts from the Federal government are less than what was expected. If federal support is reduced by $850 million or more, the New York State Director of the Budget will develop a plan to make uniform spending reductions by the State. Such plan would take effect automatically unless the State Legislature passes its own plan within 90 days. 18

24 The State provides annual State aid to school districts in the State, including the District, on the basis of various formulas. Due to the State s own budgetary crisis in 2009 and to assist the State in mitigating the impacts of its own revenue shortfall, the State reduced the allocation of State aid to school districts as part of a program known as the Gap Elimination Adjustment ( GEA ). The GEA was a negative number (funds that were deducted from the State aid originally due to the District under existing State aid formulas). The District s State aid was reduced as a result of the GEA program starting in In the fiscal year, the State began to decrease the amount of the GEA deduction. The Enacted State Budget included a further reduction of the GEA. The Enacted State Budget included the elimination of the remaining balance of the GEA. Further information may be obtained at the official website of the New York State Divisions of Budget and the New York State Education Department. The Smart Schools Bond Act was passed as part of the Enacted State Budget. The Smart Schools Bond Act authorizes the issuance of $2 billion of general obligation bonds to financed improved educational technology and infrastructure to improve learning and opportunity for students throughout the State. The District's estimated allocation of funds is $2.7 million. The District cannot predict at this time whether there will be any reductions in and/or delays in the receipt of State aid during the remainder of the current fiscal year and during the District s fiscal year. The District believes that it would mitigate the impact of any delays or the reduction in State aid by reducing expenditures, increasing revenues, appropriating other available funds on hand, and/or by any combination of the foregoing. (See also MARKET MATTERS AFFECTING FINANCINGS OF THE MUNICIPALITIES OF THE STATE ). Expenditures The major categories of expenditure for the District are General Support, Instruction, Employee Benefits, Pupil Transportation and Debt Service. A summary of the expenditures for the five most recently completed fiscal years may be found in Appendix A. The State Comptroller s Fiscal Stress Monitoring System and OSC Compliance Reviews The New York State Comptroller has reported that New York State s school districts and municipalities are facing significant fiscal challenges. As a result, the Office of the State Comptroller has developed a Fiscal Stress Monitoring System ( FSMS ) to provide independent, objectively measured and quantifiable information to school districts and municipal officials, taxpayers and policy makers regarding the various levels of fiscal stress under which the State s school districts and municipalities are operating. The fiscal stress scores are based on financial information submitted as part of each school ST-3 report filed with the State Education Department annually, and each municipality s annual report filed with the Office of the State Comptroller (OSC). Using financial indicators that include year-end fund balance, cash position and patterns of operating deficits, the system creates an overall fiscal stress score which classifies whether a school district or municipality is in significant fiscal stress, in moderate fiscal stress, as susceptible to fiscal stress or no designation. Entities that do not accumulate the number of points that would place them in a stress category will receive a financial score but will be classified in a category of no designation. This classification should not be interpreted to imply that the entity is completely free of fiscal stress conditions. Rather, the entity s financial information, when objectively scored according to the FSMS criteria, did not generate sufficient points to place them in one of the three established stress categories. The most current applicable report of OSC designates the District as No Designation (Fiscal Score: 6.7%). More information on the FSMS may be obtained from the Office of the State Comptroller. In addition, OSC helps local government officials manage government resources efficiently and effectively. The Comptroller oversees the fiscal affairs of local governments statewide, as well as compliance with relevant statutes and observance of good business practices. This fiscal oversight is accomplished, in part, through its audits, which identify opportunities for improving operations and governance. The most recent audit performed was released June, The purpose of such audit was to assess the District s fund balance for the period July 1, 2012 through June 30, The complete report, together with the District s response, may be found on the OSC s official website. Reference to this website implies no warranty of accuracy of information therein. 19

25 Employee Pension System New York State Certified employees (teachers and administrators) are members of the New York State Teachers Retirement System ( TRS ). Employer pension payments to the TRS are generally deducted from State aid payments. All non-nys certified/civil service employees of the District eligible for pension or retirement benefits under the Retirement and Social Security Law of the State of New York are members of the New York State and Local Employee's Retirement System ( ERS ). Both the TRS and ERS are non-contributory with respect to members hired prior to July 1, Other than as discussed below, all members of the respective systems hired on or after July 1, 1976 with less than 10 year s full-time service contribute 3% of their gross annual salary toward the cost of retirement programs. On December 10, 2009, the Governor signed in to law a new Tier 5. The law is effective for new ERS and TRS employees hired after January 1, 2010 and before March 31, New ERS employees will now contribute 3% of their salaries and new TRS employees will contribute 3.5% of their salaries. There is no provision for these employee contributions to cease after a certain period of service. On March 16, 2012, Governor Cuomo signed into law Chapter 18 of the Laws of 2012, which legislation provides for a new Tier 6 for employees hired after April 1, The new pension tier has progressive employee contribution rates between 3% and 6% and such employee contributions continue so long as the employee continues to accumulate pension credits; it increases the retirement age for new employees from 62 to 63 and includes provisions allowing early retirement with penalties. Under Tier 6, the pension multiplier will be 1.75% for the first 20 years of service and 2% thereafter; vesting will occur after 10 years; the time period for calculation of final average salary is increased from three years to five years; and the amount of overtime to be used to determine an employee s pension is capped at $15,000, indexed for inflation, for civilian and non-uniform employees and at 15% of base pay for uniformed employees outside of New York City. It also includes a voluntary, portable, defined contribution plan option for new non-union employees with salaries of $75,000 or more. Under current law, the employer pension payments for a given fiscal year are based on the value of the pension fund on the prior April 1 thus enabling the District to more accurately include the cost of the employer pension payment in its budget for the ensuing year. In addition, the District is required to make a minimum contribution of 4.5% of payroll every year, including years in which the investment performance of the fund would make a lower payment possible. The annual employer pension payment is due on February 1 of each year. Due to poor performance of the investment portfolio of TRS and ERS during the recent financial crisis, the employer contribution rates for required pension payments to the TRS and ERS increased substantially. To help mitigate the impact of such increases, legislation was enacted that permitted school districts to amortize a portion of its annual employer pension payment to the ERS only. Under such legislation, school districts that choose to amortize were required to set aside and reserve funds with the ERS for certain future rate increases. The District has not amortized any of its employer pension payments pursuant to this legislation and expects to continue to pay all payments in full when due. In addition, in Spring 2013, the State and TRS approved a Stable Contribution Option ( SCO ) that gives school districts the ability to better manage the spikes in Actuarially Required Contribution rates ( ARCs ). ERS followed suit and modified its existing ERS SCO. Each plan allows school districts to pay the SCO amount in lieu of the ARC amount, which is higher, and defer the difference in payment amounts. The TRS SCO deferral plan is available to school districts for up to 7 years. Under the TRS SCO plan, payment of the deferred amount will commence in year six of the program ( ) and continue for five years. School districts can elect to no longer participate in the plan at any time, resume paying the ARC and begin repayment of deferred amounts over five years. Under the ERS SCO, payment of deferred amounts begins the year immediately following the deferral and the repayment period is 12 years. Once made, the election to participate in the ERS SCO is permanent. However, the school districts can choose not to defer payment in any given year. In both plans, interest on the deferred amounts is based on the yield of 10-year U.S. Treasury securities plus 1%. The District has not amortized any of its employer pension payments as part of the SCO and expects to continue to pay all payments in full when due. The primary purpose of participation in the SCO plans is the elimination of the uncertainty in the volatility of future pension contribution ARCs in the near term, thereby providing school districts with assistance in its ability to create a projection. However, although the SCO plan will reduce payments in the near term, it may result in much higher payments in the future. As such, the District does not intend to amortize any payments to the Retirement System in the foreseeable future. 20

26 The following chart represents the TRS and ERS required contributions for each of the last five completed fiscal years and budgeted amount for fiscal year Source: Audited Financial Statements. Fiscal Year Ending June 30: TRS ERS 2013 $4,743,109 $2,246, ,504,930 2,320, ,800,800 1,919, ,375,034 1,980, ,901,101 1,683, (Budgeted) 4,571,534 2,204,537 Other Post Employment Benefits The District provides post-retirement healthcare benefits to various categories of former employees. These costs may be expected to rise substantially in the future. School Districts and Boards of Cooperative Education Services, unlike other municipal units of government in the State, have been prohibited from reducing retiree health benefits or increasing health care contributions received or paid by retirees below the level of benefits or contributions afforded to or required from active employees. This protection from unilateral reduction of benefits had been extended annually by the New York State Legislature until recently when legislation was enacted to make permanent these health insurance benefit protections for retirees. Legislative attempts to provide similar protection to retirees of other local units of government in the State have not succeeded as of the date hereof. Nevertheless, many such retirees of all varieties of municipal units in the State do presently receive such benefits. GASB Statement No. 45 ( GASB 45 ) of the Governmental Accounting Standards Board ( GASB ), requires state and local governments to account for and report their costs associated with post-retirement healthcare benefits and other non-pension benefits ( OPEB ). GASB 45 generally requires that employers account for and report the annual cost of the OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner as they currently do for pensions. Under previous rules, these benefits have generally been administered on a pay-as-you-go basis and have not been reported as a liability on governmental financial statements. Only current payments to existing retirees were recorded as an expense. GASB 45 requires that state and local governments adopt the actuarial methodologies to determine annual OPEB costs. Annual OPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. Under GASB 45, based on actuarial valuation, an annual required contribution ( ARC ) will be determined for each state or local government. The ARC is the sum of (a) the normal cost for the year (the present value of future benefits being earned by current employees) plus (b) amortization of the unfunded accrued liability (benefits already earned by current and former employees but not yet provided for), using an amortization period of not more than 30 years. If a municipality contributes an amount less than the ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial statements. GASB 45 does not require that the unfunded liabilities actually be funded, only that the District account for its unfunded accrued liability and compliance in meeting its ARC. Actuarial valuation will be required every two years for the District. 21

27 The following table shows the components of the District annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District net OPEB obligation to the plan: Annual OPEB Cost and Net OPEB Obligation Fiscal Year Ending June 30: Annual required contribution (ARC) $16,086,144 Interest on net OPEB obligation 1,402,443 Less: Adjustments to ARC (2,932,245) Annual OPEB cost (expense) 14,556,342 Less: Contributions made (7,636,360) Increase in net OPEB obligation 6,919,982 Net OPEB obligation-beginning of year 49,208,529 Net OPEB obligation-end of year $56,128,511 The District s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended June 30, 2017 and the two preceding years are as follows: Year Ended Annual OPEB Cost Percent of Annual OPEB Cost Contributed (%) Net OPEB Obligation June 30, 2017 $14,556, $56,128,511 June 30, ,665, ,208,529 June 30, ,309, ,971,656 Should the District be required to fund its unfunded actuarial accrued OPEB liability, it could have a material adverse impact upon the District s finances and could force the District to reduce services, raise taxes or both. At the present time, however, there is no current or planned requirement for the District to partially fund its actuarial accrued OPEB liability. At this time, New York State has not developed guidelines for the creation and use of irrevocable trusts for the funding of OPEB. As a result, the District has decided to continue funding the expenditure on a pay-as-you-go basis. TAX INFORMATION Real Property Taxes The District derives its power to levy an ad valorem real property tax from the State Constitution; methods and procedures to levy, collect and enforce this tax are governed by the Real Property Tax Law. Real property assessment rolls used by the District are prepared by the Towns. Assessment valuations are determined by the Town assessors and the State Board of Real Property Services which is responsible for certain utility and railroad property. In addition, the State Board of Real Property Services annually establishes State Equalization Rates for all localities in the State, which are determined by statistical sampling of market sales/assessment studies. The equalization rates are used in the calculation and distribution of certain State aids and are used by many localities in the calculation or debt contracting and real property taxing limitations. The District is not subject to constitutional real property taxing limitations. (However, See The Tax Levy Limit Law herein). 22

28 The following table sets forth the percentage of the District s General Fund revenue (excluding other financing sources) comprised of real property taxes for each of the fiscal years 2013 through 2017, and for the 2018 budget. Fiscal Year Ending June 30: Total Revenue Real Property Taxes Real Property Taxes to Revenues (%) 2013 $102,877,997 $73,145, ,334,276 76,134, ,384,952 76,493, ,506,586 78,120, ,129,341 78,671, (Budgeted) a 122,712,342 80,656, a. Budgeted revenues include the application of reserves and fund balance. Tax Collection Procedure Taxes are due and payable in two equal installments on October 4 and February 4 without penalty. Penalties are imposed at the rate of 1% per month after the installment date. After March 4, all unpaid taxes on real property within the City of Saratoga Springs are turned over to the City's tax enforcement officer and all unpaid taxes on real property in the Towns are turned over to the County Treasurer. Both such officials collect such unpaid taxes until the sale of unpaid City taxes and unpaid County taxes, respectively. At such tax sales, all unpaid school taxes are bid in by the City and County respectively and the District is paid the full amount of such unpaid taxes, including accrued interest thereon. The Tax Levy Limit Law Chapter 97 of the New York Laws of 2011, as amended, (herein referred to as the Tax Levy Limit Law or Law ) modified previous law by imposing a limit on the amount of real property taxes that a school district may levy. Prior to the enactment of the Law, there was no statutory limitation on the amount of real property taxes that a school district could levy if its budget had been approved by a simple majority of its voters. In the event the budget had been defeated by the voters, the school district was required to adopt a contingency budget. Under a contingency budget, school budget increases were limited to the lesser of four percent (4%) of the prior year s budget or one hundred twenty percent (120%) of the consumer price index ("CPI"). Under the Tax Levy Limit Law, there is now a limitation on the amount of tax levy growth from one fiscal year to the next. Such limitation is the lesser of (i) 2% or (ii) the annual percentage increase in the consumer price index, subject to certain exclusions as mentioned below and as described in the Law. A budget with a tax levy that does not exceed such limit will require approval by at least 50% of the voters. Approval by at least 60% of the voters will be required for a budget with a tax levy in excess of the limit. In the event the voters reject the budget, the tax levy for the school district s budget for the ensuing fiscal year may not exceed the amount of the tax levy for the prior fiscal year. School districts will be permitted to carry forward a certain portion of their unused tax levy limitation from a prior year. The Law permits certain significant exclusions to the tax levy limit for school districts. These include taxes to pay the local share of debt service on bonds or notes issued to finance voter approved capital expenditures such as the Bonds and the refinancing or refunding of such bonds or notes, certain pension cost increases, and other items enumerated in the Law. However, such exclusion does NOT apply to taxes to pay debt service on tax anticipation notes, revenue anticipation notes, budget notes and deficiency notes; and any obligations issued to finance deficits and certain judgments, including tax certiorari refund payments. 23

29 STAR - School Tax Exemption The STAR (School Tax Relief) program provides State-funded exemptions from school property taxes to homeowners for their primary residences. Homeowners over 65 years of age with household adjusted gross incomes, less the taxable amount of total distributions from individual retirement accounts and individual retirement annuities ( STAR Adjusted Gross Income ) of $86,000 or less, increased annually according to a cost of living adjustment, are eligible for a full value exemption of the first $65,300 for the school year (adjusted annually). Other homeowners with household STAR Adjusted Gross income not in excess of $500,000 are eligible for a $30,000 full value exemption on their primary residence. School districts receive full reimbursement from the State for real property taxes exempted pursuant to the STAR program by the first business day in January of each year. Part A of Chapter 60 of the Laws of 2016 of the State of New York ( Chapter 60 ) gradually converts the STAR program from a real property tax exemption to a personal income tax credit. Chapter 60 prohibits new STAR exemptions from being granted unless at least one of the applicants held title to the property on the taxable status date of the assessment roll that was used to levy school district taxes for the school year (generally, March 1, 2015), and the property was granted a STAR exemption on that assessment roll. However, a new homeowner may receive a new personal income tax credit in the form of a check. The dollar benefit to eligible taxpayers will not change. A taxpayer who is eligible for the new credit will receive a check from the State equal to the amount by which the STAR exemption would have reduced his or her school tax bill. A homeowner who owned his or her home on the taxable status date for the assessment roll used to levy taxes for the school year, and who received a STAR exemption on that roll, may continue to receive a STAR exemption on that home as long as he or she still owns and primarily resides in it. No further action is required (unless the homeowner has been receiving Basic STAR and wants to apply for Enhanced STAR, which is permissible). The State Enacted Budget includes changes to Chapter 60. STAR checks are now expected to be mailed out prior to the date that school taxes are payable. The amount of the check will be based on the previous year s amount adjusted by the levy growth factor used for the property tax cap. Any changes that must be made based on the final STAR credit compared to the estimate used will be factored into the subsequent year s STAR credit check or taxpayers also may account for those changes in their State income taxes. Approximately 12% of the District s school tax levy was exempted by the STAR program and the District has received full reimbursement of such exempt taxes from the State. Approximately 12% of the District s school tax levy is expected to be exempted by the STAR program and the District expects to receive full reimbursement of such exempt taxes from the State in January (See State Aid herein). Rebate Program Chapter 59 of the Laws of 2014 ( Chapter 59 ) included provisions which provided a refundable personal income tax credit to real property taxpayers in school districts in 2014 and 2015 and certain municipal units of government in 2015 and The eligibility of real property taxpayers for the tax credit in each year depended on such jurisdiction s compliance with the provisions of the Tax Levy Limitation Law. For the second taxable year of the program, the refundable personal income tax credit for real property taxpayers was additionally contingent upon adoption by the school district or municipal unit of a State approved government efficiency plan which demonstrated three-year savings and efficiencies of at least one per cent per year from shared services, cooperation agreements and/or mergers or efficiencies. Chapter 20 of the Laws of 2015 ( Chapter 20 ) introduced a new real property tax rebate program that provides state-financed tax rebate checks and credits to taxpayers who are eligible for the STAR exemption in the years For 2016, eligible taxpayers who resided outside New York City but within the Metropolitan Commuter Transportation District ( MCTD ) received $130, and eligible taxpayers who resided outside the MCTD received $185. Credits in will vary based on a taxpayer s personal income level and STAR tax savings. Similar to the Chapter 59 real property tax credit, under Chapter 20 the eligibility of real property taxpayers in each year depends on the school district s compliance with the provisions of the Tax Levy Limitation Law. Unlike Chapter 59, however, for taxpayers other than those living in one of the Big 4 cities only the compliance of the school district in which the taxpayer resides is relevant. Municipal compliance with the Tax Levy Limitation Law is only required in the case of the Big 4 cities that have fiscally dependent school districts. In such cases, the joint school/city levy must remain in compliance with the Tax Levy Limitation Law. In either scenario, the relevant jurisdiction (independent school district or joint city/school district) must certify its compliance with the provisions of Chapter 97.While the provisions of Chapter 59 did not, and the provisions of Chapter 20 do not, directly further restrict the taxing power of the affected municipalities, school districts and special districts, Chapter 59 did, and Chapter 20 does, provide an incentive for such tax levies to remain within the tax cap limits established by the Tax Levy Limitation Law. 24

30 Tax Levies, Collections and Rates Tax Levy $74,706,417 $76,189,578 $77,650,289 $78,476,892 $80,656,461 Amount Collected 74,706,417 76,189,578 77,166,362 76,749,250 N/A Amount Uncollected ,927 1,727,642 N/A Tax Rates Per $1,000 of Assessed Valuation City of Saratoga Springs $14.68 $14.99 $15.28 $15.47 $15.45 Town of Greenfield Town of Malta Town of Milton Town of Saratoga Town of Wilton Selected Listing of Large Taxable Properties Assessment Roll Name Type Assessed Valuation State of New York State Land $84,874,490 Wilton Mall LLC Shopping Center 73,164,000 Wilton Square Associates LLC Shopping Center 46,807,344 Saratoga Casino Holdings LLC Casino 35,527,600 CDP Springs, LLC (The Paddocks) Apartments 41,692,800 Niagara Mohawk dba National Grid Utility 27,641,136 Saratoga Hotel Associates Hotel 22,121,960 National Grid Utility 18,385,575 QuadGraphics Printing 18,203,800 The Shoppes of Wilton Shopping Center 19,963,100 ETON Centers Racetrack 15,702,120 Saratoga Retail Partners LLC Utility 15,124,200 THF Saratoga Dev LLP Hotel 18,500, Broadway LLC Shopping Center 14,124,000 Darley Stud Management LLC Shopping Center 12,007,300 a. Represents 6.76% of the total assessed valuation of the District for Total $463,839,425 25

31 LITIGATION In common with other school districts, the District from time to time receives notices of claim and is party to litigation. In the opinion of the District, after consultation with its attorney, unless otherwise set forth herein and apart from matters provided for by applicable insurance coverage, there are no significant claims or actions pending in which the District has not asserted a substantial and adequate defense, nor which, if determined against the District, would have an adverse material effect on the financial condition of the District. MARKET MATTERS AFFECTING FINANCINGS OF THE MUNICIPALITIES OF THE STATE The District s credit rating could be affected by circumstances beyond the District s control. Economic conditions such as the rate of unemployment and inflation, termination of commercial operations by corporate taxpayers and employers, as well as natural catastrophes, could adversely affect the assessed valuation of District property and its ability to maintain fund balances and other statistical indices commensurate with its current credit rating. As a consequence, a decline in the District s credit rating could adversely affect the market value of the Bonds. If and when an owner of any of the Bonds should elect to sell all or a part of the Bonds prior to maturity, there can be no assurance that a market will have been established, maintained and continue in existence for the purchase and sale of any of those Bonds. The market value of the Bonds is dependent upon the ability of holder to potentially incur a capital loss if such Bonds are sold prior to its maturity. There can be no assurance that adverse events including, for example, the seeking by another municipality in the State or elsewhere of remedies pursuant to the Federal Bankruptcy Act or otherwise, will not occur which might affect the market price of and the market for the Bonds. In particular, if a significant default or other financial crisis should occur in the affairs of the State or any of its municipalities, public authorities or other political subdivisions thereby possibly further impairing the acceptability of obligations issued by those entities, both the ability of the District to arrange for additional borrowing(s) as well as the market for and market value of outstanding debt obligations, including the Bonds, could be adversely affected. The District is dependent in part upon financial assistance from the State in the form of State aid as well as grants and loans to be received ( State Aid ). The District s receipt of State aid may be delayed as a result of the State s failure to adopt its budget timely and/or to appropriate State Aid to municipalities and school districts. Should the District fail to receive all or a portion of the amounts of State Aid expected to be received from the State in the amounts and at the times anticipated, occasioned by a delay in the payment of such moneys or by a reduction in State Aid or its elimination, the District is authorized pursuant to the Local Finance Law ( LFL ) to provide operating funds by borrowing in anticipation of the receipt of such uncollected State Aid, however, there can be no assurance that, in such event, the District will have market access for any such borrowing on a cost effective basis. The elimination of or any substantial reduction in State Aid would likely have a materially adverse effect upon the District requiring either a counterbalancing increase in revenues from other sources to the extent available or a curtailment of expenditures. (See also State Aid under FINANCIAL INFORMATION herein.) Future amendments to applicable statutes whether enacted by the State or the United States of America affecting the treatment of interest paid on municipal obligations, including the Bonds, for income taxation purposes could have an adverse effect on the market value of the Bonds (see TAX MATTERS herein). The enactment of the Tax Levy Limit Law, which imposes a tax levy limitation upon municipalities, school districts and fire districts in the State, including the District, without providing exclusion for debt service on obligations issued by municipalities and fire districts, may affect the market price and/or marketability for the Bonds. (See The Tax Levy Limit Law under TAX INFORMATION herein.) Federal or State legislation imposing new or increased mandatory expenditures by municipalities, school districts and fire districts in the State, including the District could impair the financial condition of such entities, including the District and the ability of such entities, including the District to pay debt service on the Bonds. 26

32 TAX MATTERS Opinion of Bond Counsel In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, under existing statutes and court decisions and assuming continuing compliance with certain tax certifications described herein, (i) interest on the Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. The Tax Certificate of the District (the Tax Certificate ), which will be delivered concurrently with the delivery of the Bonds, will contain provisions and procedures relating to compliance with applicable requirements of the Code. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the District in connection with the Bonds, and Bond Counsel has assumed compliance by the District with certain ongoing provisions and procedures set forth in the Tax Certificate relating to compliance with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the Bonds is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. Bond Counsel expresses no opinion regarding any other Federal or state tax consequences with respect to the Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update, revise or supplement its opinion after the issue date to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to its attention, or changes in law or in interpretations thereof that may hereafter occur, or for any other reason. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the Bonds, or under state and local tax law. Certain Ongoing Federal Tax Requirements and Certifications The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Bonds in order that interest on the Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause interest on the Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The District, in executing the Tax Certificate, will certify to the effect that the District will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. Certain Collateral Federal Tax Consequences The following is a brief discussion of certain collateral Federal income tax matters with respect to the Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the Bonds. Prospective owners of the Bonds should be aware that the ownership of such obligations may result in collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Interest on the Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code. 27

33 Original Issue Discount Original issue discount ( OID ) is the excess of the sum of all amounts payable at the stated maturity of a Bond (excluding certain qualified stated interest that is unconditionally payable at least annually at prescribed rates) over the issue price of that maturity. In general, the issue price of a maturity means the first price at which a substantial amount of the Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue price for each maturity of the Bonds is expected to be the initial public offering price set forth in this Official Statement. Bond Counsel further is of the opinion that, for any Bonds having OID (a Discount Bond ), OID that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is excludable from gross income for Federal income tax purposes to the same extent as other interest on the Bonds. In general, under Section 1288 of the Code, OID on a Discount Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Discount Bond. An owner s adjusted basis in a Discount Bond is increased by accrued OID for purposes of determining gain or loss on sale, exchange, or other disposition of such Discount Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or deemed to have been received for purposes of determining various other tax consequences of owning a Discount Bond even though there will not be a corresponding cash payment. Owners of Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discount for Federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and disposing of Discount Bonds. Bond Premium In general, if an owner acquires a Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Bond after the acquisition date (excluding certain qualified stated interest that is unconditionally payable at least annually at prescribed rates), that premium constitutes bond premium on that Bond (a Premium Bond ). In general, under Section 171 of the Code, an owner of a Premium Bond must amortize the note premium over the remaining term of the Premium Bond, based on the owner s yield over the remaining term of the Premium Bond determined based on constant yield principles (in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such note). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner s regular method of accounting against the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner s original acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Premium Bonds. Information Reporting and Backup Withholding Information reporting requirements apply to interest paid on tax-exempt obligations, including the Bonds. In general, such requirements are satisfied if the interest recipient completes and provides the payor with, a Form W-9, Request for Taxpayer Identification Number and Certification, or if the recipient is one of a limited class of exempt recipients. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to backup withholding, which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a payor generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient. If an owner purchasing a Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Bonds from gross income for Federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner s Federal income tax once the required information is furnished to the Internal Revenue Service. 28

34 Miscellaneous Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, could adversely affect the tax-exempt status of interest on the Bonds under Federal or state law or otherwise prevent beneficial owners of the Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation or actions (whether currently proposed, proposed in the future, or enacted) or such decisions could affect the market price or marketability of the Bonds. For example, the Tax Cuts and Jobs Act ( H.R. 1 ), which was passed by the United States House of Representatives on November 16, 2017, would, if enacted into law in its current form, include in gross income the interest on (i) any qualified private activity bond and (ii) any advance refunding bond. Such amendments would only apply to bonds issued after December 31, H.R. 1 would also impact (and generally lower) the current income tax rates for individuals and corporations. On November 21, 2017, the Senate Finance Committee released legislative text which would also prohibit the issuance of tax-exempt advance refunding bonds after December 31, 2017, but would not change the current tax treatment of qualified private activity bonds. Both the House and the Senate proposals would modify the current provisions relative to the alternative minimum tax on individuals and corporations for tax years beginning after December 31, 2017 (eliminating such tax on corporations and suspending it temporarily in respect of individuals). The future of the tax reform legislative efforts is uncertain at this time. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the Bonds will be subject to the final approving opinion of Hawkins Delafield & Wood LLP, Bond Counsel, substantially as set forth in Appendix C hereto. DISCLOSURE UNDERTAKING In order to assist the purchasers of the Bonds in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended ( Rule 15c2-12 ), the District will execute an Undertaking to Provide Continuing Disclosure, substantially in the form of which is attached hereto as Appendix D. Prior Compliance History On October 4, 2013, the District filed a material event notice regarding the status of the ratings of the bond insurers on various bonds issued by the District. Since the fall of 2008, there have been in excess of 25 rating actions on bond insurers reported by Moody s, Standard & Poor s and Fitch. Due to widespread knowledge of the downgrades to such bond insurers, material event notices were not filed pursuant to every rating action. On July 19, 2016, the District filed a material event notice indicating that annual information and audited financial statements for fiscal years ending June 30, 2011 and June 30, 2012 were each filed with EMMA more than 180 days following the end of each respective fiscal year; but in no event later than 183 days following the end of each respective year. RATING The District has applied to S&P Global Ratings ( S&P ) for a rating on the Bonds and such rating is pending at this time. This rating reflects only the view of such rating agency and an explanation of the significance of such rating should be obtained from S&P s, 55 Water Street, New York, NY 10041, Telephone: (877) and Fax: (212) Generally, a rating agency bases its ratings on the information and materials furnished to it and on investigation, studies and assumptions by the rating agency. There is no assurance that a particular rating will apply for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. Any downward revision or withdrawal of such ratings could have an adverse affect on the market price of the Bonds or the availability of a secondary market for such Bonds. 29

35 MUNICIPAL ADVISOR Munistat Services, Inc. (the Municipal Advisor ), is a Municipal Advisor, registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. The Municipal Advisor serves as independent municipal advisor to the District on matters relating to debt management. The Municipal Advisor is a municipal advisory and consulting organization and is not engaged in the business of underwriting, marketing, or trading municipal securities or any other negotiated instruments. The Municipal Advisor has provided advice as to the plan of financing and the structuring of the Bonds and has reviewed and commented on certain legal documents, including this Official Statement. The advice on the plan of financing and the structuring of the Bonds was based on materials provided by the District and other sources of information believed to be reliable. The Municipal Advisor has not audited, authenticated, or otherwise verified the information provided by the District or the information set forth in this Official Statement or any other information available to the District with respect to the appropriateness, accuracy, or completeness of disclosure of such information and no guarantee, warranty, or other representation is made by the Municipal Advisor respecting the accuracy and completeness of or any other matter related to such information and this Official Statement. ADDITIONAL INFORMATION Additional information may be obtained from the office of Tim Hilker, Assistant Superintendent for Business, Enlarged City School District of the City of Saratoga Springs, 3 Blue Streak Blvd., Saratoga Springs, New York 12866, telephone number 518/ , t_hilker@saratogaschools.org or from Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York 11776, telephone number 631/ and website: Munistat Services, Inc. may place a copy of this Official Statement on its website at Unless this Official Statement specifically indicates otherwise, no statement on such website is included by specific reference or constitutes a part of this Official Statement. Munistat Services, Inc. has prepared such website information for convenience, but no decisions should be made in reliance upon that information. Typographical or other errors may have occurred in converting original source documents to digital format, and neither the District nor Munistat Services, Inc. assumes any liability or responsibility for errors or omissions on such website. Further, Munistat Services, Inc. and the District disclaim any duty or obligation either to update or to maintain that information or any responsibility or liability for any damages caused by viruses in the electronic files on the website. Munistat Services, Inc. and the District also assume no liability or responsibility for any errors or omissions, unauthorized editing, or for any updates to dated website information. Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be, in fact, realized. This Official Statement is not to be construed as a contract or agreement between the District and the original purchasers or owners of any of the Bonds. The preparation and distribution of this Official Statement has been authorized by the refunding bond resolution of the District which delegates to the President of the Board of Education the power to sell and issue the Bonds. By: s/s JOANNE KIERAN President of the Board of Education Enlarged City School District of the City of Saratoga Springs Saratoga Springs, New York December,

36 APPENDIX A FINANCIAL INFORMATION

37 Assessed and Full Valuations Based on Special Equalization Ratios Special Assessed Equalization Full Valuations Ratios Valuations Fiscal Year Ending June 30, 2013 City of Saratoga Springs $ 3,130,849, % $ 3,818,109,405 Town of: Greenfield 689,677, % 663,151,454 Malta 6,484, % 6,484,358 Milton 222,186, % 233,880,328 Saratoga 28,114, % 28,114,194 Wilton 1,418,526, % 1,418,526,092 Total $ 5,495,838,180 $ 6,168,265,831 Fiscal Year Ending June 30, 2014 City of Saratoga Springs $ 3,151,284, % $ 3,843,030,068 Town of: Greenfield 695,631, % 675,370,571 Malta 7,201, % 7,201,808 Milton 224,330, % 236,137,097 Saratoga 28,246, % 28,246,981 Wilton 1,426,215, % 1,426,215,654 Total $ 5,532,911,029 $ 6,216,202,179 Fiscal Year Ending June 30, 2015 City of Saratoga Springs $ 3,168,929, % $ 3,961,161,990 Town of: Greenfield 700,387, % 700,387,263 Malta 7,227, % 7,227,406 Milton 226,259, % 240,062,644 Saratoga 28,245, % 28,245,353 Wilton 1,442,245, % 1,442,245,907 Total $ 5,573,294,563 $ 6,379,330,563 Fiscal Year Ending June 30, 2016 City of Saratoga Springs $ 3,196,060, % $ 4,097,513,203 Town of: Greenfield 710,355, % 710,355,133 Malta 8,386, % 8,386,340 Milton 230,437, % 235,139,891 Saratoga 29,735, % 29,735,659 Wilton 1,457,285, % 1,457,285,470 Total $ 5,632,259,993 $ 6,538,415,696 Fiscal Year Ending June 30, 2017 City of Saratoga Springs $ 3,216,498, % $ 4,288,664,836 Town of: Greenfield 715,880, % 715,880,894 Malta 8,410, % 8,410,106 Milton 235,027, % 244,820,181 Saratoga 29,797, % 29,797,543 Wilton 1,483,469, % 1,483,469,998 Total $ 5,689,084,542 $ 6,771,043,558 A-1 Saratoga Springs City School District

38 Saratoga Springs City School District A-2 Statement of Revenues, Expenditures and Fund Balances General Fund Revenues: Real Property Taxes $ 73,145,792 $ 76,134,965 $ 76,493,651 $ 78,120,303 $ 78,671,289 Charges for Services 358, , , , ,752 Use of Money and Property 140, , , , ,578 Sale of Property & Comp for Loss 6,122 10,554 23,951 32,095 36,301 Miscellaneous 569, , ,419 1,695,465 1,026,987 State Sources 27,918,672 28,271,288 29,090,560 31,054,763 33,061,000 Federal Sources 739, , , , ,434 Total Revenues 102,877, ,334, ,384, ,506, ,129,341 Expenditures: General Support 10,017,108 9,846,741 10,940,476 11,027,560 11,018,008 Instruction 51,507,922 51,798,761 54,171,191 57,059,148 59,601,012 Pupil Transportation 3,976,480 4,268,672 4,290,008 4,275,915 4,770,166 Community Services 116, ,666 11, , ,426 Employee Benefits 28,065,344 30,819,442 31,486,148 30,108,005 30,498,454 Debt Service 7,116,771 7,230,095 7,264,574 7,895,315 7,710,397 Total Expenditures 100,800, ,103, ,163, ,591, ,768,463 Excess (Deficiency) of Revenues Over Expenditures 2,077,603 2,230,899 (778,807) 1,914, ,878 Other Financing Sources and Uses Interfund Transfers (985,803) (1,246,867) (2,292,872) (334,415) (312,251) Total Other Sources (Uses) (985,803) (1,246,867) (2,292,872) (334,415) (312,251) Excess (Deficiency) of Revenues & Other Sources Over Expenditures & Other (Uses) 1,091, ,032 (3,071,679) 1,580,354 48,627 Fund Equity, Begining of Year 44,102,986 46,275,602 48,917,484 45,845,805 47,426,159 Prior Period Adjustments Fund Equity, Beginning of Year Restated 44,102,986 46,275,602 48,917,484 45,845,805 47,426,159 Residual Equity Transfers 1,080,816 1,657, Balance End of Year $ 46,275,602 $ 48,917,484 $ 45,845,805 $ 47,426,159 $ 47,474,786 Source: Audited Annual Financial Reports ( ) NOTE: This Schedule NOT Audited

39 Balance Sheet - General Fund Fiscal Year Ended June 30: ASSETS: Unrestricted Cash $ 23,143,769 $ 18,727,185 Restricted Cash 9,753,271 Temporary Investments Investments in Securities - Restricted 16,483,591 31,567,049 State and Federal Receivable 1,168,304 1,635,589 Due From Other Governments 682,960 Due From Other Funds 3,635,110 2,793,069 Prepaid Expenses 16,782 18,397 Other Receivables, Net 362, ,331 Taxes Receivable, Net 2,354,818 2,207,377 Total Assets $ 57,600,619 $ 57,333,997 LIABILITIES AND FUND BALANCE: Accounts & Retainages Payable $ 748,498 $ 612,837 Accrued Liabilities 902,833 1,050,844 Due to Other Funds 524, ,821 Due to Teachers' Retirement System 5,659,880 5,194,546 Due to Employees' Retirement System 550, ,396 Deferred Tax Revenues 1,788,107 2,017,767 Total Liabilities $ 10,174,460 $ 9,859,211 FUND EQUITY: Reserved: Non-Spendable 16,782 18,397 Restricted 26,236,862 31,119,177 Assigned 5,405,417 7,275,026 Unassigned 15,767,098 9,062,186 Total Fund Equity 47,426,159 47,474,786 Total Liabilities and Fund Equity $ 57,600,619 $ 57,333,997 Source: Audited Annual Financial Statement of the District ( ) NOTE: This Schedule NOT Audited Saratoga Springs City School District A-3

40 Budget Summaries Fiscal Years Ending June 30: Revenues: Property Taxes $ 78,497,772 $ 80,656,461 Payments in Lieu of Taxes 155, ,000 Interest & Penalties on Real Property Taxes 195, ,000 Use Of Money & Property 50, ,000 Miscellaneous 400, ,486 State Aid 33,883,703 34,258,992 Medicaid Assistance 155, ,000 Medicare Retiree Drug Subsidy 155, ,000 Appropriation of Fund Balance from Prior Fiscal Year 4,907,243 6,531,403 Total Revenues $ 118,398,718 $ 122,712,342 Expenditures: General Support $ 12,006,111 $ 12,258,702 Instruction 60,391,187 63,324,981 Pupil Transportation 5,060,817 5,309,014 Employee Benefits 32,819,890 33,126,500 Interfund Transfer 300, ,603 Debt Service 7,820,713 8,388,542 Total Expenditures $ 118,398,718 $ 122,712,342 (a) The budget for the fiscal year was approved by voters of the District on May 17, (b) The budget for the fiscal year was approved by voters of the District on May 16, Source: Adopted Budgets of the District Saratoga Springs City School District A-4

41 ENLARGED CITY SCHOOL DISTRICT OF THE CITY OF SARATOGA SPRINGS APPENDIX B AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 NOTE: SUCH FINANCIAL REPORT AND OPINIONS WERE PREPARED AS OF THE DATE THEREOF AND HAVE NOT BEEN REVIEWED AND/OR UPDATED IN CONNECTION WITH THE PREPARATION AND DISSEMINATION OF THIS OFFICIAL STATEMENT. CONSENT OF THE AUDITORS HAS NOT BEEN REQUESTED OR OBTAINED.

42 SARATOGA SPRINGS CITY SCHOOL DISTRICT TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT 1-3 SECTION A - MANAGEMENT S DISCUSSION AND ANALYSIS PAGE MANAGEMENT S DISCUSSION AND ANALYSIS A1-A8 SECTION B - BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION B1 B2 FUND FINANCIAL STATEMENTS BALANCE SHEET - GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND EQUITY - GOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND EQUITY OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION B3 B4 B5 FIDUCIARY FUND FINANCIAL STATEMENTS STATEMENT OF NET POSITION - FIDUCIARY FUNDS STATEMENT OF CHANGES IN NET POSITION - FIDUCIARY FUNDS NOTES TO FINANCIAL STATEMENTS B6 B6 B7-B41 SECTION C - REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN SCHEDULES OF PROPORTIONATE SHARE OF NET PENSION LIABILITY (ASSET) SCHEDULES OF DISTRICT CONTRIBUTIONS C1-C2 C3 C4 C5 SCHEDULE D - SUPPLEMENTAL INFORMATION SCHEDULE OF CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET D1

43 SARATOGA SPRINGS CITY SCHOOL DISTRICT TABLE OF CONTENTS PAGE SCHEDULE D - SUPPLEMENTAL INFORMATION SCHEDULE OF SECTION 1318 OF REAL PROPERTY TAX LAW LIMIT CALCULATION SCHEDULE OF PROJECT EXPENDITURES - CAPITAL PROJECTS FUND SCHEDULE OF NET INVESTMENT IN CAPITAL ASSETS D1 D2 D3 D4 SCHEDULE E - COMPLIANCE REPORT INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS E1-E2 SINGLE AUDIT SECTION INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS F1-F2 F3 F4 F5-F6 F7

44 INDEPENDENT AUDITOR S REPORT To the President and Members of the Board of Education of the Saratoga Springs City School District Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of the Saratoga Springs City School District (the District), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1.

45 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Saratoga Springs City School District as of June 30, 2017, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Correction of Error As described in Note 6 to the financial statements, the District restated the beginning fund balance of the School Lunch Fund and the beginning net position of the entity wide financial statements to correct an error related to accounting for pre-paid lunches. Our opinion is not modified with respect to that matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages A1 A8, budgetary comparison information on pages C1 and C2, schedule of funding progress for the retiree health plan on page C3, schedules of proportionate share of net pension liability (asset) on page C4 and schedules of district contributions on page C5 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplemental Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Saratoga Springs City School District s basic financial statements. The supplemental information on pages D1 D4 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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. These supplemental schedules and the 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 financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental information and schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 2.

46 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 13, 2017, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. Marvin and Company, P.C. Latham, NY October 13,

47 Saratoga Springs City School District Management s Discussion & Analysis For the Year Ended June 30, 2017 As management of the Saratoga Springs City School District, we offer the reader of the District s financial statements this narrative discussion, overview, and analysis of the financial activities of the District for the fiscal year ending June 30, We encourage readers to consider the information presented here, in conjunction with information provided in the financial statements. This discussion and analysis are intended to serve as an introduction to the District s basic financial statements. Financial Highlights The District maintained financial strength during the school year. - Total net position decreased by $1.8 million over the course of the year, including a prior period adjustment of ($73) thousand. - Overall revenues were $1120 million, or approximately $1.7 million less than expenditures when measured on an entity-wide basis. Entity-wide basis includes (noncash) expenditure provisions for depreciation and other post-employment benefits. - The total cost of basic programs was $121.7 million. Overview of the Financial Statements The District s annual report consists of three parts: management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District: The first two statements are District-wide financial statements that provide both short-term and long-term information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District s operations in more detail than the District-wide statements. - The governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for future spending. - Fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the District s budget for the year. District-wide Statements The District-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the assets and liabilities of the District, with the difference between the two reported as net position. Over time, increases or A1.

48 decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the assets of the District changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). The District-wide financial statements can be found on pages B1 - B2 of this report. Fund Financial Statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds. Governmental funds: Most of the District s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional long-term focus of the District-wide statements, additional information at the bottom of the governmental funds statements explains the relationship (or differences) between them. Fiduciary funds: The District is the trustee, or fiduciary, for assets that belong to others, such as the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations. District-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities by $71,167,405 at the close of the most recent fiscal year. We refer you to the notes to the financial statements for more detailed information. A2.

49 Saratoga Springs City Schools Net Position Governmental Activities June 30, 2017 Governmental Activities June 30, 2016 Current and other assets $ 57,521,910 $ 60,914,236 Pension assets - 26,825,540 Capital assets (net) 92,174,580 89,846,003 Total Assets $ 149,696,490 $ 177,585,779 Deferred Outflows of Resources $30,753,792 $12,218,777 Current and other liabilities $ 14,707,360 $ 14,645,054 Pension liabilities 6,311,217 6,050,744 Long-term debt outstanding 86,537,360 86,220,913 Total Liabilities $ 107,555,937 $ 106,916,711 Deferred Inflows of Resources $1,726,940 $9,948,064 Invested in capital assets Net of related debt: $63,112,816 $59,572,728 Restricted 31,173,947 26,236,862 Unrestricted (23,119,358) (12,869,809) Total Net Position $ 71,167,405 $ 72,939,781 A large portion of the District s net position, 89%, reflects its investment in capital assets (e.g. land, buildings, improvements, furniture, and equipment), less any related debt (serial bonds payable and obligations under capital leases) used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to students; consequently, these assets are not available for future spending. An additional portion of the District s net position, such as debt service, capital improvements and workers compensation represent resources that are subject to external restrictions. The remaining balance of unrestricted net position may be used to meet the District s ongoing obligations to students, employees and creditors. The restricted net position amount has been earmarked for the following purposes: Tax Certiorari Reserve Reserve for Employee Benefit Accrued Liability Retirement Contribution Reserve Workers Compensation Reserve Capital Reserve Insurance Reserve A3.

50 The key elements of the decrease in the District s net position for the years ended June 30, 2017 and 2016 are as follows: Saratoga Springs City Schools Changes in Net Assets from Operating Results Governmental Activities For the Year Ended June 30, 2017 Governmental Activities For the Year Ended June 30, 2016 Program Revenues: Charges for Services $ 1,767,679 $ 1,744,005 Operating Grants 4,440,254 4,551,146 General Revenues: Real Property Taxes and Other Tax Items 78,900,949 78,010,328 Use of Money and Property 232, ,215 Sale of Property and Compensation for Loss - 32,095 Loss on Disposal (14,212) - Donated Equipment - - Miscellaneous 1,026,987 1,700,984 State Sources 33,061,000 31,054,763 Federal Sources 550, ,315 Total Revenues $ 119,965,671 $ 118,217,851 Expenses: General Support $6,811,257 $11,058,237 Instruction 62,638,964 60,313,566 Pupil Transportation 5,007,675 4,496,847 Community Service 170, ,874 Employee Benefits 38,118,008 32,049,009 Interest Expense 1,092,576 1,295,509 School Lunch Program 2,090,691 2,144,714 Depreciation Unallocated 5,735,207 5,562,150 Total Expenses $121,664,804 $117,145,906 Change in Net Position ($1,699,133) $1,071,945 Total Net Position Beginning of year 72,939,781 71,867,836 Prior Period Adjustments ($73,243) - Cumulative Effect of Changes in Accounting Principles - - Total Net Position End of Year $71,167,405 $72,939,781 A4.

51 Financial Analysis of the District s Funds As explained earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financing requirements. The District has designated portions of the reserved fund balance to earmark resources for certain government-wide liabilities and post-employment obligations that are not recognized in the governmental funds. The assigned fund balance includes reserve for encumbrances and amounts for subsequent year s expenditures. The unassigned fund balance includes a reserve for tax reduction. Fund balance of capital projects and other governmental funds are restricted by state law to be spent for the purpose of the fund and are not available for spending at the District s discretion. The Government Funds financial statements can be found on pages B3 B4. General Fund: The general fund is the chief operating fund of the District. Financial highlights include: Total General Fund revenues were $114,129,341, an increase of $1,622,755 or 1.4% from The key factors in this change were increases in property tax items of $550,986, state aid revenues of $2,006,237, as well as decreases in federal revenues of $420,881 and miscellaneous revenues of $668,478. Sources of Revenue for Fiscal Year % State Formula Aid 69% 2% Other Property Taxes A5.

52 7% Expenses for Fiscal Year % General Support 4% 27% 52% Instruction Transportation Employee Benefits Debt Service Total general fund expenditures were $113,768,463, an increase of $3,176,646 or 2.9% from The difference between the original budget and the final amended budget was $783,680 or 0.67% of total general fund expenditures, which can be summarized as follows: $498,176 Carryover of 6/30/15 Encumbrances $143,730 Increases for Tax Certiorari Reserve Adjustments $21,144 Increases for Donations $120,641 Other Revenue Actual revenues exceeded the revised budget by $496,081 or 0.4%. Actual general fund expenditures plus encumbrances were less than the revised budget by $4,358,072 or 3.7%. Significant budget variances (after considering encumbrances at June 30, 2017) include: Teaching Regular School - $615,753, Central Services - $451,392, Employee Benefits - $2,184,662, and Pupil Transportation - $306,069. Capital Asset and Debt Administration Capital Assets By the end of 2017, the District had invested $92,174,580, net of depreciation of $86,670,565 in a broad range of capital assets, including school buildings, transportation facility, administrative buildings, athletic facilities, computer and audio-visual equipment, and buses. This amount represents an increase of $2,328,577 from last year. (More detailed information about capital assets can be found in Note 3 to the financial statements.) Total depreciation expense for the year was $5,735,207, while building improvements and additions to equipment and furniture amounted to $6,849,759 the majority of which came from construction in progress and bus purchases. A6.

53 Capital Assets (net of depreciation) Governmental Activities June 30, 2017 Governmental Activities June 30, 2016 Land $ 8,712,144 $ 8,712,144 Construction in Progress 3,722,142 2,457,604 Buildings 71,611,219 72,125,174 Machinery and Equipment 7,201,373 5,451,805 Land Improvements 927,702 1,099,276 Total $92,174,580 $89,846,003 Long-Term Debt At year-end, the District had $29,580,000 in serial and statutory installment bonds and bond anticipation notes outstanding. (More detailed information about the District s long-term liabilities is presented in Note 3 to the financial statements.) Outstanding Long-Term Debt Total School District Serial and Statutory Installment Bonds $29,580,000 $33,795,000 The District continued to pay down its debt, retiring $4,215,000 of outstanding bonds. Factors Bearing on the District s Future The Saratoga Springs City School District is regionally located to have its residents participate in the stable or somewhat expanding employment base of the area. Saratoga Springs has maintained property wealth, income levels and a stable tax base. However, the district is also dependent on continually dwindling state and federal funding sources. As these financial statements are being prepared, the District is aware of several circumstances that have a bearing on its financial condition in the future. The Board of Education continually considers future financial challenges facing the district, and to the extent possible, establishes appropriate reserve funds for these future liabilities. Examples of such reserve funds include the Retirement Contribution Reserve, the Tax Certiorari Reserve and the Employee Benefit Accrued Liability Reserve. A7.

54 Government Accounting Standards Board Statement No. 45: Government Accounting Standards Board (GASB) Statement No. 45 requires an Actuarial Valuation of the district s liability for Other Post-Employment Benefits (OPEB), essentially retiree health insurance, every two years. In addition, this statement requires that OPEB be expensed systematically over periods approximating employee s years of service and that an actuarially determined liability be established for unfunded obligations. The recently completed Actuarial Valuation estimated the unfunded actuarial accrued liability as of June 30, 2017 at $212.6 million. In the 2008 state legislative session, the state comptroller s office proposed legislation (S8383 for local governments and S8484 for the State and other local governments) for a sanctioned method of funding this liability by authorizing schools to set aside funds on a regular basis in an irrevocable trust administered by the Office of the State Comptroller. The district understands that the state comptroller s office still endorses this concept. This proposed legislation has not yet been enacted into law. The Board of Education supports the creation of a legal method to fund these liabilities and believes that some portion of unappropriated fund balance should be for this obligation. The district s unappropriated funds largely result from successful recoupment of additional state building aid, prospective tax certiorari settlements, conservative budgeting and cost containment. Advanced Refinancing: In December 2011 the Board of Education refinanced construction bonds that were issued in This was done to take advantage of lower prevailing interest rates. The aggregate budgetary savings over the life of these bonds is $1.1 million. In March, 2010 the Board of Education refinanced construction bonds that were issued in 2001 and This was done to take advantage of lower prevailing interest rates. The aggregate budgetary savings over the life of these bonds is $1.8 million. In July, 2016 the Board of Education refinanced construction bonds issued in This was done to take advantage of lower prevailing interest rates. The aggregate budgetary savings over the life of these bonds is $240 thousand. Property Tax Cap: Chapter 97 of the Laws of 2011 implement a property tax cap for New York State schools beginning with the school year budget. This property tax cap is in effect through Thereafter, it remains in effect only so long as regulation and control of residential rents and evictions (i.e. rent control) laws are in place. The district anticipates decreased tax revenues as a result of this legislation. Contacting the District s Financial Management This financial report is designed to provide the District s citizens, taxpayers, customers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report, contact the Business Office, Saratoga Springs City School District, at 3 Blue Streak Boulevard, Saratoga Springs, NY A8.

55 SARATOGA SPRINGS CITY SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2017 ASSETS Current Assets Cash $ 20,438,956 Investments in Securities 31,616,143 Accounts Receivable 406,167 Taxes Receivable, net 2,207,377 State and Federal Aid Receivable 2,731,581 Inventories 103,289 Prepaid Expenditures 18,397 Capital Assets, net 92,174,580 Total Assets 149,696,490 Deferred Outflows of Resources Loss on Refunding 541,904 Pensions 30,211,888 Total Deferred Outflows of Resources 30,753,792 Total Assets and Deferred Outflows of Resources $ 180,450,282 LIABILITIES Current Liabilities Accounts Payable $ 849,798 Accrued Liabilities 1,068,366 Due to Fiduciary Funds 7,993 Due to Other Governments 216 Bond Interest Accrued 45,886 Due to Teachers' Retirement System 5,194,546 Due to Employees' Retirement System 489,396 Retainage Payable 39,150 Refundable Advances 82,009 Long-Term Liabilities - Due and Payable Within One Year Bonds 6,930,000 Long-Term Liabilities - Due and Payable After One Year Bonds 22,650,000 Unamortized Bond Premium 1,082,324 Compensated Absences 5,192,056 Workers' Compensation 925,069 Judgments and Claims 559,400 Other Post Employment Benefits Payable 56,128,511 Net Pension Liability, Proportionate Share 6,311,217 Total Liabilities 107,555,937 Deferred Inflows of Resources Pensions 1,726,940 Total Deferred Inflows of Resources 1,726,940 NET POSITION Net Investment in Capital Assets 63,112,816 Restricted 31,173,947 Unrestricted (23,119,358) Total Net Position 71,167,405 Total Liabilities, Deferred Inflows of Resources and Net Position $ 180,450,282 See accompanying notes to financial statements. B1.

56 SARATOGA SPRINGS CITY SCHOOL DISTRICT STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2017 Program Revenues Net (Expense) Revenue and Charges for Operating Changes in Expenses Services Grants Net Position FUNCTIONS/PROGRAMS General support $ 6,811,257 $ - $ - $ (6,811,257) Instruction 62,638, ,752 3,603,197 (58,485,015) Pupil transportation 5,007, (5,007,675) Community service 170, (170,426) Employee benefits 38,118, (38,118,008) Debt service 1,092, (1,092,576) Depreciation - unallocated 5,735, (5,735,207) School lunch program 2,090,691 1,216, ,057 (36,707) Total Functions and Programs $ 121,664,804 $ 1,767,679 $ 4,440,254 (115,456,871) GENERAL REVENUES Real property taxes 78,900,949 Investment earnings 149,005 Use of money and property 83,575 Sale of property and compensation for loss (14,212) State sources 33,061,000 Federal sources 550,434 Miscellaneous 1,026,987 Total General Revenues 113,757,738 Change in Net Position (1,699,133) Total Net Position - Beginning of Year as Originally Reported 72,939,781 Prior Period Adjustment (73,243) Total Net Position, Beginning of Year as Restated 72,866,538 Total Net Position - End of Year $ 71,167,405 See accompanying notes to financial statements. B2.

57 SARATOGA SPRINGS CITY SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2017 School Capital Debt Total General Special Aid Lunch Projects Service Governmental Fund Fund Fund Fund Fund Funds Assets Cash - Unrestricted $ 18,727,185 $ 1,113 $ 646,326 $ 1,058,656 $ - $ 20,433,280 Cash - Restricted ,676 5,676 Temporary Investments Investments in Securities 447, ,872 Investments in Securities-Restricted 31,119, ,094 31,168,271 State and Federal Receivable 1,635,589 1,044,851 51, ,731,581 Due From Other Governments Due From Other Funds 2,793, , ,160-3,021,928 Accounts Receivable, net 385,331-20, ,167 Taxes Receivable, net 2,207,377 2,207,377 Inventories , ,289 Prepaid Expenditures 18, ,397 Total Assets $ 57,333,997 $ 1,261,597 $ 821,658 $ 1,071,816 $ 54,770 $ 60,543,838 Liabilities Accounts Payable $ 612,837 $ 19,184 $ 19,897 $ 197,880 $ - $ 849,798 Accrued Liabilities 1,050,844 9,677 7, ,068,366 Due to Other Funds 493,821 1,232,736 26,855 1,276,509-3,029,921 Due to Other Governments Due to Teachers' Retirement System 5,194, ,194,546 Due to Employees' Retirement System 489, ,396 Refundable Advances , ,009 Total Liabilities 7,841,444 1,261, ,822 1,474,389-10,714,252 Deferred Inflows of Resources 2,017, ,017,767 Fund Equity (Deficiency) Fund Equity (Deficiency): Non-spendable 18, , ,686 Restricted 31,119, ,770 31,173,947 Assigned 7,275, ,275,026 Unassigned 9,062, ,547 (402,573) - 9,241,160 Total Fund Equity (Deficiency) 47,474, ,836 (402,573) 54,770 47,811,819 Total Liabilities, Deferred Inflows of Resources, and Fund Equity (Deficiency) $ 57,333,997 $ 1,261,597 $ 821,658 $ 1,071,816 $ 54,770 $ 60,543,838 Amounts reported for governmental activities in the statement of net position are different due to the following: Fund equity of the governmental funds $ 47,811,819 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 92,174,580 Accrued interest expense is reported under the accrual basis (45,886) Property tax revenues are recorded as revenue when levied under the accrual basis and when "available" under the modified accrual basis. 2,017,767 Net pension liability (6,311,217) Net Deferred (inflows)/outflows related to net pension asset/liability adjustments 29,026,852 Retainage payable (39,150) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds (93,467,360) Net Position of Governmental Activities $ 71,167,405 See accompanying notes to financial statements. B3.

58 SARATOGA SPRINGS CITY SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND EQUITY - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2017 Revenues School Capital Debt Total Special Aid Lunch Projects Service Governmental General Fund Fund Fund Fund Funds Real Property Taxes and Tax Items $ 78,671,289 $ - $ - $ - $ - $ 78,671,289 Charges for Services 550, ,752 Use of Money and Property 232, ,202 Sale of Property and Compensation for Loss 36, ,301 Miscellaneous 1,026,987-1, ,028,754 State Sources 33,061,000 1,197,771 30, ,289,441 Federal Sources 550,434 2,405, , ,762,247 Sales - - 1,214, ,214,538 Total Revenues 114,129,341 3,603,197 2,053, ,786,524 Expenditures General Support 11,018, ,018,008 Instruction 59,601,012 3,037, ,638,964 Pupil Transportation 4,770, , ,007,675 Community Services 170, ,426 Employee Benefits 30,498, , , ,349,889 Debt Service 7,710, ,710,397 Cost of Sales - - 1,779, ,779,243 Capital Outlay ,387,279-5,387,279 Total Expenditures 113,768,463 3,815,448 2,090,691 5,387, ,061,881 Excess (Deficiency) of Revenues Over Expenditures 360,878 (212,251) (36,707) (5,387,279) 2 (5,275,357) Other Financing Sources And (Uses) Interfund Transfers, net (312,251) 212, ,000 (49,092) 49,092 - Premium on Obligations , , ,365 Proceeds of Bond Issuance ,195,000-2,195,000 Proceeds of Advanced Refunding ,880,000 2,880,000 Payments to Escrow Agent - Advanced Refunding (3,077,965) (3,077,965) Total Other Sources (Uses) (312,251) 212, ,000 2,160,632 54,768 2,215,400 Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other (Uses) 48,627-63,293 (3,226,647) 54,770 (3,059,957) Fund Equity, Beginning of Year as Originally Reported 47,426, ,786 2,824,074-50,945,019 Prior Period Adjustment - - (73,243) - - (73,243) Fund Equity, Beginning of Year as Restated 47,426, ,543 2,824,074-50,871,776 Fund Equity, End of Year $ 47,474,786 $ - $ 684,836 $ (402,573) $ 54,770 $ 47,811,819 See accompanying notes to financial statements. B4.

59 SARATOGA SPRINGS CITY SCHOOL DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND EQUITY OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2017 Net changes in fund balance - total governmental funds $ (3,059,957) Capital outlays for the purchase of capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are shown in the statement of net position and allocated over their useful lives as depreciation expense in the statement of activities. Depreciation expense $ (5,735,207) Capital outlays 8,114,297 2,379,090 The net book value, cost less accumulated depreciation, of capital assets disposed of are removed from the statement of net position. Any gain or loss resulting is recorded in the statement of activities. (50,513) Interest is recognized as an expense in the governmental funds when paid. For governmental activities, interest expense is recognized as it accrues. The decrease in accrued interest during 2016/17 results in less expense. 10,327 Proceeds of serial bond principal is revenue in governmental funds, but proceeds increase long-term liabilities in the statement of net position. (2,150,000) Bond premiums are recorded as revenue in the governmental funds, but are recorded as liabilities in the statement of net position (218,365) Deferred loss on refunding is included as expenditures in the governmental funds but are reported as deferred outflows in the statement of net position 155,575 Repayments of long-term debt are recorded as expenditures in the governmental funds but are recorded as payments of liabilities in the statement of net position. 6,365,000 Property taxes are reported as revenue in governmental funds when available. Property taxes that are levied but not considered available are reported as deferred inflows of resources. However, for governmental activities property tax revenues 229,660 are recognized when levied. Certain expenses in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Retainage 18,581 Workers Compensation (129,916) Judgements and Claims 1,461,152 Other Post Employment Benefits (6,919,982) Compensated Absences 187,349 Adjustments for net pension liability - ERS (525,059) Adjustments for net pension liability - TRS 308,041 Amortization of bond premium, issuance costs and loss on refunding bonds is an adjustment to interest expense in the statement of activities. 239,884 Change in net position - governmental activities $ (1,699,133) See accompanying notes to financial statements. B5.

60 SARATOGA SPRINGS CITY SCHOOL DISTRICT STATEMENT OF NET POSITION - FIDUCIARY FUNDS JUNE 30, 2017 Private Purpose Agency Trusts ASSETS Cash - unrestricted $ 109,142 $ - Cash - restricted 233, ,291 Due from other funds 7, Total Assets $ 350,608 $ 281,344 LIABILITIES Extraclassroom activity balances $ 232,477 $ - Other liabilities 118,131 - Total Liabilities $ 350,608 $ - NET POSITION Reserved for scholarships $ 281,344 STATEMENT OF CHANGES IN NET POSITION - FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2017 Private Purpose Trusts ADDITIONS Gifts and contributions $ 32,490 Investment earnings 280 Total Additions 32,770 DEDUCTIONS Scholarships and awards 34,475 Change in Net Position (1,705) Net Position - Beginning of year 283,049 Net Position - End of year $ 281,344 See accompanying notes to financial statements. B6.

61 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the Saratoga Springs City School District ("the District") have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for governments as prescribed by the Governmental Accounting Standards Board (GASB) which is the standard setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity The District is governed by the laws of New York State. The District is an independent entity governed by an elected Board of Education consisting of nine members. The President of the Board serves as the chief fiscal officer and the Superintendent is the chief executive officer. The Board is responsible for, and controls all activities related to public school education within the District. Board members have authority to make decisions, power to appoint management, and primary accountability for all fiscal matters. The reporting entity of the District is based upon criteria set forth by GASB Statement 14, The Financial Reporting Entity, as amended by GASB Statement 39, Component Units. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. The accompanying financial statements present the activities of the District and its component unit. The District is not a component unit of another reporting entity. The decision to include a potential component unit in the reporting entity is based on several criteria, including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is a brief description of an entity included in the District's reporting entity: The Extraclassroom Activity Fund The extraclassroom activity fund of the District represents funds of the students of the District. The Board of Education exercises general oversight of these funds. The extraclassroom activity funds are independent of the District with respect to its financial transactions and the designation of student management. A separate audited financial statement (cash basis) of the extraclassroom activity fund can be found at the District's business office, located at 3 Blue Streak Boulevard, Saratoga Springs, New York. The District accounts for assets held as an agent for various student organizations in an agency fund. B. Joint Venture The Saratoga Springs City School District is one of 31 component school districts in the Washington-Saratoga-Warren-Hamilton-Essex Board of Cooperative Educational Services (BOCES). A BOCES is a voluntary, cooperative association of school districts in a geographic area that share planning, services, and programs which provide educational and support activities. B7.

62 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B. Joint Venture BOCES are organized under Section 1950 of the Education Law. A BOCES Board is considered a corporate body. Members of a BOCES Board are nominated and elected by their component member boards in accordance with provisions of Section 1950 of the New York State Education Law. All BOCES property is held by the BOCES Board as a corporation (Section 1950(6)). In addition, BOCES Boards also are considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under Section 119-n(a) of the New York State General Municipal Law. A BOCES budget is comprised of separate budgets for administrative, program, and capital costs. Each component school district s share of administrative and capital cost is determined by resident public school district enrollment as defined in Education Law, Section 1950(4)(b)(7). There is no authority or process by which a school district can terminate its status as a BOCES component. In addition, component school districts pay tuition or a service fee for programs in which its students participate. BOCES charges districts for program costs based on participation and for administrative costs. During the year ended June 30, 2017, the District was billed $9,755,182 for BOCES administrative and program costs. In the same period, the District received $1,547,545 in State Aid and $672,482 in Refund of Prior Year's Expense from BOCES. Financial statements for the BOCES are available from the BOCES administrative offices. C. Basis of Presentation District-wide statements The statement of net position and the statement of activities present financial information about the District s governmental activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize the double counting of internal transactions. Governmental activities generally are financed through taxes, State aid, intergovernmental revenues, and other exchange and nonexchange transactions. Operating grants include operating-specific and discretionary (either operating or capital) grants, while the capital grants column, if any, reflects capital-specific grants. The Statement of Activities presents a comparison between direct expenses and revenues for each function of the District s governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. B8.

63 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. Basis of Presentation Fund financial statements The fund statements provide information about the District s funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The District reports the following major governmental funds: I. Governmental Funds 1. General Fund The general fund is the principal operating fund and is used to account for all financial resources except those required to be accounted for in another fund. 2. Special Revenue Funds The special revenue funds are used to account for the proceeds of special revenue sources that are legally restricted to expenditure for specified purposes. Special revenue funds include the following funds: a. Special Aid Fund Used to account for special operating projects or programs supported in whole, or in part, with Federal funds, State grants or private grants. b. School Lunch Fund The school lunch fund is used to account for transactions of breakfast (if necessary) and lunch programs. 3. Capital Projects Fund The capital projects fund is used to account for and report financial resources to be used for the acquisition, construction or renovation of major capital facilities, or equipment. 4. Debt Service Fund The debt service fund is provided to account for the accumulation of resources to be used for the redemption of principal and interest related to long-term debt. When a capital asset is sold and all or a portion of the bonds used to finance the capital asset are outstanding, this fund must be used to account for the proceeds from the sale of capital assets up to the balance of related bonds outstanding. B9.

64 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. Basis of Presentation II. Fiduciary Funds Fiduciary Funds These funds are used to account for fiduciary activities. Fiduciary activities are those in which the District acts as trustee and agent for resources that belong to others. These activities are not included in the District-wide financial statements, because their resources do not belong to the District, and are not available to be used. There are two classes of fiduciary funds: Private purpose trust funds: These funds are used to account for trust arrangements in which principal and income benefits annual third party awards and scholarships for students. Established criteria govern the use of the funds and members of the District or representatives of the donors may serve on committees to determine who benefits. Agency funds: These funds are strictly custodial in nature and do not involve the measurement of results of operations. Assets are held by the District as agent for various student groups or extraclassroom activity funds and for payroll or employee withholding. D. Basis of Accounting/Measurement Focus General Information Accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The District-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Nonexchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants and donations. On an accrual basis, revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. The governmental fund statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within one year after the end of the fiscal year, except for real property taxes, which are considered to be available if they are collected within 60 days after the end of the fiscal year. The District selected the one year time frame to match the time frame the related liabilities would be liquidated. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, other post-employment benefits and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. B10.

65 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES E. Refundable Advances Refundable advances arise when resources are received by the District before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both recognition criteria are met, or when the District has legal claim to the resources, the liability for refundable advances is removed and revenue is recognized. F. Property Taxes I. Calendar Real property taxes are levied annually by the Board of Education. The levy was adopted by the Board of Education on August 25, 2016, and became a lien on August 25, Taxes were collected during the period September 2, 2016 through March 6, II. Enforcement Uncollected real property taxes are enforced by the City of Saratoga Springs and the County of Saratoga. An amount representing all uncollected real property taxes must be transmitted by the City and County to the District within two years from the return of unpaid taxes to such City and County. Real property taxes receivable expected to be collected within sixty days subsequent to June 30, 2017, less similar amounts collected during this period in the preceding year, are recognized as revenue; otherwise, real property taxes receivable are offset by deferred inflows of resources. G. Budgetary Procedures and Budgetary Accounting I. Budget Policies 1. The budget policies are as follows: a. The District administration prepares a proposed budget for approval by the Board of Education for the General Fund. b. The proposed appropriation budget for the General Fund is approved by the voters within the District. c. Appropriations are adopted at the program level. B11.

66 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES G. Budgetary Procedures and Budgetary Accounting I. Budget Policies d. Appropriations established by adoption of the budget constitute a limitation on expenditures (and encumbrances) which may be incurred. Appropriations lapse at the fiscal year end unless expended or encumbered. Encumbrances will lapse if not expended in the subsequent year. Supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. The following supplemental appropriations occurred during the year: Funded by Additional Estimated Revenue: Gifts and Donations $ 21,144 Other Revenue 120,641 Funded by Appropriating Tax Certiorari Reserved Fund Balance: Judgments and Claims 143,730 Total $ 285,515 e. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year. f. Budgets are established and used for individual capital project funds expenditures as approved by a special referendum of the District s voters. The maximum project amount authorized is based primarily upon the cost of the project plus any requirements for external borrowings, not annual appropriations. These budgets do not lapse and are carried over to subsequent fiscal years until the completion of the projects. II. Encumbrances Encumbrance accounting is used for budget control and monitoring purposes and is reported as a part of the governmental funds. Under this method, purchase orders, contracts and other commitments for the expenditure of monies are recorded to reserve applicable appropriations. Outstanding encumbrances as of year-end are presented as reservations of fund balance and do not represent expenditures or liabilities. These commitments will be honored in the subsequent period. Related expenditures are recognized at that time, as the liability is incurred or the commitment is paid. B12.

67 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES G. Budgetary Procedures and Budgetary Accounting III. Budget Basis of Accounting Under GASB No. 34, budgetary comparison information is required to be presented for the general fund and each major special revenue fund with a legally adopted budget. The District is not legally required to adopt a budget for its special revenue funds. Therefore, budget comparison information for special revenue funds is not included in the District s financial statements. H. Cash and Investments The District s cash and cash equivalents consist of cash on hand, demand deposits, and shortterm investments with original maturities of three months or less from date of acquisition. The District investment policies are governed by New York State statutes. District monies must be deposited in FDIC-insured commercial banks or trust companies located within the State. The treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by Federal Deposit Insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and School Districts. Investments are stated at fair value. Certificates of deposit are classified as investments in these financial statements. I. Accounts Receivable Accounts receivable are shown, net of an allowance for uncollectible accounts. Allowances are reported when accounts are considered to be uncollectible. The allowance at June 30, 2017 is $20,084 and relates to old tuition billings. J. Inventories Inventories of food and/or supplies in the school lunch fund are recorded at cost on a first-in, first-out basis or, in the case of surplus food, at stated value that approximates market. Purchases of inventoriable items in other funds are recorded as expenditures at the time of purchase, and are considered immaterial in amount. K. Interfund Transactions The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowing. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Permanent transfers of funds include the transfer of expenditures and revenues to provide financing or other services. B13.

68 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES K. Interfund Transactions In the District-wide statements, the amounts reported on the statement of net position for interfund receivables and payables represent amounts due between different fund types (governmental activities and fiduciary funds). Eliminations have been made for all interfund receivables and payables between the funds, with the exception of those due from or to the fiduciary funds. The governmental funds report all interfund transactions as originally recorded. Interfund receivables and payables may be netted on the accompanying governmental funds balance sheet when it is the District s practice to settle these amounts at a net balance based upon the right of legal offset. Refer to Note 3.A.II for a detailed disclosure by individual fund for interfund receivables, payables, expenditures and revenues activity. L. Equity Classification District-wide statements: In the District-wide statements there are three classes of net position: Net investment in capital assets - consists of net capital assets (cost less accumulated depreciation) reduced by outstanding balances of related debt obligations from the acquisition, construction or improvements of those assets. Restricted net position - reports net position when constraints placed on the assets are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position - reports all other net position that does not meet the definition of the above two classifications and are deemed to be available for general use by the District. Fund statements: In the fund basis statements there are five classifications of fund balance: Non-spendable Includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Non-spendable fund balance includes the inventory recorded in the School Lunch Fund of $103,289 and prepaid expenditures recorded in the General Fund of $18,397. Restricted - includes amounts with constraints placed on the use of resources either externally imposed by creditors, grantors, contributors or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. The District has established the following restricted fund balances: B14.

69 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES L. Equity Classification Tax Certiorari Reserve Tax Certiorari Reserve (Education Law a) is used to establish a reserve fund for tax certiorari and to expend from the fund without voter approval. The monies held in the reserve shall not exceed the amount that might reasonably be deemed necessary to meet anticipated judgments and claims arising out of tax certiorari proceedings. Any resources deposited to the reserve which are not expended for tax certiorari proceedings in the year such monies are deposited must be returned to the General Fund on or before the first day of the fourth fiscal year after deposit of these monies. The reserve is accounted for in the General Fund. Capital Reserve Capital Reserve (Education Law 3651) is used to pay the cost of any object or purpose for which bonds may be issued. The creation of a capital reserve fund requires authorization by a majority of the voters establishing the purpose of the reserve; the ultimate amount, its probable term and the source of the funds. Expenditure may be made from the reserve only for a specific purpose further authorized by the voters. The form for the required legal notice for the vote on establishing and funding the reserve and the form of the proposition to be placed on the ballot are set forth in 3651 of the Education Law. This reserve is accounted for in the General Fund. Reserve for Employee Benefit Accrued Liability This reserve is used to accumulate funds for the payment of any accrued employee benefits due an employee upon termination of service. This reserve fund was established by a majority vote of the Board of Education and is funded by budgetary appropriations, and such other reserves and funds that may be legally appropriated. This reserve is accounted for in the General Fund. Workers' Compensation Reserve This reserve is used to accumulate funds for the purpose of paying for compensation benefits and other expenditures authorized under Article 2 of the New York State Workers' Compensation Law, and for payment of expenditures of administering this self-insurance program. The reserve may be established by Board action and is funded by budgetary appropriations and such other funds as may be legally appropriated. Within sixty days after the end of any fiscal year, excess reserve amounts may be either transferred to another reserve or applied to the appropriations of the next succeeding fiscal year's budget. This reserve is accounted for in the General Fund. Insurance This reserve was established in according to General Municipal Law 6 n, and must be used to pay liability, casualty and other types of losses, except losses incurred for which the following types of insurance may be purchased: life, accident, health, annuities, fidelity and surety, credit, title residual value and mortgage guarantee. Settled or compromised claims up to $25,000 may be paid from the reserve without judicial approval. This reserve is accounted for in the general fund. B15.

70 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES L. Equity Classification Retirement Contribution Reserve This reserve is used for the purpose of financing retirement contributions. The reserve must be accounted for separate and apart from all other funds and a detailed report of the operation and condition of the fund must be provided to the Board. Restricted fund balance includes the following: General Fund: Tax Certiorari $ 860,650 Employee Benefit Accrued Liability 5,379,405 Insurance 100,000 Workers Compensation 1,790,142 Retirement Contribution 7,988,980 Capital Reserve 15,000,000 Total $ 31,119,177 Debt Service Fund $ 54,770 Committed - Includes amounts that can only be used for the specific purposes pursuant to constraints imposed by formal action of the school district s highest level of decision making authority, i.e., the Board of Education. The District has no committed fund balances as of June 30, Assigned - Includes amounts that are constrained by the District s intent to be used for specific purposes, but are neither restricted nor committed. The purpose of the constraint must be narrower than the purpose of the General Fund, and in funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. Assigned fund balance also includes an amount appropriated to partially fund the subsequent year s budget, as well as the encumbrances not classified as restricted at the end of the fiscal year. All encumbrances of the General Fund are classified as assigned fund balance in the General Fund. Encumbrances reported in the General Fund amounted to $743,623. Appropriated fund balance in the General Fund is $6,531,403. The remaining fund equity in the other funds is also reported as assigned. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments of expenditures are recorded for budgetary control purposes in order to reserve applicable appropriations, is employed as a control in preventing over-expenditure of established appropriations. Open encumbrances are reported as restricted fund balance in all funds other than the General Fund, since they do not constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year. B16.

71 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES L. Equity Classification Purpose of Encumbrances General Fund General Support $ 158,988 Instruction 533,413 Community Services 35,000 Pupil Transportation 16,222 $ 743,623 Unassigned - Includes all other General Fund net assets that do not meet the definition of the above four classifications and are deemed to be available for general use by the District. In funds other than the General Fund, the unassigned classification is used to report a deficit fund balance resulting from overspending for specific purposes for which amounts had been restricted or assigned. NYS Real Property Tax Law 1318 limits the amount of unexpended surplus funds a school district can retain to no more than 4% of the District s budget for the General Fund for the ensuing fiscal year. Nonspendable and restricted fund balance of the General Fund are excluded from the 4% limitation. Amounts appropriated for the subsequent year and encumbrances and reserve for tax reduction are also excluded from the 4% limitation. The District exceeded the 4% limit at June 30, Order of Use of Fund Equity The District s policy is to have the Board Finance Committee, or their designee, determine the order of the expenditure of funds on an annual basis. The Board Finance committee will make this determination in the best interests of the District. When an expenditure is incurred for purposes for which several sources of funds are available, the District s general practice will be to use budgeted funds, unrestricted (appropriated) funds to the extent budgeted, and then restricted funds. Restricted funds will be used in accordance with the legal restrictions of such funds. B17.

72 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES M. Post Employment Benefits In addition to providing the retirement benefits described in Note 3, the District provides post employment health insurance coverage to its retired employees and their survivors in accordance with the provisions of various employment contracts in effect at the time of retirement. Substantially all of these employees may become eligible for these benefits if they reach normal retirement age while working for the District. The District pays 100% of the cost of premiums to an insurance company which provides health care insurance. The District recognizes the cost of providing benefits for fiscal year 2017 by recording $7,636,360 in expenditures, its share of insurance premiums for all retirees. N. Due to/from Other Funds The amounts reported on the Statement of Net Position for due to and due from other funds represents amounts due between different fund types (governmental activities and fiduciary funds). Eliminations have been made for amounts due to and due from within the same fund type. A detailed description of the individual fund balances at year-end is provided subsequently in these Notes. O. Capital Assets Capital assets are reported at actual cost for acquisitions subsequent to April 30, For assets acquired prior to April 30, 2006, actual or estimated historical costs based on appraisals conducted by independent third-party professionals were used. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar amount above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Threshold Depreciation Method Estimated Useful Life Land $ 1,000 N/A N/A Buildings 1,000 SL 50 years Building improvements 1,000 SL 20 years Land improvements 1,000 SL 20 years Machinery and equipment 1,000 SL 5-20 years B18.

73 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES P. Deferred Outflows and Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has three items that qualify for reporting in this category. First is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The second item is related to pensions reported in the district-wide statement of net position. This represents the effect of the net change in the District s proportion of the collective net pension asset or liability and difference during the measurement period between the District s contributions and its proportionate share of total contributions to the pension systems not included in pension expense. Lastly is the District contributions to the pension systems (TRS and ERS Systems) subsequent to the measurement date. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies related to pensions reported in the district-wide statement of net position. This represents the effect of the net change in the District s proportion of the collective net pension liability (ERS System) and difference during the measurement period between the District s contributions and its proportionate share of total contributions to the pension systems not included in pension expense. Q. Explanation of Certain Differences Between Governmental Fund Statements and Districtwide Statements Due to the differences in the measurement focus and basis of accounting used in the governmental fund statements and the district-wide statements, certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items. The differences result primarily from the economic focus of the statement of activities, compared with the current financial resources focus of the governmental funds. a. Total Fund balances of governmental fund vs. net position of governmental activities: Total fund balances of the District s governmental funds differ from net position of governmental activities reported in the statement of net position. This difference primarily results from the additional long-term economic focus of the statement of net position versus the solely current financial resources focus of the governmental fund balance sheets, as applied to the reporting of capital assets and long-term liabilities, including pensions. b. Statement of revenues, expenditures and changes in fund balance vs. statement of activities: Differences between the governmental funds statement of revenues, expenditures and changes in fund balance and the statement of activities fall into one of four broad categories. B19.

74 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Q. Explanation of Certain Differences Between Governmental Fund Statements and Districtwide Statements Long-Term Revenue and Expense Differences Long-term revenue differences arise because governmental funds report revenues only when they are considered available, whereas the statement of activities reports revenues when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis, whereas the accrual basis of accounting is used in the statement of activities. Capital Related Differences Capital related differences include the difference between proceeds from the sale of capital assets reported on governmental fund statements and the gain or loss on the sale of assets as reported in the statement of activities, and the difference between recording an expenditure for the purchase of capital items in the governmental fund statements and depreciation expense on those items as recorded in the statement of activities. Long-Term Debt Transaction Differences Long-term debt transaction differences occur because both interest and principal payments are recorded as expenditures in the governmental fund statements, whereas interest payments are recorded in the statement of activities as incurred, and principal payments are recorded as a reduction of liabilities in the statement of net position. Pension Differences Pension differences occur as a result of changes in the District s proportion of the collective net pension asset/liability and differences between the District s contributions and its proportionate share of the total contributions to the pension systems. R. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenditures during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including computation of compensated absences, other post employment benefits, potential contingent liabilities, net pension liability/asset, and useful lives of long-term assets. B20.

75 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES S. Vested Employee Benefits Compensated absences consist of unpaid accumulated annual sick leave, vacation, and sabbatical time. Sick leave eligibility and accumulation is specified in negotiated labor contracts, and in individual employment contracts. Upon retirement, resignation, or death, employees may contractually receive a payment based on unused accumulated sick leave. District employees are granted vacation in varying amounts, based primarily on length of service and service position. Some earned benefits may be forfeited if not taken within varying time periods. Consistent with GASB Statement 16, Accounting for Compensated Absences, the liability has been calculated using the vesting method and an accrual for that liability is included in the district-wide financial statements. The compensated absences liability is calculated based on the pay rates in effect at year-end. In the governmental funds, only the amount of matured liabilities is accrued within the General Fund based upon expendable and available financial resources. These amounts are expensed on a pay-as-you-go basis. T. Accrued Liabilities and Long-Term Obligations Payables, accrued liabilities and long-term obligations are reported in the District-wide financial statements. In the governmental funds, payables and accrued liabilities are paid in a timely manner and in full from current financial resources. Claims and judgments, and compensated absences that will be paid from governmental funds, are reported as a liability in the governmental funds only to the extent that they are due for payment in the current year. Bonds and other long-term obligations that will be paid from governmental funds are recognized as a liability when due. Long-term obligations represent the District s future obligations or future economic outflows. The liabilities are reported as due in one year or due after one year in the statement of net position. U. Implementation of New Accounting Standards The District has adopted all current Statements of the Governmental Accounting Standards Board (GASB) that are applicable. At June 30, 2017, the District implemented the following new standard issued by GASB: GASB has issued Statement 77, Tax Abatement Disclosures, effective for the year ending June 30, See note 5 for the disclosure related to implementation of this standard. GASB has issued Statement 82, Pensions Issues an Amendment of GASB Statements No. 67, No. 68 and No. 73, effective for the year ending June 30, B21.

76 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES V. Future Changes in Accounting Standards The District will evaluate the impact each of these pronouncements may have on its financial statements and will implement them as applicable and when material. GASB has issued Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for the year ending June 30, GASB has issued Statement 81, Irrevocable Split-Interest Agreements, effective for the year ending June 30, GASB has issued Statement 83, Certain Asset Retirement Obligations, effective for the year ending June 30, GASB has issued Statement 84, Fiduciary Activities, effective for the year ending June 30, GASB has issued Statement 85, Omnibus 2017, effective for the year ending June 30, GASB has issued Statement 86, Certain Debt Extinguishment Issues, effective for the year ending June 30, GASB has issued Statement 87, Leases, effective for the year ending June 30, STEWARDSHIP, COMPLIANCE, ACCOUNTABILITY A. Unassigned Fund Balance The District s unassigned fund balance in the general fund was in excess of the New York State Real Property Tax Law 1318 limit, which restricts it to an amount not greater than 4% of the District s budget for the upcoming school year, by $4,144,892. B. Deficit Fund Balances The Capital Projects Fund has a deficit fund balance of $402,573. This will be funded when the District obtains permanent financing for its current construction projects. B22.

77 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS A. Assets I. Cash and Investments Deposits Deposits are valued at cost or cost plus interest and are categorized as either (1) insured, or for which the securities are held by the District's agent in the District's name, (2) collateralized, and for which the securities are held by the pledging financial institution's trust department or agent in the District's name, or (3) uncollateralized. At June 30, 2017 all deposits were fully insured and collateralized by the District s agent in the District s name. Investments The District participates in CLASS, a multi-municipal cooperative investment pool agreement pursuant to New York State General Municipal Law Article 5-G, Section 119-0, whereby it holds a portion of the investments in cooperation with other participants. At June 30, 2017, the District held $31,567,049 in investments consisting of various investments in securities issued by the United States and its agencies. The following valuation inputs are included as investments: Valuation Inputs Investments in Securities at Value Level 1 Level 2 Level 3 Total General Fund $ - $ 31,567,049 $ - $ 31,567,049 Debt Service Fund - 49,094-49,094 TOTAL $ - $ 31,616,143 $ - $ 31,616,143 The above amounts represent the fair value of the investment pool shares. For the year ended June 30, 2017, the portfolio did not have significant unobservable inputs (Level 3) used in determining fair value. Thus, a reconciliation of assets in which significant unobservable inputs (Level 3) which were used in determining fair value is not applicable. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the period. The portfolio recognizes transfers between the levels as of the beginning of the fiscal year. Restricted Cash and Investments Fund Financial Statements Restricted cash and investments of $31,119,177 in the General Fund on the fund financial statements consists of $7,988,980 restricted for Retirement Contribution Reserve, $5,379,405 restricted for Reserve for Employee Benefit Accrued Liability, $860,650 restricted for the Tax Certiorari Reserve, $15,000,000 restricted for capital reserve, $100,000 restricted for the Insurance Reserve and $1,790,142 restricted for Workers Compensation Reserve. Fiduciary Restricted cash of $232,477 is restricted for Extraclassroom Activity funds, $1,049 is restricted for student deposits and $281,291 is restricted for scholarships. B23.

78 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS A. Assets II. Interfund Transactions Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. The balances result from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. Interfund transactions and balances are as follows: Interfund Receivable Interfund Payable Interfund Revenues Interfund Expenditures General Fund $ 2,793,069 $ 493,821 $ - $ 312,251 Special Aid Fund 215,633 1,232, ,251 - School Lunch Fund 66 26, ,000 - Debt Service ,092 - Capital Projects Fund 13,160 1,276,509-49,092 Total Government Activities 3,021,928 3,029, , ,343 Fiduciary Fund 7, Totals $ 3,029,921 $ 3,029,921 $ 361,343 $ 361,343 III. Other Receivables Other receivables at June 30, 2017 consisted of the following, which are stated at net realizable value. District management has deemed the amounts to be fully collectible. Fund Description Amount General Fund Use of facilities and tuition $ 385,331 School Lunch Fund Outstanding school lunch bills $ 20,836 B24.

79 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS A. Assets IV. Capital Assets Capital asset balances for the year ended June 30, 2017 are as follows: Balance July 1, 2016 Additions Retirements/ Reclassifications Balance June 30, 2017 Governmental Activities Capital assets that are not depreciated: Land $ 8,712,144 $ - $ - $ 8,712,144 Construction in progress 2,457,604 3,722,142 2,457,604 3,722,142 Total Nondepreciable Historical Cost 11,169,748 3,722,142 2,457,604 12,434,286 Capital assets that are depreciated: Buildings and improvements 141,286,371 3,340, ,627,062 Machinery and equipment 18,018,215 3,509,068 3,174,981 18,352,302 Land improvements 3,450,009-18,514 3,431,495 Total Depreciable Historical Cost 162,754,595 6,849,759 3,193, ,410,859 Less accumulated depreciation: Buildings and improvements 69,161,197 3,854,646-73,015,843 Machinery and equipment 12,566,410 1,708,987 3,124,468 11,150,929 Land improvements 2,350, ,574 18,514 2,503,793 Total Accumulated Depreciation 84,078,340 5,735,207 3,142,982 86,670,565 Total Capital Assets, net $ 89,846,003 $ 4,836,694 $ 2,508,117 $ 92,174,580 B25.

80 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans General Information The District participates in the New York State and Local Employees Retirement System (ERS) and the New York State Teachers Retirement System (TRS). Collectively, TRS and ERS are referred to herein as the Systems. These are cost-sharing multiple employer, public employee retirement systems. The Systems offer a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability. Plan Descriptions Teachers Retirement System The TRS is administered by the New York State Teachers Retirement Board. The System provides retirement benefits as well as death and disability benefits to plan members and beneficiaries as authorized by the Education Law and the Retirement and Social Security Law of the State of New York. The system is governed by a 10 member Board of Trustees. Membership is mandatory and automatic for all full-time teachers, teaching assistants, guidance counselors and administrators employed in the New York Public Schools and BOCES who elected to participate in TRS. Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. The New York State TRS issues a publicly available financial report that contains financial statements and required supplementary information for the System. The report and additional information may be obtained by writing to the New York State Teachers Retirement System, 10 Corporate Woods Drive, Albany, NY or by referring to the NYSSTR Comprehensive Annual Financial report which can be found on the System s website at Employees Retirement System The New York State and Local Employees Retirement System provides retirement benefits as well as death and disability benefits. The net position of the System is held in the New York State Common Retirement Fund (The Fund), which was established to hold all net assets and record changes in plan net position allocated to the System. The Comptroller of the State of New York serves as the trustee of the Fund and is the administrative head of the System. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report and additional information may be obtained by writing to the New York State and Local Employees Retirement System, 110 State Street, Albany, NY or found at B26.

81 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans Contributions The Systems are noncontributory except for employees who joined after July 27, 1976 who contribute 3% of their salary for the first ten years of membership, and employees who joined on or after January 1, 2010 who generally contribute 3% to 3.5% of their salary for their entire length of service. In addition, employee contribution rates under ERS tier VI vary based on a sliding salary scale. For ERS, the Comptroller certifies the rates expressed as proportions of members payroll annually, which are used in computing the contributions required to be made by employers to the pension accumulation fund. Pursuant to Article 11 of the Education Law, the New York State Teachers Retirement Board establishes rates annually for TRS. The District is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS TRS $ 1,683,704 $ 4,901, ,980,771 5,375, ,919,873 6,800,880 The District contributions made to the Systems were equal to 100 percent of the contributions required for each year. Pension Liabilities At June 30, 2017, the District reported the following asset/(liability) for its proportionate share of the net pension asset/(liability) for each of the Systems. The net pension asset/(liability) was measured as of March 31, 2017 for ERS and June 30, 2016 for TRS. The total net pension asset/(liability) used to calculate the net pension asset/(liability) was determined by an actuarial valuation as of that date. The District s proportion of the net pension asset/(liability) was based on a projection of the District s long-term share of contributions of all participating members, actuarially determined. This information was provided by the ERS and TRS systems in reports provided to the District. The ERS information provided was further allocated by the District so that just its proportionate share is recognized. ERS TRS Actuarial valuation date April 1, 2016 June 30, 2015 Net pension asset/(liability) ($3,497,698) ($2,813,519) District s portion of the Plan s total net pension asset/(liability) % % B27.

82 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans Pension Expense (Credit) For the year ended June 30, 2017, the District recognized its proportionate share of pension expense of $2,002,980 for ERS and $4,653,710 for TRS. Deferred Outflows and Inflows of Resources Related to Pensions At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources ERS TRS ERS TRS Differences between expected and actual experiences $ 87,649 $ - $ 531,145 $ 913,988 Changes of assumptions 1,194,942 16,027, Net difference between projected and actual earnings on pension plan investments 698,632 6,326, Changes in proportion and differences between contributions and proportionate share of contributions 457,848 28,456 15, ,369 Contributions subsequent to the measurement date 489,396 4,901, Total $ 2,928,467 $ 27,283,421 $ 546,583. $ 1,180,357 District s contributions subsequent to the measurement date will be recognized as a reduction of the net pension (liability)/asset in the year ended June 30, 2017 for TRS and March 31, 2017 for ERS. Other amounts reported as deferred outflows of resources, and deferred inflows of resources related to pensions will be recognized within pension expense as follows: ERS TRS Year ended: 2017 $ - $ 1,917, ,324 1,917, ,324 6,830, ,651 5,302, (430,811) 2,410,547 Thereafter - 2,822,958 B28.

83 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans Actuarial Assumptions The total pension (liability)/asset as of the measurement date was determined by using an actuarial valuation as noted in the table below, with update procedures used to roll forward the total pension (liability)/asset to the measurement date. The actuarial valuation used the following actuarial assumptions: ERS TRS Measurement date March 31, 2017 June 30, 2016 Actuarial valuation date April 1, 2016 June 30, 2015 Interest rate 7.0% 7.5% Salary scale 3.8% 1.9% %* Decrement tables April 1, March 31, 2015 System s Experience July 1, June 30, 2014 System s Experience Inflation rate 2.5% 2.5% Projected cost of living Adjustments 1.3% annually 1.5% annually For ERS, annuitant mortality rates are based on April 1, 2010 March 31, 2015 System s experience with adjustments for mortality improvements based on MP For TRS, annuitant mortality rates are based on July 1, 2009 June 30, 2014 System s experience with adjustments for mortality improvements based on Society of Actuaries Scale MP For ERS, the actuarial assumptions used in the April 1, 2016 valuation are based on the results of an actuarial experience study for the period April 1, March 31, For TRS, the actuarial assumptions used in the June 30, 2016 valuation are based on the results of an actuarial experience study for the period July 1, 2009 June 30, The long-term expected rate of return on pension plan investments was determined in accordance with Actuarial Standard of Practice (ASOP) No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. ASOP No. 27 provides guidance on the selection of an appropriate assumed investment rate of return. Consideration was given to expected future real rates of return (expected returns, net of pension plan investment expense and inflation) for each major asset class as well as historical investment data and plan performance. B29.

84 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans The long-term expected rate of return on pension plan investments was determined in accordance with Actuarial Standard of Practice (ASOP) No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. ASOP No. 27 provides guidance on the selection of an appropriate assumed investment rate of return. Consideration was given to expected future real rates of return (expected returns, net of pension plan investment expense and inflation) for each major asset class as well as historical investment data and plan performance. The long-term expected rate of return on pension plan investments was determined using a building block method in which best estimate ranges of expected future real rates of return (expected returns net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation are summarized below: ERS Target Allocation Long-term expected real rate of return* Asset Class: Domestic equities 38% 36% 7.30% 4.55% International equities Private Equity Real estate Absolute return strategies (1) Opportunistic portfolio Real assets Bonds and mortgages Cash (0.25) Inflation-Indexed bonds Total 100% 100% * Real rates of return are net of the long-term inflation assumption of 2.5% for 2016 and (1) Excludes equity-oriented and long-only funds. For investment management purposes, these funds are included in domestic equity and international equity, respectively. B30.

85 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans TRS Target Allocation Long-term expected real rate of return* Asset Class: Domestic equities 37% 6.1% International equities Real estate Private equities Total equities 72 Domestic fixed income securities Global fixed income securities Mortgages Short-term Total fixed income 28 Total 100% * Real rates of return are net of the long-term inflation assumption of 2.1% for Discount rate The discount rate used to calculate the total pension (liability)/asset was 7.0% for ERS and 7.5% for TRS. The projection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates, actuarially based upon the assumptions, the System s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore the longterm expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension (liability)/asset. Sensitivity of the Proportionate Share of the Net Pension (Liability)/Asset to the Discount Rate Assumption The following presents the District s proportionate share of the net pension (liability)/asset calculated using the discount rate of 7.0% for ERS and 7.5% for TRS, as well as what the District s proportionate share of the net pension asset/(liability) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.0% for ERS and 6.5% for TRS) or 1- percentage-point higher (8.0% for ERS and 8.5% for TRS) than the current rate: B31.

86 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities I. Pension Plans ERS 1% Decrease (6.0%) Current Assumption (7.0%) 1% Increase (8.0%) Employer s proportionate share of the net pension asset/(liability) ($11,170,955) ($3,497,698) $ 2,990,026 TRS 1% Decrease (6.5 %) Current Assumption (7.5%) 1% Increase (8.5%) Employer s proportionate share of the net pension asset/(liability) ($ 36,708,747) ($ 2,813,519) $ 25,616,022 Changes of Assumptions Changes of assumptions about future economic or demographic factors or other inputs are amortized over a closed period equal to the average of the expected service lives of all employees that are provided with pension benefits. Collective Pension Expense Collective pension expense includes certain current period changes in the collective net pension asset/(liability), projected earnings on pension plan investments, and the amortization of deferred outflows of resources and deferred inflows of resources for the current period. The collective pension expense for the year ended June 30, 2017 is $2,147,841 for ERS and $4,614,659 for TRS. Payables to the Pension Plan For ERS, employer contributions are paid annually based on the System s fiscal year which ends on March 31 st. Accrued retirement contributions as of June 30, 2017 represent the projected employer contribution for the period of April 1, 2017 through June 30, 2017 based on paid ERS wages multiplied by the employer s contribution rate, by tier. Accrued retirement contributions as of June 30, 2017 amounted to $489,396. For TRS, employer and employee contributions for the fiscal year ended June 30, 2017 are paid to the System in September, October and November 2017 through a state aid intercept. Accrued retirement contributions as of June 30, 2017 represent employee and employer contributions for the fiscal year ended June 30, 2017 based on paid TRS wages multiplied by the employer s contribution rate, by tier and employee contributions for the fiscal year as reported to the TRS System. Accrued retirement contributions as of June 30, 2017 amounted to $5,194,546. Other Benefits District employees may choose to participate in the District s elective deferred compensation plans established under Internal Revenue Code Section 403(b). B32.

87 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS II. Indebtedness 1. Short-Term Debt Revenue Anticipation Notes and Tax Anticipation Notes For governmental funds, notes issued in anticipation of the receipt of revenues are recorded as a liability of the fund that will actually receive the proceeds from the issuance of the notes. The revenue anticipation and tax anticipation notes represent a liability that will be extinguished by the use of expendable available resources of the fund. The District did not issue or redeem any revenue or tax anticipation notes during the current year. Bond Anticipation Notes Notes issued in anticipation of proceeds from the subsequent sale of bonds are recorded as a current liability of the fund that will actually receive the proceeds from the issuance of the bonds. State law requires that bond anticipation notes issued for capital purposes be converted to long-term financing within five years after the original issue date. There were no Bond Anticipation Notes issued or redeemed during the year. 2. Long-Term Debt a. Serial and Statutory Bonds The District borrows money in order to acquire or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the capital assets. These longterm liabilities are full faith and credit debt of the District. The provision to be made in future budgets for capital indebtedness represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. During the current year, the District recognized $1,345,397 of expenditures for serial and statutory bond debt interest in the General Fund. Interest on long-term debt for the year was composed of: Interest paid $ 1,345,397 Less interest accrued in the prior year (56,213) Plus interest accrued in the current year 45,886 Plus amortization of deferred costs 268,431 Less amortization of bond premium (508,315) Total Expense $ 1,095,186 B33.

88 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities II. Indebtedness 2. Long-Term Debt b. Other Long-Term Debt 3. Changes In addition to the above long-term debt, the District had the following noncurrent liabilities: Compensated Absences - Represents the value of the earned and unused portion of the liability for employees' vacation and sick pay, which has not been accrued in the General Fund. Workers Compensation - Represents the estimate of the District's share of unpaid workers compensation claims and administrative costs due. Judgments and Claims - The noncurrent portion of the estimated liability for various legal actions taken against the District. Other Post Employment Benefits - Represents the net liability for other postemployment benefits calculated in accordance with GASB 45. The changes in bonds and other long-term indebtedness during the year ended June 30, 2017 are summarized as follows: July 1, 2016 Additions Deletions June 30, 2017 Serial Bonds $ 33,795,000 $ 5,075,000 $ 9,290,000 $ 29,580,000 Plus - Bond Premium 1,372, , ,315 1,082,324 Less - Unamortized Loss* (654,760) (155,575) (268,431) (541,904) Total Bonds 34,512,514 5,137,790 9,529,884 30,120,420 Compensated Absences 5,379, ,349 5,192,056 Workers Compensation 795, , , ,069 Judgments and Claims 2,020,552-1,461, ,400 Other Post Employment Benefits 49,208,529 14,556,342 7,636,360 56,128,511 Total $ 91,916,153 $ 20,099,648 $ 19,090,345 $ 92,925,456 Additions and deletions to compensated absences and workers compensation are shown net since it is impractical to determine these amounts separately. The above liabilities are liquidated by the General Fund. *This item is recorded as a deferred outflow on the statement of net position. B34.

89 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities II. Indebtedness 4. Maturity The following is a summary of maturity of indebtedness: Description of Issue Issue Date Final Maturity Interest Rate Outstanding June 30, 2017 Serial Bonds Refunding Bond 4/15/2010 6/15/ %-5.0% $ 11,520,000 Refunding Bond 12/28/2011 6/15/ %-5.00% 6,070, Bus Purchase 6/27/2013 6/15/ %-1.50% 180, Bus Purchase 12/9/ /15/ %-1.70% 350, Bus Purchase 6/26/15 6/15/20 2.0%-2.8% 525, Bus Purchase 12/15/16 12/15/21 2.0%-2.8% 2,195, Serial Bonds 6/26/2015 6/15/ %-2.80% 5,875,000 Refunding Bond 8/17/16 6/15/ %-4.0% 2,865,000 Total $ 29,580,000 The following is a summary of maturing debt service requirements for bonds: Principal Interest Total 2018 $ 6,930,000 $1,113,866 $ 8,043, ,030, ,625 7,844, ,110, ,238 7,631, ,720, ,387 1,937, ,755, ,113 1,927, ,610, ,206 4,018, ,425,000 78,612 1,503,612 $ 29,580,000 $3,326,047 $ 32,906,047 B35.

90 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities II. Indebtedness 5. Advanced Refunding Prior Year Defeasance In a prior fiscal year, the District defeased serial bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District s financial statements. At June 30, 2017, $18.60 million of bonds outstanding are considered defeased. III. Deferred Inflows of Resources Deferred inflow of resources arises when a potential revenue does not meet both the measurable and available criteria for recognition in the current period. IV. Constitutional Debt Limit The constitution of the State of New York limits the amounts of indebtedness which may be issued by the District. The District may issue indebtedness to the extent that the aggregate outstanding debt issues which are subject to such limit does not exceed 5% of the average full valuation of taxable real estate within the District. At June 30, 2017, the District has exhausted 10.44% of its constitutional debt limit. V. Workers Compensation Insurance The District is self-insured for workers compensation benefits on a cost-reimbursement basis. Under the program, the District is responsible for claim payments. All known claims filed and an estimate of all incurred but unreported claims existing at June 30, 2017 have been recorded as other liabilities. The District establishes workers compensation claims liabilities based on estimates of the ultimate cost of claims (including future claim adjustment expenses) that have been reported but not settled, and of claims that have been incurred but not reported. The length of time for which such costs must be estimated varies depending on the coverage involved. Because actual claims costs depend on such complex factors as inflation, changes in doctrines of legal liability, and damage awards, the process used in computing claims liabilities does not necessarily result in an exact amount. Claims liabilities are recomputed periodically using a variety of actuarial and statistical techniques to produce current estimates that reflect recent settlements, claims frequency, and other economic and social factors. A provision for inflation in the calculation of estimated future claims costs is implicit in the calculation because reliance is placed both on actual historical data that reflect past inflation and on other factors that are considered to be appropriate modifiers of past experience. Adjustments to claims liabilities are charged or credited to the liability in the periods in which they are made. B36.

91 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities V. Workers Compensation Insurance As discussed above, the District establishes a liability for both reported and unreported insured events, which includes estimates of both future payments of losses and related claim adjustment expenses. The following represents changes in those aggregate liabilities for the District during the past two years: Unpaid claims and claim adjustment expenses at beginning of year $ 795,153 $ 750,389 Incurred claims and claim adjustment expenses: Provision for incurred claims expenditures for events of the current year 42,224 67,504 Increase in provision for incurred events of prior years 363, ,259 Total incurred claims and claim adjustment expenses 405, ,763 Payments made for claims during the current year 275, ,999 Total unpaid (prepaid) claims and claim adjustment expenses at end of year $ 925,069 $ 795,153 VI. Post Employment Benefits Plan Description The District administers the post employment benefits as a single-employer defined benefit plan (the Plan), through which retirees and their spouses receive benefits. The Plan provides for continuation of medical and/or dental/vision benefits for certain retirees and their survivors and can be amended by action of the District subject to applicable collective bargaining and employment agreements. The Plan does not issue a separate financial report since there are no assets legally segregated for the sole purpose of paying benefits under the Plan. Funding Policy The obligations of the Plan members, employer and other contributing entities are established by action of the District pursuant to applicable collective bargaining and other employment agreements. Employees contribute varying percentages of the premiums, depending on when retired and their applicable agreement. B37.

92 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities VI. Post Employment Benefits Funding Policy (Continued) Employees are eligible for the retiree health benefits upon meeting the following requirements: 1) retire from the District, 2) enrolled in District provided health care at time of retirement, 3) must reach age 55 (earlier if disabled) and 4) there is no service requirement for Tier 1 employees and a 5 year service requirement for Tiers 2, 3 and 4 (ERS and TRS). The District currently funds the plan to satisfy current obligations on a pay-as-you-go basis. During the year ended June 30, 2017, approximately $7,636,000 was paid on behalf of 879 retirees. Actuarial Methods and Assumptions The actuarial valuation date is as of July 1, Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contributions of the District are subject to continual revision as actual results are compared with past expectations and new estimates about the future. The schedule of funding progress is presented as required supplementary information following the notes to the financial statements. Projected benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the District and the Plan members) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the District and Plan members to that point. The actuarial calculations reflect a long-term perspective; actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Previously, the actuarial funding method used to calculate the costs of the Plan is known as the Projected Unit Credit Method. Under this method, the present value of each employee s future retiree health benefit claims costs is allocated over a portion of the employee s employment, the attribution period. The attribution period for this group begins with the employee s date of employment and ends with the date on which the employee is expected to retire. The accrued liability for active employees is the portion of benefit liability attributed to service years to date. Normal cost is the amount of benefit liability attributed to the current employment year. Normal cost for retired employees is zero. The initial accrued liability is amortized over a 30-year period using the level dollar method. Actuarial gains and losses will be determined annually and amortized over a fixed 15-year period. Actuarial Methods and Assumptions Beginning with the July 1, 2016 actuarial valuation the funding method used to calculate the costs of the Plan is known as Entry Age Normal (level percentage of salary). Under this method, the total normal cost is the sum of amounts necessary to fund each active member s normal retirement benefit if paid annually from entry age to assumed retirement age. B38.

93 3. DETAIL NOTES ON ALL FUNDS B. Liabilities SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 VI. Post Employment Benefits Actuarial Methods and Assumptions Entry age is the age at which the employee would have been first eligible for the plan, if it had always been in effect. The normal cost for each participant is expected to remain a level percentage of the employee s salary. The normal cost for the plan is the difference between normal costs for the year and the anticipated member contributions for the year. The present value of future benefits that relates to service before the valuation date is the total past service liability. The unfunded past service liability is the difference between the total past service liability and any assets. This amount is amortized over 30 years on an open basis. The following assumptions were used in the calculation: a) a 2.85% discount rate, b) initial medical cost trend of 8.0% that is downgraded to an ultimate rate of 5.00%, c) mortality tables based on the RP-2014 mortality table d) assumed retirement age of the later of age 59 or date eligible for retiree health benefits, but no later than age 68, e) active participants are assumed to keep their current marital status upon retirement, f) turnover was calculated from ERS and TRS data which uses rates of 11.34% for employees less than 20 years of age to 1.83% for employees ages 55-69, g) retirement election rates for OPEB are assumed to be 100% for all employees, h) the current benefits will remain in effect for all future years, however negotiated changes in planned contributions that were not yet scheduled to take effect were considered in the calculation, and i) there were no explicit assumptions for expenses because the assumed interest discount rates are net of expenses. Annual OPEB Cost and Net OPEB Obligation The District s annual other post employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table summarizes the Annual OPEB Cost: Normal Cost $ 3,312,452 $ 3,577,406 Amortization of Unfunded Actuarial Liability 12,773,692 12,163,586 ARC 16,086,144 15,740,992 Interest on OPEB Obligation 1,402,443 1,577,409 Adjustment to ARC (2,932,245) (2,652,547) OPEB Expense $ 14,556,342 $ 14,665,854 Net OPEB Obligation at the beginning of the year $ 49,208,529 $ 40,971,656 OPEB Expense 14,556,342 14,665,853 Net OPEB Contributions made during the fiscal year (7,636,360) (6,428,980) Net OPEB Obligation at the end of the year $ 56,128,511 $ 49,208,529 Percentage of Expense Contributed 52% 44% B39.

94 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, DETAIL NOTES ON ALL FUNDS B. Liabilities VI. Post Employment Benefits The net increase in the OPEB obligation at the end of the year is reflected as an operating expense in the accompanying financial statements. Fiscal Year Ending Annual OPEB Cost Actual Contribution Percentage Contributed Net OPEB Obligation 06/30/17 $ 14,556,342 $ 7,636,360 52% $ 56,128,511 06/30/16 $ 14,665,854 $ 6,428,980 44% $ 49,208,529 06/30/15 $ 13,309,718 $ 6,685,893 50% $ 40,971,656 Funded Status Accrued liability at end of year $212,571,375 Plan assets at end of year - Unfunded accrued liability $212,571,375 Percentage of Funded Accrued Liability 0% 4. COMMITMENTS AND CONTINGENCIES A. Litigation Several tax certiorari actions are pending against the District for reductions in the assessed value of various properties. The petitions are for taxes collected between and Management believes that the likelihood of a reduction is probable. Provisions for losses for those cases related to through taxes collected are recorded in long-term debt. The District plans on funding any settlements from the Tax Certiorari Reserve, future appropriations and/or issuing debt. B. Risk Financing and Related Insurance The Saratoga Springs City School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omissions; and natural disasters. These risks, except for workers compensation, are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past two years. C. Other Items The District has received grants which are subject to audit by agencies of the State and Federal governments. Such audits may result in disallowances and a request for a return of funds. Based on prior audits, the District s administration believes disallowances, if any, will be immaterial. B40.

95 SARATOGA SPRINGS CITY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, TAX ABATEMENTS The County of Saratoga, the City of Saratoga Springs and the Town of Wilton, enter into various property tax abatement programs for the purpose of economic development. The District property tax revenue was reduced $155,000. The District received Payment in Lieu of Tax (PILOT) payments totaling $204, PRIOR PERIOD ADJUSTMENT The District identified that certain pre-paid student lunches were recognized in prior years as revenue when received rather than as refundable advances. The District restated the beginning fund balance in the School Lunch by reducing fund balance by $73,243. The beginning net position of the entitywide financial statements was reduced by the same amount. 7. SUBSEQUENT EVENTS The District has evaluated subsequent events through October 13, 2017, which is the date these financial statements were issued. All subsequent events requiring recognition as of June 30, 2017, have been incorporated into these financial statements. B41.

96 SARATOGA SPRINGS CITY SCHOOL DISTRICT REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2017 Final Budget Original Final Variance with Budget Budget Actual Actual Revenues Local Sources Real Property Taxes $ 78,497,772 $ 78,497,772 $ 78,244,060 $ (253,712) Real Property Tax Items 350, , ,229 77,229 Charges for Services 268, , , ,048 Use of Money and Property 131, , , ,271 Sale of Property and Compensation for Loss - 38,963 36,301 (2,662) Miscellaneous 50, ,811 1,026, ,176 Total Local Sources 79,297,772 79,439,557 80,517,907 1,078,350 State Sources 33,883,703 33,883,703 33,061,000 (822,703) Federal Sources 310, , , ,434 Total Revenue and Other Sources 113,491, ,633,260 $ 114,129,341 $ 496,081 Appropriated Fund Balance Prior Year's Encumbrances 498, ,176 Apparopriated Fund Equity 4,907,243 5,050,973 Total Appropriated Fund Balance 5,405,419 5,549,149 Total Revenues, Other Sources and Appropriated Fund Balance $ 118,896,894 $ 119,182,409 C1.

97 SARATOGA SPRINGS CITY SCHOOL DISTRICT REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2017 Expenditures Final Budget Variance with Original Final Actual and Budget Budget Actual Encumbrances Encumbrances General Support Board of Education $ 32,899 $ 33,248 $ 23,794 $ 1,249 $ 8,205 Central Administration 382, , ,901 1,272 22,851 Finance 1,074,081 1,079,360 1,038,972 4,102 36,286 Staff 967, , ,130 1, ,101 Central Services 7,926,802 7,921,370 7,318, , ,392 Special Items 1,557,740 1,659,005 1,605,598-53,407 Total General Support 11,941,352 11,858,238 11,018, , ,242 Instruction Instruction, Administration & Improvement 4,464,444 4,199,230 4,067,934 55,687 75,609 Teaching - Regular School 32,695,181 31,429,021 30,547, , ,753 Programs for Students with Disabilities 10,340,928 12,753,659 12,495, ,915 59,149 Occupational Education 3,777,316 3,820,545 3,815, ,044 Teaching - Special Schools 305, ,459 91,422-97,037 Instructional Media 3,806,210 3,726,901 3,638,799 6,505 81,597 Pupil Services 5,369,723 5,108,305 4,945,129 5, ,506 Total Instruction 60,759,561 61,226,120 59,601, ,413 1,091,695 Other Pupil Transportation 5,060,814 5,092,457 4,770,166 16, ,069 Community Services 194, , ,426 35, Employee Benefits 32,819,890 32,683,116 30,498,454-2,184,662 Debt Service Debt Service Principal 6,350,000 6,365,000 6,365, Debt Service Interest 1,470,712 1,439,412 1,345,397-94,015 Total other 45,895,981 45,785,751 43,149,443 51,222 2,585,086 Total Expenditures 118,596, ,870, ,768, ,623 4,358,023 Other Financing Uses Interfund Transfer 300, , , Total Expenditures and Other Uses $ 118,896,894 $ 119,182, ,080,714 $ 743,623 $ 4,358,072 Net Change in Fund Balance $ 48,627 Fund balance - beginning 47,426,159 Fund balance - ending $ 47,474,786 C2.

98 SARATOGA SPRINGS CITY SCHOOL DISTRICT REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN JUNE 30, 2017 Actuarial Valuation Date Actuarial Valuation of Assets (a) Actuarial Accrued Liability (AAL) - Projected Unit Credit (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll (c) UAAL as a percentage of Covered Payroll ((b-a)/c) 7/1/2016 $ - $174,212,010 $174,212,010 0% $38,913, % 7/1/2014 $ - $223,224,862 $223,224,862 0% $37,218, % 7/1/2012 $ - $149,453,222 $149,453,222 0% $37,077, % C3.

99 SARATOGA SPRINGS CITY SCHOOL DISTRICT SCHEDULES OF PROPORTIONATE SHARE OF NET PENSION LIABILITY (ASSET) FOR THE YEAR ENDED JUNE 30, 2017 ERS Pension Plan Last 10 Fiscal Years Proportion of the net pension liability (asset) % % Proportionate share of the net pension liability (asset) $ 3,497,698 $ 6,050,744 Covered-employee payroll $ 12,367,564 $ 11,751,695 Proportionate share of the net pension liability (asset) as a percentage of covered-employee payroll 28% 51.5% Plan fiduciary net position as a percentage of the total pension liability 94.70% 90.7% TRS Pension Plan Last 10 Fiscal Years Proportion of the net pension liability (asset) % % Proportionate share of the net pension liability (asset) $ 2,813,519 $ (26,825,540) Covered-employee payroll $ 40,542,967 $ 39,515,000 Proportionate share of the net pension liability (asset) as a percentage of covered-employee payroll 7% -68% Plan fiduciary net position as a percentage of the total pension liability 99.01% % Note: This schedule is presented to illustrate the requirement to show information for 10 years. However until a full 10-year trend is compiled this presentation will only include information for those years for which information is available. C4.

100 SARATOGA SPRINGS CITY SCHOOL DISTRICT SCHEDULES OF DISTRICT CONTRIBUTIONS FOR THE YEAR ENDED JUNE 30, 2017 ERS Pension Plan Last 10 Fiscal Years Contractually required contribution $ 1,683,704 $ 1,980,771 Contributions in relation to the contractually required contribution (1,683,704) (1,980,771) Contribution deficiency (excess) $ - $ - Covered-employee payroll $ 12,367,564 $ 11,751,695 Contributions as a percentage of covered-employee payroll 13.61% 16.86% TRS Pension Plan Last 10 Fiscal Years Contractually required contribution $ 4,901,101 $ 5,375,034 Contributions in relation to the contractually required contribution (4,901,101) (5,375,034) Contribution deficiency (excess) $ - $ - Covered-employee payroll $ 40,542,967 $ 39,515,000 Contributions as a percentage of covered-employee payroll 12.09% 13.60% Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled this presentation will only include information for those years for which information is available. C5.

101 SARATOGA SPRINGS CITY SCHOOL DISTRICT SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES FROM ADOPTED BUDGET TO FINAL BUDGET AND SCHEDULE OF SECTION 1318 OF REAL PROPERTY TAX LAW LIMIT CALCULATION FOR THE YEAR ENDED JUNE 30, 2017 CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET Adopted Budget $ 118,398,718 Add: Prior year's encumbrances 498,176 Original Budget 118,896,894 Additions: Budget Amendments 285,515 Final Budget $ 119,182,409 SECTION 1318 OF REAL PROPERTY TAX LAW LIMIT CALCULATION [subsequent year's] voter-approved expenditure budget $ 122,712,342 Maximum allowed (4% of [subsequent year's] budget) 4,908,494 General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law*: Unrestricted Fund Balance: Committed Fund Balance $ - Assigned Fund Balance 7,275,026 Unassigned Fund Balance 9,062,186 Total Unrestricted Fund Balance 16,337,212 Less: Appropriated Fund Balance 6,531,403 Encumbrances included in Committed and Assigned Fund Balance 743,623 Total Adjustments 7,275,026 General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law $ 9,062,186 Actual percentage 7.38% * Per office of the State Comptroller's "Fund Balance Reporting and Governmental Fund Type Definitions," Updated April 2011 (Originally Issued November 2010), the portion of [General Fund] fund balance subject to Section 1318 of the Real Property Tax law is: unrestricted fund balance (i.e., the total of the committed, assigned, and unassigned classifications), minus appropriated fund balance, amounts reserved for insurance recovery, amounts reserved for tax reduction, and encumbrances included in committed and assigned fund balance. D1.

102 SARATOGA SPRINGS CITY SCHOOL DISTRICT SCHEDULE OF PROJECT EXPENDITURES - CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2017 Expenditures Methods of Financing Fund Prior Current Unexpended Proceeds of Local Balance Project Title Original Revised Year's Year's Total Balance Obligations Sources Total June 30,2017 Caroline Street H Capital Project 3.24 M SED Project #: $ 150,984 $ 176,375 $ 168,772 $ 7,242 $ 176,014 $ 361 $ 106,000 $ 47,000 $ 153,000 $ (23,014) Division Street H Capital Project 3.24 M SED Project #: $ 149,040 $ 175,697 $ 171,049 $ 5,813 $ 176,862 $ (1,165) $ 105,000 $ 47,000 $ 152,000 $ (24,862) Dorothy Nolan H Capital Project 3.24 M SED Project #: $ 583,200 $ 426,565 $ 380,907 $ 7,522 $ 388,429 $ 38,136 $ 404,000 $ 180,000 $ 584,000 $ 195,571 Geyser Road H Capital Project 3.24 M SED Project #: $ 155,520 $ 155,654 $ 155,654 $ 5,618 $ 161,272 $ (5,618) $ 106,100 $ 50,000 $ 156,100 $ (5,172) Greenfield Center H Capital Project 3.24 M SED Project #: $ 260,496 $ 260,496 $ 207,739 $ 6,830 $ 214,569 $ 45,927 $ 182,300 $ 80,000 $ 262,300 $ 47,731 Lake Avenue H Capital Project 3.24 M SED Project #: $ 191,160 $ 212,335 $ 210,019 $ 5,810 $ 215,829 $ (3,493) $ 134,200 $ 60,000 $ 194,200 $ (21,629) Maple Avenue H Capital Project 3.24 M SED Project #: $ 129,600 $ 411,035 $ 367,744 $ 4,220 $ 371,964 $ 39,071 $ 122,200 $ 55,000 $ 177,200 $ (194,764) Senior High School H Capital Project 3.24 M SED Project #: $ 1,620,000 $ 1,421,843 $ 1,429,599 $ 13,240 $ 1,442,839 $ (20,996) $ 1,080,200 $ 481,000 $ 1,561,200 $ 118,361 Total H16 Project $ 3,240,000 $ 3,240,000 $ 3,091,483 $ 56,294 $ 3,147,777 $ 92,223 $ 2,240,000 $ 1,000,000 $ 3,240,000 $ 92,223 Caroline Street H Capital Project 6.4M SED Project #: $ 1,784,700 $ 1,289,132 $ 293,284 $ 781,124 $ 1,074,408 $ 214,724 $ 550,000 $ 250,000 $ 800,000 $ (274,408) Division Street H Capital Project 6.4M SED Project #: $ 1,796,540 $ 1,796,540 $ 404,725 $ 722,318 $ 1,127,043 $ 669,497 $ 550,000 $ 250,000 $ 800,000 $ (327,043) Dorothy Nolan H Capital Project 6.4M D2.

103 SED Project #: $ 170,900 $ 170,900 $ 85,980 $ 44,889 $ 130,869 $ 40,031 $ 550,000 $ 250,000 $ 800,000 $ 669,131 Geyser Road H Capital Project 6.4M SED Project #: $ 11,900 $ 11,900 $ 1,063 $ 123 $ 1,186 $ 10,714 $ 550,000 $ 250,000 $ 800,000 $ 798,814 Greenfield Center H Capital Project 6.4M SED Project #: $ 347,600 $ 347,600 $ 137,232 $ 23,825 $ 161,057 $ 186,543 $ 550,000 $ 250,000 $ 800,000 $ 638,943 Lake Avenue H Capital Project 6.4M SED Project #: $ 47,100 $ 91,531 $ 75,163 $ 12,821 $ 87,984 $ 3,546 $ 550,000 $ 250,000 $ 800,000 $ 712,016 Maple Avenue H Capital Project 6.4M SED Project #: $ 329,800 $ 329,800 $ 221,358 $ 10,088 $ 231,446 $ 98,354 $ 550,000 $ 250,000 $ 800,000 $ 568,554 Senior High School H Capital Project 6.4M SED Project #: $ 1,911,460 $ 2,362,597 $ 1,525,320 $ 1,134,792 $ 2,660,112 $ (297,515) $ 550,000 $ 250,000 $ 800,000 $ (1,860,112) Total H17 Project $ 6,400,000 $ 6,400,000 $ 2,744,125 $ 2,729,980 $ 5,474,105 $ 925,895 $ 4,400,000 $ 2,000,000 $ 6,400,000 $ 925,895 Transportation Lifts H18 - CANCELLED- Moved to H19 June 2015 $100k SED Project # $ 100,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - Total H18 Project $ 100,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - Transportation Lifts H19 May 2016 $1.1M SED Project # $ 1,109,250 $ 1,109,250 $ - $ 46,303 $ 46,303 $ 1,062,947 $ - $ 100,000 $ 100,000 $ 53,697 Total H19 Project $ 1,109,250 $ 1,109,250 $ - $ 46,303 $ 46,303 $ 1,062,947 $ - $ 100,000 $ 100,000 $ 53,697 Smart Schools Bond Act H20 March 2016 $2.7M SED Project # $ 2,738,126 $ 2,738,126 $ - $ 1,474,388 $ 1,474,388 $ 1,263,737 $ - $ - $ - $ (1,474,388) Total H20 Project $ 2,738,126 $ 2,738,126 $ - $ 1,474,389 $ 1,474,389 $ 1,263,737 $ - $ - $ - $ (1,474,388) Total All Capital Projects $ 13,587,376 $ 13,487,376 $ 5,835,608 $ 4,306,966 $ 10,142,574 $ 3,344,802 $ 6,640,000 $ 3,100,000 $ 9,740,000 $ (402,573) Bus Purchases $ 1,080,314 $ 1,080,314 $ - $ 1,080,314 $ 1,080,314 $ - $ - $ 1,080,314 $ 1,080,314 $ - Grand Totals $ 14,667,690 $ 14,567,691 $ 5,835,608 $ 5,387,281 $ 11,222,889 $ 3,344,802 $ 6,640,000 $ 4,180,314 $ 10,820,314 $ (402,573) D3.

104 SARATOGA SPRINGS CITY SCHOOL DISTRICT SCHEDULE OF NET INVESTMENT IN CAPITAL ASSETS JUNE 30, 2017 Capital Assets, Net Add: Unamortized deferred loss $ 541,904 Capital projects fund - cash and investments 1,058,656 Deduct: Short-term portion of bonds payable $ (6,930,000) Long-term portion of bonds payable (22,650,000) Unamortized bond premium (1,082,324) $ 92,174,580 1,600,560 (30,662,324) Net Investment in Capital Assets $ 63,112,816 D4.

105 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 To the President and Members of the Board of Education of the Saratoga Springs City School District We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Saratoga Springs City School District (the District), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District s basic financial statements, and have issued our report thereon dated October 13, 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 expressing 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 the District s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. E1.

106 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 material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and which is described in the accompany schedule of findings and questioned costs as item Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Marvin and Company, P.C. Latham, NY October 13, 2017 E2.

107 SARATOGA SPRINGS CITY SCHOOL DISTRICT SINGLE AUDIT SUPPLEMENTARY FINANCIAL REPORT JUNE 30, 2017

108 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the President and Members of the Board of Education of Saratoga Springs City School District Report on Compliance for Each Major Federal Program We have audited the Saratoga Springs City School District s (the District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the District s major federal programs for the year ended June 30, The District s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the District s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Saratoga Springs City School District s compliance. F1.