Board of Education of Davis School District, Utah

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1 NEW ISSUE Rating: 2013A Building Bonds Moody s Aaa (State of Utah Guaranty; underlying Aa2 ) 2013B Refunding Bonds Moody s Aaa (State of Utah Guaranty; underlying Aa2 ) See STATE OF UTAH GUARANTY and MISCELLANEOUS Bond Ratings herein. In the opinion of Ballard Spahr LLP, Bond Counsel to the Board, interest on the 2013 Bonds is excludable from gross income for purposes of federal income tax, assuming continuing compliance with the requirements of the federal tax laws. Interest on the 2013 Bonds is not a preference item for purposes of either individual or corporate federal alternative minimum tax; however, interest paid to corporate holders of the 2013 Bonds may be indirectly subject to alternative minimum tax under circumstances described under LEGAL MATTERS herein. Bond Counsel is also of the opinion that, under currently existing law, interest on the 2013 Bonds is exempt from State of Utah individual income taxes. See LEGAL MATTERS Federal Income Tax Matters herein. Board of Education of Davis School District, Utah $20,000,000 General Obligation School Building Bonds, (Utah School Bond Guaranty Program), Series 2013A $20,550,000 General Obligation Refunding Bonds, (Utah School Bond Guaranty Program), Series 2013B The $20,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2013A and the $20,550,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013B are issuable by the Board of Education of Davis School District, Utah, as fully registered bonds and, when initially issued, will be in book entry only form, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York. DTC will act as securities depository for the 2013 Bonds. Principal of and interest on the 2013A Building Bonds (interest payable June 1 and December 1 of each year, commencing December 1, 2013) and principal of and interest on the 2013B Refunding Bonds (interest payable April 1 and October 1 of each year, commencing October 1, 2013) are payable by U.S. Bank National Association, Corporate Trust Services, as Paying Agent, to the registered owners thereof, initially DTC. See THE 2013 BONDS Book Entry System herein. The 2013A Building Bonds are subject to optional redemption prior to maturity. The 2013B Refunding Bonds are not subject to optional redemption prior to maturity. See THE 2013 BONDS Redemption Provisions herein. The 2013 Bonds will be general obligations of the Board payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in Davis School District, Utah, fully sufficient to pay the 2013 Bonds as to both principal and interest. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State of Utah under the provisions of the Utah School Bond Guaranty Act. See STATE OF UTAH GUARANTY herein. Dated: Date of Delivery 1 Due: June 1 (on the 2013A Building Bonds) and April 1 (on the 2013B Refunding Bonds), as shown on inside front cover See the inside front cover for the maturity schedule of the 2013 Bonds. The 2013A Building Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on March 21, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated March 8, 2013) to Janney Montgomery Scott LLC, Philadelphia, Pennsylvania, at a true interest rate of 2.95%. The 2013B Refunding Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on March 21, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated March 8, 2013) to Citigroup Global Markets Inc., New York, New York, at a true interest rate of 1.13%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire OFFI- CIAL STATEMENT to obtain information essential to the making of an informed investment decision. This OFFICIAL STATEMENT is dated March 21, 2013, and the information contained herein speaks only as of that date. 1 The anticipated date of delivery is Thursday, April 4, 2013.

2 $20,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2013A Dated: Date of Delivery 1 Due: June 1, as shown below Due CUSIP Principal Interest Yield/ June Amount Rate Price F80 $1,060, % 1.25% F98 1,100, G22 1,145, G30 1,190, G48 1,230, G55 1,255, G63 1,280, G71 1,320, G89 1,355, G97 1,400, H21 1,440, H39 1,485, H47 1,530, H54 1,580, H62 1,630, $20,550,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013B Dated: Date of Delivery 1 Due: April 1, as shown below Due CUSIP Principal Interest April Amount Rate Yield H96 $3,845, % 0.50% J29 3,960, J37 4,080, J45 4,245, J52 4,420, The anticipated date of delivery is Thursday, April 4, 2013.

3 Table Of Contents Page INTRODUCTION... 1 Public Sale/Electronic Bid... 1 Davis School District, Utah... 2 The 2013 Bonds... 2 Security... 2 Authority And Purpose... 2 Redemption Provisions... 3 Registration, Denominations, Manner Of Payment... 3 Tax Matters... 4 Professional Services... 4 Conditions Of Delivery, Anticipated Date, Manner, And Place Of Delivery... 4 Continuing Disclosure Undertaking... 5 Basic Documentation... 5 Contact Persons... 5 CONTINUING DISCLOSURE UNDERTAKING... 6 STATE OF UTAH GUARANTY... 7 Guaranty Provisions... 7 Guaranty Procedures... 7 Purpose Of The Guaranty... 8 State Of Utah Financial And Operating Information... 9 THE 2013 BONDS... 9 General... 9 Plan Of Refunding For The 2013B Refunding Bonds Sources And Uses Of Funds Security And Sources Of Payment Redemption Provisions Registration And Transfer; Record Date Book Entry System Debt Service On The 2013 Bonds DAVIS SCHOOL DISTRICT, UTAH General Form Of Government Employee Workforce And Retirement System; No Post Employment Benefits; Early Retirement Incentive Risk Management Investment Of Funds Population Employment, Income, Construction And Sales Taxes Within Davis County And The State Of Utah Largest Employers Rate Of Unemployment Annual Average DEBT STRUCTURE OF DAVIS SCHOOL DISTRICT, UTAH Outstanding General Obligation Bonded Indebtedness Future Issuance Of Debt; Capital Leases; Historical Tax Anticipation Note Borrowing Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Page Overlapping And Underlying General Obligation Debt Debt Ratios General Obligation Legal Debt Limit And Additional Debt Incurring Capacity No Defaulted Obligations FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Fund Structure; Accounting Basis Budgets And Budgetary Accounting Management s Discussion And Analysis Financial Summaries Tax Levy And Collection Public Hearing On Certain Tax Increases Property Tax Matters Historical Tax Rates Of The District Comparative Total Property Tax Rates Within Davis County Taxable, Fair Market And Market Value Of Property Within The District Historical Summaries Of Taxable Value Of Property Tax Collection Record Some Of The Largest Taxpayers STATE OF UTAH SCHOOL FINANCE Sources Of Funds Local District Funding State Funding Federal Funding Summary Of State And Federal Funding LEGAL MATTERS Absence Of Litigation Federal Income Tax Matters State Of Utah Income Tax No Further Opinion Changes In Federal And State Tax Laws General MISCELLANEOUS Bond Ratings Escrow Verification Financial Advisor Independent Auditors Additional Information APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR A 1 APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL... B 1 APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING... C 1 APPENDIX D BOOK ENTRY SYSTEM... D 1 iii

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5 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 2013 Bonds (as defined herein), by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained herein, and if given or made, such other informational representations must not be relied upon as having been authorized by any of: the Board of Education of Davis School District, Utah (the Board ); Zions Bank Public Finance, Salt Lake City, Utah (as Financial Advisor); U.S. Bank National Association, Corporate Trust Services (as Paying Agent); the State of Utah; the successful bidder(s); or any other entity. The information contained herein has been obtained from the Board, The Depository Trust Company, New York, New York, the State of Utah, and from other sources which are believed to be reliable. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this OFFICIAL STATEMENT nor the issuance, sale, delivery or exchange of the 2013 Bonds, shall under any circumstance create any implication that there has been no change in the affairs of the Board, since the date hereof. The 2013 Bonds have not been registered under the Securities Act of 1933, as amended, or any state securities laws in reliance upon exemptions contained in such act and laws. Neither the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this OFFICIAL STATEMENT. Any representation to the contrary is unlawful. The yields at which the 2013 Bonds are offered to the public may vary from the initial reoffering yields on the inside cover page of this OFFICIAL STATEMENT. In addition, the successful bidder(s) may allow concessions or discounts from the initial offering prices of the 2013 Bonds to dealers and others. In connection with the offering of the 2013 Bonds, the successful bidder(s) may engage in transactions that stabilize, maintain, or otherwise affect the price of the 2013 Bonds. Such transactions may include overallotments in connection with the purchase of 2013 Bonds, the purchase of 2013 Bonds to stabilize their market price and the purchase of 2013 Bonds to cover the successful bidder s(s ) short positions. Such transactions, if commenced, may be discontinued at any time. Forward Looking Statements. Certain statements included or incorporated by reference in this OFFICIAL STATEMENT constitute forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as plan, project, forecast, expect, estimate, budget or other similar words. The achievement of certain results or other expectations contained in such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The Board does not plan to issue any updates or revisions to those forward looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. The CUSIP (the Committee on Uniform Securities Identification Procedures) identification numbers are provided on the inside cover page of this OFFICIAL STATEMENT and are being provided solely for the convenience of bondholders only, and the Board does not make any representation with respect to such numbers or undertake any responsibility for their accuracy. The CUSIP numbers are subject to being changed after the issuance of the 2013 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the 2013 Bonds. The information available at the web or internet sites referenced in this OFFICIAL STATEMENT has not been reviewed for accuracy and completeness. Such information has not been provided in connection with the offering of the 2013 Bonds and is not a part of this OFFICIAL STATEMENT. v

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7 OFFICIAL STATEMENT RELATED TO Board of Education of Davis School District, Utah $20,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2013A $20,550,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013B INTRODUCTION This introduction is only a brief description of the 2013 Bonds, as hereinafter defined, the security and source of payment for the 2013 Bonds and certain information regarding the Board of Education (the Board ) of Davis School District, Utah (the District ). The information contained herein is expressly qualified by reference to the entire OFFICIAL STATEMENT, including the appendices. Investors are urged to make a full review of the entire OFFICIAL STATEMENT. See the following appendices that are attached hereto and incorporated herein by reference: APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DIS- TRICT, UTAH FOR FISCAL YEAR 2012; APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL; APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UN- DERTAKING; and APPENDIX D BOOK ENTRY SYSTEM. When used herein the terms Fiscal Year[s] 20YY or Fiscal Year[s] End[ed][ing] June 30, 20YY shall refer to the year ended or ending on June 30 of the year indicated and beginning on July 1 of the preceding calendar year. Capitalized terms used but not otherwise defined herein have the same meaning as given to them in the Resolution, as hereinafter defined. Public Sale/Electronic Bid The 2013A Building Bonds (as defined herein) were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on March 21, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated March 8, 2013) to Janney Montgomery Scott LLC, Philadelphia, Pennsylvania, at a true interest rate of 2.95%. The 2013B Refunding Bonds (as defined herein) were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on March 21, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated March 8, 2013) to Citigroup Global Markets Inc., New York, New York, at a true interest rate of 1.13%. The 2013 Bonds may be offered and sold to certain dealers (including dealers depositing the 2013 Bonds into investment trusts) at prices lower than the initial public offering prices set forth on the inside cover page of the OFFICIAL STATEMENT and such public offering prices may be changed from time to time. 1

8 Davis School District, Utah The District was established in 1911 and shares common boundaries with Davis County, Utah (the County ). The County, incorporated in 1853, covers an area of approximately 304 (land area) square miles and is located in the north central portion of the State of Utah (the State ). See the location map above. The southern boundary of the County adjoins the northern boundary of Salt Lake City and Salt Lake County. The northern boundary is approximately eight miles south of Ogden City, Utah. The County had 311,811 residents according to the 2011 population estimate by the U.S. Census Bureau, ranking the County as the third largest populated county in the State (out of 29 counties). The 2013 Bonds This OFFICIAL STATEMENT, including the cover page, introduction and appendices, provides information in connection with the issuance and sale by the Board of its $20,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2013A (the 2013A Building Bond or 2013A Building Bonds ) and $20,550,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013B (the 2013B Refunding Bonds or 2013B Refunding Bond, and collectively with the 2013A Building Bonds, the 2013 Bond or 2013 Bonds ), initially issued in book entry form only. Security The 2013 Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2013 Bonds as to both principal and interest. See THE 2013 BONDS Security And Sources Of Payment and FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Tax Levy And Collection below. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited taxing power of the State under the provisions of the Utah School Bond Guaranty Act, Title 53A, Chapter 28 (the Guaranty Act ), Utah Code Annotated 1953, as amended (the Utah Code ). See STATE OF UTAH GUARANTY below. Authority And Purpose The 2013A Building Bonds. The 2013A Building Bonds are being issued pursuant to (i) the Local Government Bonding Act, Title 11, Chapter 14 (the Local Government Bonding Act ), Utah Code; the Registered Public Obligations Act, Title 15, Chapter 7, Utah Code; and the applicable provisions of Title 53A of the Utah Code, (ii) the resolution of the Board adopted on February 19, 2013 (the Resolution ), which provides for the issuance of the 2013A Building Bonds, and (iii) other applicable provisions of law. The 2013A Building Bonds were authorized at a special bond election held for that purpose on November 3, 2009 (the 2009 Bond Election ). The proposition submitted to the voters of the District was as follows: Shall the Board of Education of Davis School District, Utah, be authorized to issue general obligation bonds in an amount not to exceed Two Hundred Fifty Million Dollars ($250,000,000) for the purpose of defraying all or a portion of the costs of new school construction, land acquisition, equipment acquisition, and renovation and improvement of existing school facilities, and for payment of expenses reasonably incurred in connection with the acquisition and construction of said improvements and the authorization and issuance of the bonds; said bonds to be due and payable in not to exceed twenty one (21) years from the date of the bonds? 2

9 At the 2009 Bond Election there were 23,517 votes cast in favor of the issuance of bonds and 13,688 votes cast against the issuance of bonds, for a total vote count of 37,205, with approximately 63% in favor of the issuance of bonds. The 2013A Building Bonds are the fourth block of bonds to be issued from the 2009 Bond Election. After the sale and delivery of the 2013A Building Bonds, the Board will have $102.5 million authorized unissued bonds from the 2009 Bond Election. The 2013A Building Bonds are being issued to fund various equipment, acquisition and construction projects as set forth in the 2009 Bond Election proposition and to pay certain costs of issuance. See THE 2013 BONDS Sources And Uses Of Funds below. The 2013B Refunding Bonds. The 2013B Refunding Bonds are being issued pursuant to the Utah Refunding Bond Act, Title 11, Chapter 27 and the Resolution of the Board, which provide for the issuance of the 2013B Refunding Bonds; and other applicable provisions of law. The 2013B Refunding Bonds are being issued for the purpose of refunding in advance of their maturity $21,475,000 of the Board s currently outstanding General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2005A, dated April 13, 2005, which mature on June 1, 2016 through June 1, The 2013B Refunding Bonds are also being issued to pay certain costs of issuance. See THE 2013 BONDS Plan Of Refunding For The 2013B Refunding Bonds below. Redemption Provisions The 2013A Building Bonds are subject to optional redemption prior to maturity. The 2013B Refunding Bonds are not subject to optional redemption prior to maturity. See THE 2013 BONDS Redemption Provisions below. Registration, Denominations, Manner Of Payment The 2013 Bonds are issuable only as fully registered bonds and, when initially issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2013 Bonds. Purchases of 2013 Bonds will be made in book entry form only, in the principal amount of $5,000 or any whole multiple thereof, through brokers and dealers who are, or who act through, DTC s Direct Participants (as defined herein). Beneficial Owners (as defined herein) of the 2013 Bonds will not be entitled to receive physical delivery of bond certificates so long as DTC or a successor securities depository acts as the securities depository with respect to the 2013 Bonds. Direct Participants, Indirect Participants and Beneficial Owners are defined under APPENDIX D BOOK ENTRY SYSTEM. Principal of and interest on the 2013A Building Bonds (interest payable June 1 and December 1 of each year, commencing December 1, 2013) are payable by U.S. Bank National Association, Corporate Trust Services ( U.S. Bank ), as paying agent (the Paying Agent ) for the 2013A Building Bonds, to the registered owners of the 2013 Bonds. Principal of and interest on the 2013B Refunding Bonds (interest payable April 1 and October 1 of each year, commencing October 1, 2013) are payable by U.S. Bank, as Paying Agent for the 2013B Refunding Bonds, to the registered owners of the 2013B Refunding Bonds. So long as Cede & Co. is the registered owner of the 2013 Bonds, DTC will, in turn, remit such principal and interest to its Direct Participants, for subsequent disbursements to the Beneficial Owners of the 2013 Bonds, as described in APPENDIX D BOOK ENTRY SYSTEM. So long as DTC or its nominee is the registered owner of the 2013 Bonds, neither the Board nor the Paying Agent will have any responsibility or obligation to any Direct or Indirect Participants of DTC, or the persons for whom they act as nominees, with respect to the payments to or the providing of notice for 3

10 the Direct Participants, Indirect Participants or the Beneficial Owners of the 2013 Bonds. Under these same circumstances, references herein and in the Resolution to the Bondowners or Registered Owners of the 2013 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2013 Bonds. Tax Matters In the opinion of Ballard Spahr LLP, Bond Counsel to the Board, interest on the 2013 Bonds is excludable from gross income for purposes of federal income tax, assuming continuing compliance with the requirements of the federal tax laws. Interest on the 2013 Bonds is not a preference item for purposes of either individual or corporate federal alternative minimum tax; however, interest paid to corporate holders of the 2013 Bonds may be indirectly subject to alternative minimum tax under circumstances described under LEGAL MATTERS herein. Bond Counsel is also of the opinion that, under currently existing law, interest on the 2013 Bonds is exempt from State of Utah individual income taxes. Bond Counsel expresses no opinion regarding any other tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the 2013 Bonds. See LEGAL MATTERS below for a more complete discussion. Professional Services In connection with the issuance of the 2013 Bonds, the following have served the Board in the capacity indicated. Independent Auditor Bond Counsel Squire & Company PC Ballard Spahr LLP Certified Public Accountants 201 S Main St Ste S 800 E Salt Lake City UT Orem UT f f wadeb@ballardspahr.com daveb@squire.com Attorney for the Board Escrow, Bond Registrar and Paying Agent Michelle Beus U.S. Bank National Association Davis School District Corporate Trust Services PO Box 588 (45 E State St) 170 S Main St Ste 200 Farmington UT Salt Lake City UT f f mbeus@dsdmail.net brandon.elzinga@usbank.com Escrow Verification Agent Financial Advisor Grant Thornton LLP Zions Bank Public Finance Accountants and Management Consultants Zions Bank Building 500 Pillsbury Center One S Main St 18 th Fl Minneapolis MN Salt Lake City UT f f stephanie.seroogy@gt.com johnathan.ward@zionsbank.com Conditions Of Delivery, Anticipated Date, Manner, And Place Of Delivery The 2013 Bonds are offered, subject to prior sale, when, as and if issued and received by the successful bidder(s), subject to the approval of legality of the 2013 Bonds by Ballard Spahr LLP, Bond Counsel 4

11 to the Board, and certain other conditions. Certain legal matters will be passed on for the Board by the attorney for the Board, Michelle Beus, Legal Issues Specialist. It is expected that the 2013 Bonds, in book entry form only, will be available for delivery in Salt Lake City, Utah for deposit with U.S. Bank, a fast agent of DTC, on or about Thursday, April 4, Continuing Disclosure Undertaking The Board will enter into a continuing disclosure undertaking for the benefit of the Beneficial Owners of the 2013 Bonds. For a detailed discussion of this disclosure undertaking, previous undertakings and timing of submissions see CONTINUING DISCLOSURE UNDERTAKING below and APPEN- DIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING. Basic Documentation This OFFICIAL STATEMENT speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Board, the District, the 2013 Bonds, and the Resolution are included in this OFFICIAL STATEMENT. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Resolution are qualified in their entirety by reference to such document, and references herein to the 2013 Bonds are qualified in their entirety by reference to the form thereof included in the Resolution. The basic documentation which includes the Resolution, the closing documents and other documentation, authorizing the issuance of the 2013 Bonds and establishing the rights and responsibilities of the Board and other parties to the transaction, may be obtained from the contact persons as indicated below. Contact Persons As of the date of this OFFICIAL STATEMENT, the chief contact person for the Board concerning the 2013 Bonds is: Craig A. Carter, Business Administrator, ccarter@dsdmail.net Davis School District Administration Center PO Box 588 (45 E State St) Farmington UT f davis.k12.ut.us As of the date of this OFFICIAL STATEMENT, the chief contact person for the State concerning the State guaranty for the 2013 Bonds is: Richard K. Ellis, Utah State Treasurer, rellis@utah.gov Utah State Treasurer s Office 350 N State St Ste C 180 (PO Box ) Salt Lake City UT f treasurer.state.ut.us As of the date of this OFFICIAL STATEMENT, additional requests for information may be directed to Zions Bank Public Finance, Salt Lake City, Utah (the Financial Advisor ) to the Board: 5

12 Johnathan Ward, Vice President, Eric John Pehrson, Vice President, Zions Bank Public Finance Zions Bank Building One S Main St 18 th Fl Salt Lake City UT f CONTINUING DISCLOSURE UNDERTAKING The Board will enter into a Continuing Disclosure Undertaking (the Disclosure Undertaking ) for the benefit of the Beneficial Owners of the 2013 Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board ( MSRB ) through its Electronic Municipal Market Access ( EMMA ) pursuant to the requirements of paragraph (b)(5) of Rule 15c2 12 (the Rule ) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and other terms of the Disclosure Undertaking, including termination, amendment and remedies, are set forth in the proposed form of Disclosure Undertaking in AP- PENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING. The Board has complied in all material respects with each and every undertaking previously entered into by it pursuant to the Rule. Based on prior disclosure undertakings the Board submits its comprehensive annual financial report for Fiscal Year Ending June 30 (the CAFR ) and other operating and financial information on or before January 31 (on or before seven months from the end of the Fiscal Year). The Board will submit the Fiscal Year 2013 CAFR and other required operating and financial information for the 2013 Bonds on or before January 31, 2014, and annually thereafter on or before each January 31. A failure by the Board to comply with the Disclosure Undertaking will not constitute a default under the Resolution and Beneficial Owners of the 2013 Bonds are limited to the remedies described in the Disclosure Undertaking. See APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING. A failure by the Board to comply with the Disclosure Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the 2013 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the 2013 Bonds and their market price. The State has entered into a Master Continuing Disclosure Agreement (the Master Agreement ) for the benefit of the Beneficial Owners of the bonds, including the 2013 Bonds, guaranteed by the State pursuant to the Guaranty Act. See STATE OF UTAH GUARANTY below. In the Master Agreement, the State has undertaken to send certain information annually and to provide notice of certain events to MSRB through EMMA pursuant to the Rule, but solely as to its responsibilities under its guaranty. See STATE OF UTAH GUARANTY State Of Utah Financial And Operating Information below. The State has complied in all material respects with the Master Agreement previously entered into by it pursuant to the Rule. Based on prior disclosure undertakings the State submits its Fiscal Year Ending June 30 CAFR and other operating and financial information on or before January 15 (on or before 199 days from the end of the Fiscal Year). The State has agreed to submit the State s Fiscal Year 2013 CAFR and other operating and financial information on or before January 15, 2014, and annually thereafter on or before each January 15. 6

13 The Board is responsible for continuing disclosure under the Rule for all other matters relating to the 2013 Bonds. Bond Counsel expresses no opinion as to whether the Undertaking or the Master Agreement complies with the requirements of the Rule. Guaranty Provisions STATE OF UTAH GUARANTY Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. The Guaranty Act establishes the Utah School Bond Default Avoidance Program (the Program or the Utah School Bond Guaranty Program ). The State s guaranty is contained in Section 53A (2)(a) of the Guaranty Act, which provides as follows: The full faith and credit and unlimited taxing power of the state is pledged to guarantee full and timely payment of the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, bonds as such payments shall become due (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration). In addition, the Guaranty Act provides that the State pledges to and agrees with the holders of bonds guaranteed under the Guaranty Act that the State will not alter, impair, or limit the rights vested by the Program with respect to said bonds until said bonds, together with applicable interest, are fully paid and discharged. However, this pledge does not preclude an alteration, impairment, or limitation if adequate provision is made by law for the protection of the holders of the bonds. The Guaranty Act further provides that (i) the guaranty of the State does not extend to the payment of any redemption premium due on any bonds guaranteed under the Guaranty Act and (ii) bonds which are guaranteed by the State for which payment is provided by the deposit of direct obligations of the United States government under the provisions of the Refunding Bond Act, Title 11, Chapter 27, Utah Code, will no longer be secured by the State s guaranty subsequent to such provision for payment. This is likely to occur only if such bonds are refunded in advance of their maturity. In such an event, such bonds would then be secured solely by the obligations pledged for their payment and not by the State s guaranty. Guaranty Procedures Under the Guaranty Act, the Business Administrator of the Board (the Business Administrator ) is required to transfer moneys sufficient for scheduled debt service payments on the 2013 Bonds to the Paying Agent at least 15 days before any principal or interest payment date for the 2013 Bonds. If the Business Administrator is unable to transfer the scheduled debt service payment to the Paying Agent at least 15 days before the payment date, the Business Administrator must immediately notify the Paying Agent and the Utah State Treasurer (the State Treasurer ) by (i) telephone and (ii) a writing sent by (a) facsimile transmission and (b) first class United States mail. In addition, if the Paying Agent has not received the scheduled debt service payment at least 15 days prior to the scheduled debt service payment date for the 2013 Bonds, then the Paying Agent must at least 10 days before the scheduled debt service payment notify the State Treasurer of that failure by (i) telephone and (ii) a writing sent by (a) facsimile transmission and (b) first class United States mail. The Guaranty Act further provides that if sufficient moneys to pay the scheduled debt service payment have not been transferred to the Paying Agent, then the State Treasurer shall, on or before the scheduled payment date, transfer sufficient moneys to the Pay- 7

14 ing Agent to make the scheduled debt service payment. Payment by the State of a debt service payment on the 2013 Bonds discharges the obligation of the Board to the bondholders for that payment, to the extent of the State s payment, and transfers the Board s obligation for that payment to the State. In the event the State is called upon to make payment of principal of or interest on the 2013 Bonds on behalf of the Board, the State will use cash on hand (or from other legally available moneys) to make the payment. Under the Guaranty Act, the State Treasurer is required to immediately intercept any payments from the Uniform School Fund or from any other source of operating moneys provided by the State to the Board. The intercepted payments will be used to reimburse the State until all obligations of the Board to the State, including interest and penalties, are paid in full. The State does not currently expect to have to advance moneys to the Board pursuant to its guaranty. If, however, at the time the State is required to make a debt service payment under its guaranty on behalf of the Board, sufficient moneys are not on hand and available for that purpose, then the Guaranty Act provides that the State may seek a short term loan from the Permanent School Fund sufficient to make the required payment (the Permanent School Fund is not required to make such a loan) or issue short term State debt in the form of general obligation notes as provided in the Guaranty Act. The provisions of the Guaranty Act relating to short term debt provide that such debt will carry the full faith and credit of the State and will be issued with a maturity of not more than 18 months so that the State could, if necessary, obtain liquidity financing on short notice. Under the State Constitution, debt incurred for this purpose does not count toward the constitutional debt limit of the State. As of the date of this OFFICIAL STATEMENT, the State has guaranteed the following (statistics include this issuer but not this bond issue) under the Guaranty Act: Number of school districts (out of 41 school districts in the State) Number of bond issues Aggregate total principal amount outstanding within the State s Fiscal Year $2,802,256,722 The approximate aggregate total annual principal and interest payments (interest payments include anticipated federal interest subsidies on Build America Bonds and Qualified School Construction Bonds ) due on bonds guaranteed by the State under the Program during Fiscal Years 2013 through 2018, inclusive, is as follows (currently, the Program s annual principal and interest payments extend to Fiscal Year 2033): Fiscal Year $330,745,279 Fiscal Year ,357,279 Fiscal Year ,668,538 Fiscal Year ,661,464 Fiscal Year ,466,064 Fiscal Year ,061,434 (Source: Zions Bank Public Finance.) Purpose Of The Guaranty The Guaranty Act is for the protection of the bondholders. Ultimate liability for the payment of the 2013 Bonds remains with the Board. Accordingly, the Guaranty Act contains provisions, including interception of State aid to the Board, possible action to compel levy of a tax sufficient to reimburse the State for any payments made to bondholders pursuant to its guaranty and various oversight provisions to assure that the Board, and not the State, will ultimately be responsible for debt service on the 2013 Bonds. 8

15 The Guaranty Act also charges the State Superintendent of Public Instruction with the responsibility to monitor and evaluate the fiscal solvency of each school board under the Program. He or she must immediately report to the Governor and the State Treasurer any circumstances suggesting that a school district will be unable to timely meet its debt service obligations and recommend a course of remedial action. Since the Guaranty Act s inception in January 1997, the State has not been called upon to pay the principal of and interest on any bonds guaranteed under the Guaranty Act. State Of Utah Financial And Operating Information The CAFR of the State for Fiscal Year 2012 (the State CAFR ), its most recent official statements and continuing disclosure information for its general obligation and lease revenue bond debt, and the Master Agreement, are currently on file with EMMA. The financial and operating information with respect to the State contained in the State CAFR, such official statements and continuing disclosure information, and the Master Agreement are hereby included by reference in this OFFICIAL STATEMENT; provided, however, the Board has not reviewed or approved and taken the responsibility for such financial and operating information incorporated herein by reference. The State CAFR and the most current continuing disclosure information may be obtained on the internet at the State Division of Finance s home page and on EMMA. Additionally, the State s most recent official statements for its general obligation and lease revenue bonds may be found on EMMA. Such information contained on EMMA shall not be considered to be a part of this OFFICIAL STATEMENT and is not provided in connection with the offering of the 2013 Bonds. As of the date of this OFFICIAL STATEMENT, the outstanding general obligation bonds of the State are rated AAA by Fitch Ratings ( Fitch ), Aaa by Moody s Investors Service, Inc. ( Moody s ), and AAA by Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ). General THE 2013 BONDS The 2013A Building Bonds. The 2013A Building Bonds will be dated the date of their original issuance and delivery 1 (the Dated Date ) and will mature on June 1 of the years and in the amounts as set forth on the inside cover page of this OFFICIAL STATEMENT. The 2013A Building Bonds will bear interest from their Dated Date at the rates set forth on the inside cover page of this OFFICIAL STATE- MENT. Interest on the 2013A Building Bonds is payable semiannually on each June 1 and December 1, commencing December 1, Interest on the 2013A Building Bonds will be computed on the basis of a 360 day year comprised of 12, 30 day months. The 2013B Refunding Bonds. The 2013B Refunding Bonds will be dated the Dated Date and will mature on April 1 of the years and in the amounts as set forth on the inside cover page of this OFFICIAL STATEMENT. The 2013B Refunding Bonds will bear interest from their Dated Date at the rates set forth on the inside cover page of this OFFICIAL STATEMENT. Interest on the 2013B Refunding Bonds is payable semiannually on each April 1 and October 1, commencing October 1, Interest on the 2013B Refunding Bonds will be computed on the basis of a 360 day year comprised of 12, 30 day months. U.S. Bank is the Bond Registrar (the initial Bond Registrar ) and Paying Agent for the 2013 Bonds under the Resolution. 1 The anticipated date of delivery is Thursday, April 4,

16 The 2013 Bonds will be issued as fully registered bonds, initially in book entry form, in the denomination of $5,000 or any whole multiple thereof, not exceeding the amount of each maturity. The 2013 Bonds are being issued within the constitutional debt limit imposed on boards of education of school districts in the State. See DEBT STRUCTURE OF DAVIS SCHOOL DISTRICT, UTAH General Obligation Legal Debt Limit And Additional Debt Incurring Capacity below. Plan Of Refunding For The 2013B Refunding Bonds The Board has previously issued its $52,200,000 (original principal amount) General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2005A, dated April 13, 2005, currently outstanding in the aggregate principal amount of $32,435,000 (the 2005 Bonds ) the original proceeds were used by the Board for the acquisition, construction, and renovation of school buildings within the District. Proceeds from the 2013B Refunding Bonds, together with other legally available moneys, in the aggregate amount of $23,563, will be deposited with U.S. Bank, as Escrow Agent (the Escrow Agent ), pursuant to an Escrow Agreement dated as of the delivery date of the 2013B Refunding Bonds (the Escrow Agreement ) to establish an irrevocable trust escrow account (the Escrow Account ), consisting of cash and government obligations of the United States of America. Amounts in the 2013 Escrow Account shall be used to pay principal of and interest on all of the callable portion of the 2005 Bonds maturing on and after June 1, 2016 (the 2005 Refunded Bonds ), at a redemption price of 100% of the principal amount thereof on June 1, 2015 (the 2005 Redemption Date ). The 2005 Refunded Bonds mature on the dates and in the amounts, and bear interest at the rates, as follows: Scheduled Maturity Redemption CUSIP Principal Interest Redemption (June 1) Date Amount Rate Price June 1, 2015 WG3 $ 3,965, % 100% June 1, 2015 WH1 4,120, June 1, 2015 WJ7 4,285, June 1, 2015 WK4 4,460, June 1, 2015 WL2 4,645, Totals... $21,475,000 The cash and investments held in the Escrow Account will be sufficient to pay (a) the interest falling due on the 2005 Refunded Bonds through the 2005 Redemption Date and (b) the redemption price of the 2005 Refunded Bonds, due and payable on the 2005 Redemption Date. Certain mathematical computations regarding the sufficiency of and the yield on the investments held in the Escrow Account will be verified by Grant Thornton LLP, Minneapolis, Minnesota. See MISCEL- LANEOUS Escrow Verification below. Sources And Uses Of Funds The proceeds from the sale of the 2013 Bonds are estimated to be applied as set forth below: 10

17 Sources of Funds: 2013A Build- 2013B Re Bonds ing Bonds funding Bonds Totals Par amount of 2013A Building Bonds... $20,000, $ $20,000, Par amount of 2013B Refunding Bonds... 20,550, ,550, Original issue premium , ,839, ,574, Transfer from debt service payment fund , , Total... $20,734, $23,709, $44,444, Uses of Funds: Deposit to project construction fund... $20,292, $ $20,292, Deposit to Escrow Account... 23,563, ,563, Successful bidder s discount , , , Original issue discount , , Costs of issuance (1)... 57, , , Total... $20,734, $23,709, $44,444, (1) Includes legal fees, Financial Advisor fees, rating agency fees, Bond Registrar and Paying Agent fees, Escrow Agent fees, escrow verification agent fees, rounding amounts and other miscellaneous costs of issuance. Security And Sources Of Payment The 2013 Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the District, fully sufficient to pay the 2013 Bonds as to both principal and interest. See FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Property Tax Matters and STATE OF UTAH SCHOOL FINANCE below. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. See STATE OF UTAH GUARANTY above. Redemption Provisions Optional Redemption for the 2013A Building Bonds. The 2013A Building Bonds maturing on and after June 1, 2023 are subject to redemption prior to maturity in whole or in part at the option of the Board on December 1, 2022 or on any date thereafter, from such maturities or parts thereof as shall be selected by the Board at the redemption price of 100% of the principal amount of the 2013A Building Bonds to be redeemed plus accrued interest (if any) thereon to the redemption date. No Optional Redemption for the 2013B Refunding Bonds. The 2013B Refunding Bonds are not subject to redemption prior to maturity. Selection for Redemption. If less than all 2013A Building Bonds of any maturity are to be redeemed, the particular 2013A Building Bonds or portion of 2013A Building Bonds of such maturity to be redeemed will be selected at random by the Bond Registrar in such manner as the Bond Registrar in its discretion may deem fair and appropriate. The portion of any registered 2013A Building Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or a whole multiple thereof, and in selecting portions of such 2013A Building Bonds for redemption, the Bond Registrar will treat each such 2013A Building Bond as representing that number of 2013A Building Bonds of $5,000 denomination that is obtained by dividing the principal amount of such 2013A Building Bond by $5,

18 Notice of Redemption. Notice of redemption will be given by the Bond Registrar by registered or certified mail, not less than 30 nor more than 45 days prior to the redemption date, to the owner, as of the Record Date, as defined under THE 2013 BONDS Registration And Transfer below, of each 2013A Building Bond that is subject to redemption, at the address of such owner as it appears on the registration books of the Board kept by the Bond Registrar, or at such other address as is furnished to the Bond Registrar in writing by such owner on or prior to the Record Date. Each notice of redemption will state the Record Date, the principal amount, the redemption date, the place of redemption, the redemption price and, if less than all of the 2013A Building Bonds are to be redeemed, the distinctive numbers of the 2013A Building Bonds or portions of 2013A Building Bonds to be redeemed, and will also state that the interest on the 2013A Building Bonds in such notice designated for redemption will cease to accrue from and after such redemption date and that on the redemption date there will become due and payable on each of the 2013A Building Bonds to be redeemed the principal thereof and interest accrued thereon to the redemption date. Each notice of optional redemption may further state that such redemption will be conditioned upon the receipt by the Paying Agent, on or prior to the date fixed for redemption, of moneys sufficient to pay the principal of and premium, if any, and interest on such 2013A Building Bonds to be redeemed and that if such moneys have not been so received the notice will be of no force or effect and the Board will not be required to redeem such 2013A Building Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made and the Bond Registrar will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Any such notice mailed will be conclusively presumed to have been duly given, whether or not the Bondowner receives such notice. Failure to give such notice or any defect therein with respect to any 2013A Building Bond will not affect the validity of the proceedings for redemption with respect to any other 2013A Building Bond. In addition to the foregoing notice, further notice of such redemption will be given by the Bond Registrar to DTC and certain registered securities depositories and national information services as provided in the Resolution, but no defect in such further notice nor any failure to give all or any portion of such notice will in any manner affect the validity of a call for redemption if notice thereof is given as prescribed above and in the Resolution. For so long as a book entry system is in effect with respect to the 2013A Building Bonds, the Bond Registrar will mail notices of redemption to DTC or its successor. Any failure of DTC to convey such notice to any Direct Participants or any failure of the Direct Participants or Indirect Participants to convey such notice to any Beneficial Owner will not affect the sufficiency of the notice or the validity of the redemption of 2013A Building Bonds. See THE 2013 BONDS Book Entry System below. Registration And Transfer; Record Date In the event the book entry system is discontinued, any 2013 Bond may, in accordance with its terms, be transferred, upon the registration books kept by the Bond Registrar, by the person in whose name it is registered, in person or by such owner s duly authorized attorney, upon surrender of such 2013 Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Bond Registrar. No transfer will be effective until entered on the registration books kept by the Bond Registrar. Whenever any 2013 Bond is surrendered for transfer, the Bond Registrar will authenticate and deliver a new fully registered 2013 Bond or 2013 Bonds of the same series, designation, maturity and interest rate and of authorized denominations duly executed by the Board, for a like aggregate principal amount. The 2013 Bonds may be exchanged at the office of the Bond Registrar for a like aggregate principal amount of fully registered 2013 Bonds of the same series, designation, maturity and interest rate of other authorized denominations. 12

19 For every such exchange or transfer of the 2013 Bonds, the Bond Registrar must make a charge sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or transfer of the 2013 Bonds. The term Record Date means (i) with respect to each interest payment date, the day that is 15 days preceding such interest payment date, or if such day is not a business day for the Bond Registrar, the next preceding day that is a business day for the Bond Registrar, and (ii) with respect to any redemption of any 2013A Building Bond such Record Date as is specified by the Bond Registrar in the notice of redemption, provided that such Record Date will be not less than 15 calendar days before the mailing of such notice of redemption. The Bond Registrar will not be required to transfer or exchange any 2013 Bond (a) after the Record Date with respect to any interest payment date to and including such interest payment date, or (b) after the Record Date with respect to any redemption of such 2013A Building Bond. The Board, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each 2013 Bond is registered in the registration books kept by the Bond Registrar as the holder and absolute owner thereof for the purpose of receiving payment of, or on account of, the principal or redemption price thereof (on the 2013A Building Bonds) and interest due thereon and for all other purposes whatsoever. Book Entry System DTC will act as securities depository for the 2013 Bonds. The 2013 Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered 2013 Bond certificate will be issued for each maturity of the 2013 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. See APPENDIX D BOOK ENTRY SYSTEM for a more detailed discussion of the book entry system and DTC. In the event the book entry system is discontinued, interest on the 2013 Bonds will be payable by check or draft of the Paying Agent, mailed to the registered owners thereof at the addresses shown on the registration books of the Board kept for that purpose by the Bond Registrar. The principal of all 2013 Bonds will be payable at the principal office of the Paying Agent. Debt Service On The 2013 Bonds The 2013A Building Bonds The 2013A Building Bonds Payment Date Principal Interest Period Total Fiscal Total December 1, $ 0.00 $ 411, $ 411, June 1, , , $ 724, December 1, , , June 1, , , , December 1, , , June 1, , , , December 1, , , June 1, , , , December 1, , , June 1, , , , December 1, , , June 1, ,060, , ,372, ,685, December 1, , , June 1, ,100, , ,391, ,683, December 1, , , June 1, ,145, , ,414, ,684,

20 Debt Service On The 2013 Bonds continued The 2013A Building Bonds continued The 2013A Building Bonds Payment Date Principal Interest Period Total Fiscal Total December 1, $ 0.00 $ 246, $ 246, June 1, ,190, , ,436, $1,683, December 1, , , June 1, ,230, , ,458, ,687, December 1, , , June 1, ,255, , ,471, ,688, December 1, , , June 1, ,280, , ,483, ,686, December 1, , , June 1, ,320, , ,503, ,687, December 1, , , June 1, ,355, , ,519, ,683, December 1, , , June 1, ,400, , ,543, ,687, December 1, , , June 1, ,440, , ,562, ,685, December 1, , , June 1, ,485, , ,586, ,687, December 1, , , June 1, ,530, , ,608, ,686, December 1, , , June 1, ,580, , ,633, ,686, December 1, , , June 1, ,630, , ,657, ,685, Totals... $20,000, $8,514, $28,514, The 2013B Refunding Bonds The 2013B Refunding Bonds Payment Date Principal Interest Period Total Fiscal Total October 1, $ 0.00 $ 376, $ 376, April 1, , , $ 759, October 1, , , April 1, , , , October 1, , , April 1, ,845, , ,227, ,610, October 1, , , April 1, ,960, , ,285, ,610, October 1, , , April 1, ,080, , ,345, ,611, October 1, , , April 1, ,245, , ,429, ,613, October 1, , , April 1, ,420, , ,513, ,607, Totals... $20,550, $4,028, $24,578,

21 DAVIS SCHOOL DISTRICT, UTAH General The District was established in 1911 and shares common boundaries with the County. The County, incorporated in 1853, covers an area of approximately 304 (land area) square miles and is located in the north central portion of the State. See the location map on the inside front cover. The southern boundary of the County adjoins the northern boundary of Salt Lake City and Salt Lake County. The northern boundary is approximately eight miles south of Ogden City, Utah. The County had 311,811 residents according to the 2011 population estimate by the U.S. Census Bureau, ranking the County as the third largest populated county in the State (out of 29 counties). The District s headquarters are located in Farmington City and Farmington City serves as the county seat. The cities in the District are Bountiful City, Centerville City, Clearfield City, Clinton City, Farmington City, Fruit Heights City, Kaysville City, Layton City, North Salt Lake City, South Weber City, Sunset City, Syracuse City, West Bountiful City, West Point City, and Woods Cross City. The District presently operates 59 elementary schools, 16 junior high schools, eight high schools and six special purpose schools/programs. For an eight year history of district facilities see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section District Facilities and Personnel Positions (page 84). The historical October 1 enrollment within the District is as follows: % Increase October 1 Total Over Prior Year 2013 (1)... 68, % , , , , , , , , , (1) Projection provided by the District. (Source: State Office of Education.) Additional Information. For a 10 year history of average daily membership and October student enrollments and for student enrollment projections through 2030 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Average Daily Membership and October Enrollment (page 85) and Student Enrollment Projections (page 89). Form Of Government Board of Education. The determination of policies for the management of the District is the responsibility of the Board, the members of which are elected by the qualified electors within the District. The District is divided into seven representative precincts, and a member of the Board is elected from each of the seven precincts. Members serve four year terms, which are staggered to provide continuity. 15

22 The Board is empowered, among other things, to: (i) implement core curriculum; (ii) administer tests which measure the progress of each student, and create plans to improve the student s progress; (iii) implement training programs for school administrators; (iv) purchase, sell and improve school sites, buildings and equipment; (v) construct and furnish school buildings; (vi) establish, locate and maintain elementary, secondary and applied technology schools; (vii) maintain school libraries; (viii) make and enforce all necessary rules and regulations for the control and management of the public schools in the District; (ix) adopt bylaws and rules for its own procedure; and (x) appoint a superintendent of schools, business administrator, and such officers or employees as are deemed necessary for the promotion of the interests of the schools. Superintendent. The Superintendent of Schools (the Superintendent ) is appointed by the Board and is responsible for the actual administration of the schools in the District. The powers and duties of the Superintendent are prescribed by the Board. Pursuant to State law, the Superintendent is required to prepare and submit to the Board an annual budget itemizing anticipated revenues and expenditures for the next school year. The Superintendent is appointed by the Board for a two year term and until a successor is appointed. Business Administrator. The Business Administrator is appointed by the Board and reports to the Superintendent. The duties of the Business Administrator, among others, are to (i) attend all meetings of the Board and keep a journal of the proceedings, (ii) countersign all warrants drawn upon the District treasury, (iii) keep an account and prepare and publish an annual statement of moneys received by the District and amounts paid out of the treasury, and (iv) have custody of the records and papers of the Board. The Business Administrator is the custodian of all moneys belonging to the District and is required to prepare and submit to the Board a monthly report of the receipts and disbursements of the Business Administrator s office. The Business Administrator is appointed by the Board for a two year term and until a successor is appointed. Current members of the Board, the Superintendent, the Business Administrator, and other administrators and their respective terms in office are as follows: Years Expiration Office Person in Position of Current Term President... Tamara O. Lowe 10 January 2015 Vice President... L. Burke Larsen 4 January 2015 Member... Kathie Bone 1 January 2017 Member... Peter Cannon 3 January 2015 Member... David Lovato 3 January 2015 Member... Barbara A. Smith 21 January 2017 Member... Larry Smith 1 January 2017 Superintendent... Dr. W. Bryan Bowles 11 Appointed/July 2014 Business Administrator... Craig A. Carter 4 Appointed/July 2013 Finance Director... Tim Leffel 3 Appointed Employee Workforce And Retirement System; No Post Employment Benefits; Early Retirement Incentive Employee Workforce and Retirement System. As of Fiscal Year 2012 the District employs approximately 5,970 full time equivalent employees. For an eight year history of the District s full time equivalent employees see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DA- VIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section District Facilities and Personnel Positions (page 84). 16

23 The District is a member of the Utah State Retirement System. The District also participates in various retirement plans. For a detailed discussion regarding the District s retirement procedures see AP- PENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 5. Retirement Plans. No Post Employment Benefits. The District does not provide post employment benefits (under the Governmental Accounting Standards Board GASB definition), and has no annual required contribution. As of the date of this OFFICIAL STATEMENT, the Board currently does not expect its current or future policies regarding post employment benefits to have a negative financial impact on the District. Early Retirement Incentive. The District does provide early retirement incentive benefits for those who retire before age 65. These benefits are paid from on going revenues within the program from which the employee retired. The District has reserved $4 million in the general fund in the unlikely event that termination benefits revenues were not sufficient to cover the liability. The District s obligation for early retirement benefits for Fiscal Year 2012 was $7.6 million. For a discussion regarding the District s early retirement incentive benefits see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL RE- PORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 5. Retirement Plans Early Retirement Incentive. Risk Management The District is a member of a risk pool where the State self insures portions of certain property and liability claims and purchases commercial insurance for claims above the self-insured retention amounts. This is done through the State s Administrative Services Risk Management Fund. The fund is maintained via premiums charged to its members State agencies, institutions of higher education, school districts and charter schools. As of Fiscal Year 2012, the Administrative Services Risk Management Fund contained $44.7 million in reserve available to pay for claims incurred. In the opinion of the State s Risk Manager, the available balance will be adequate to cover claims through Fiscal Year For a general discussion of coverage, limits of coverage, unemployment compensation and payment claims see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 6. Risk Management. Investment Of Funds The State Money Management Act. The State Money Management Act, Title 51, Chapter 7 of the Utah Code (the Money Management Act ), governs and establishes criteria for the investment of all public funds held by public treasurers in the State. The Money Management Act provides a limited list of approved investments, including qualified in state and permitted out of state financial institutions, obligations of the State and political subdivisions of the State, U.S. Treasury and approved federal government agency and instrumentality securities, certain investment agreements and repurchase agreements and investments in corporate securities meeting certain ratings requirements. The Money Management Act establishes the State Money Management Council (the Money Management Council ) to exercise oversight of public deposits and investments. The Money Management Council is comprised of five members appointed by the Governor of the State for terms of four years, after consultation with the State Treasurer and with the advice and consent of the State Senate. The Board is currently complying with all of the provisions of the Money Management Act for all Board operating funds. 17

24 The Utah Public Treasurers Investment Fund. A significant portion of Board funds may be invested in the Utah Public Treasurers Investment Fund ( PTIF ). The PTIF is a local government investment fund, established in 1981, and managed by the State Treasurer. All investments in the PTIF must comply with the Money Management Act and rules of the Money Management Council. The PTIF invests primarily in money market securities. Securities in the PTIF include certificates of deposit, commercial paper, short term corporate notes, obligations of the U.S. Treasury and securities of certain agencies of the federal government. By policy, the maximum weighted average adjusted life of the portfolio is not to exceed 90 days and the maximum final maturity of any security purchased by the PTIF is limited to five years. Safekeeping and audit controls for all investments owned by the PTIF must comply with the Money Management Act. All securities purchased are delivered versus payment to the custody of the State Treasurer or the State Treasurer s safekeeping bank, assuring a perfected interest in the securities. Securities owned by the PTIF are completely segregated from securities owned by the State. The State has no claim on assets owned by the PTIF except for any investment of State moneys in the PTIF. Deposits are not insured or otherwise guaranteed by the State. Investment activity of the State Treasurer in the management of the PTIF is reviewed monthly by the Money Management Council and is audited by the State Auditor. The PTIF is not rated. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 2. Deposits and Investments. Investment of 2013A Building Bond Proceeds. The proceeds of the 2013A Building Bonds will be held by the Board and invested so as to be readily available. The 2013A Building Bond proceeds may also be invested in the PTIF or other investments authorized under the Money Management Act. Population The following population information is provided for the County and the State. % % Change From Change From County Prior Period State of Utah Prior Period 2011 Estimate (1) , % 2,817, % 2010 Census , ,763, Census , ,233, Census , ,722, Census , ,461, Census... 99, ,059, Census... 64, , Census... 30, , Census... 15, , Census... 14, , Census... 11, , Census... 10, , (1) U.S. Bureau of the Census estimates for July 1, Percentage change is calculated from the 2010 Census. (Source: U.S. Department of Commerce, Bureau of the Census.) 18

25 Employment, Income, Construction, and Sales Taxes within Davis County and the State of Utah Labor Force, Nonfarm Jobs and Wages within Davis County Calendar Year (1) % change from prior year 2012 (2) Civilian labor force 143, , , , , , (1.3) 0.3 (1.2) 1.7 Employed persons 136, , , , , , (0.4) (0.9) (3.9) 1.0 Unemployed persons 7,697 8,943 10,275 8,614 4,782 3,813 (13.9) (13.0) Total nonfarm jobs 109, , ,364 99, , , (3.6) 0.1 Mining (16.6) Construction 7,435 6,870 6,742 7,285 9,053 10, (7.5) (19.5) (11.2) Manufacturing 10,456 9,815 8,991 8,894 9,703 10, (8.3) (6.8) Trade, transportation, utilities 20,060 19,453 19,241 19,717 20,768 20, (2.4) (5.1) 1.7 Information 1,379 1,357 1,102 1,041 1, (1.0) 7.8 Financial activity 3,491 3,561 3,708 3,955 4,024 4,093 (2.0) (4.0) (6.2) (1.7) (1.7) Professional and business services 13,464 12,545 11,805 11,447 12,107 11, (5.5) 3.7 Education and health services 12,130 11,725 11,071 10,500 10,128 9, Leisure and hospitality 11,447 9,940 9,712 9,472 9,905 9, (4.4) 8.0 Other services. 2,989 3,122 2,781 2,869 3,035 3,049 (4.3) 12.3 (3.1) (5.5) (0.5) Government 25,981 26,825 25,073 24,625 23,779 24,234 (3.1) (1.9) Total payroll (in millions) $ 1,053 $ 4,057 $ 3,769 $ 3,676 $ 3,704 $ 3,668 (74.0) (0.8) 1.0 Average monthly wage $ 3,216 $ 3,216 $ 3,129 $ 3,066 $ 2,986 $ 2, Average employment 109, , ,375 99, , , (3.4) (0.2) Establishments 7,189 7,010 6,890 7,040 7,142 6, (2.1) (1.4) 2.3 Personal Income; Per Capital Personal Income; Median Household Income within Davis County and State of Utah Calendar Year (3) % change from prior year Total Personal Income (in $1,000 s): Davis County. $ 10,837,002 $ 10,239,776 $ 9,979,627 $ 10,170,729 $ 9,601,267 $ 8,775, (1.9) State of Utah... 94,401,070 89,152,008 86,544,337 90,610,323 85,105,668 78,378, (4.5) Total Per Capita Personal Income (in $): Davis County. 34,755 33,267 33,049 34,384 33,310 31, (3.9) State of Utah... 33,509 32,121 31,778 34,025 32,761 31, (6.6) Median Household Income (in $): Davis County. 68,974 64,840 66,220 67,004 65,767 61, (2.1) (1.2) State of Utah... 55,802 54,740 55,183 56,820 55,220 51, (0.8) (2.9) (1) Utah Department of Workforce Services. (2) Preliminary and subject to change. Information is from Third Quarter; July through September Civilian labor force information is the annual average for (3) U.S. Department of Commerce; Bureau of Economic Analysis and U.S. Census Bureau. (Source: Utah State Tax Commission.) 19

26 Employment, Income, Construction, and Sales Taxes within Davis County and the State of Utah continued Construction within Davis County (1) Calendar Year % change from prior year Number new dwelling units 1, , , , , (6.4) 3.3 (46.5) New (in $1,000 s): Residential value $ 317,520.0 $ 241,536.1 $ 205,706.0 $ 189,750.5 $ 199,928.2 $ 393, (5.1) (49.2) Non residential value 47, , , , , ,439.8 (17.8) (13.3) (7.9) (40.6) (6.4) Additions, alterations, repairs (in $1,000 s): Residential value 19, , , , , , (1.9) 12.4 (13.2) Non residential value 23, , , , , ,544.6 (45.4) (10.3) (21.5) Total construction value (in $1,000 s) $ 407,599.4 $ 360,343.9 $ 318,982.6 $ 300,706.5 $ 360,437.2 $ 571, (16.6) (36.9) Sales Taxes Within Davis County and the State of Utah (2) Calendar Year % change from prior year Gross Taxable Sales (in $1,000 s): Davis County. $ 3,756,880 $ 3,600,214 $ 3,943,161 $ 4,002,947 $ 4,053,068 $ 3,723, (8.7) (1.5) (1.2) 8.9 State of Utah.. 44,335,559 41,907,568 44,409,394 47,360,540 47,690,034 44,795, (5.6) (6.2) (0.7) 6.5 Fiscal Year % change from prior year Local Sales and Use Tax Distribution: Davis County (and all cities) $ 39,131,098 $ 38,362,708 $ 42,584,066 $ 45,386,534 $ 43,358,607 $ 37,638, (9.9) (6.2) (1) University of Utah Bureau of Economic and Business Research, Utah Construction Report. (2) Utah State Tax Commission. 20

27 Additional Information. For a 10 year history of the District s presentation of demographic and economic statistics (page 81) and labor market data (page 82) are provided in APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section. Largest Employers The following is a list of the largest employers in the County with employment over 500 individuals. Firm/Location Business Employees Department of Defense (Hill Air Force Base) (Clearfield)... Public administration 10,000 15,000 Davis School District (county wide)... Educational services 6,475 13,820 Wal Mart (county wide)... Retail trade 1,150 2,350 Lifetime Products (Clearfield City)... Manufacturing 1,000 2,000 Davis County (county wide)... Public administration (1) 650 1,400 Kroger Group (county wide)... Retail trade/manufacturing 600 1,500 Kroger Group (Layton City)... Transportation and warehousing 550 1,100 ATK Launch Systems (Clearfield City)... Manufacturing 500 1,000 ATK Space Systems (Clearfield City)... Manufacturing 500 1,000 Davis Hospital and Medical Center (Layton City)... Health care and social assistance 500 1,000 Hospital Corporation of Utah (Bountiful City)... Health care and social assistance 500 1,000 K&R Investments Group LLC (North Salt Lake)... Admin., Support, Waste Mgt., Remediation 500 1,000 Lofthouse Bakery Products (Clearfield City)... Manufacturing 500 1,000 South Davis Community Hospital (Bountiful City).. Health care and social assistance 500 1,000 Utility Trailer and Manufacturing (Clearfield City).. Manufacturing 500 1,000 (1) Includes public administration; information; health care and social assistance; arts, entertainment and recreation; construction; and other services. (Source: Utah Department of Workforce Services. Updated April 2012, reflecting information as of September 2011.) Additional Information. For a presentation of the largest employers in the District in Calendar Years 2002 and 2011 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Principal Employers (page 83). (The remainder of this page has been intentionally left blank.) 21

28 Rate Of Unemployment Annual Average Davis State United Year County of Utah States 2012 (1) % 5.2% 7.8% 2011 (2) (1) Preliminary, subject to change. As of December 2012, seasonally adjusted. (2) Preliminary, subject to change. (Source: Utah Department of Workforce Services.) (The remainder of this page has been intentionally left blank.) 22

29 DEBT STRUCTURE OF DAVIS SCHOOL DISTRICT, UTAH Outstanding General Obligation Bonded Indebtedness Original Current Principal Final Principal Series (1) Purpose Amount Maturity Date Outstanding 2013B (a)... Refunding $20,550,000 April 1, 2020 $ 20,550, A (a)... School building 20,000,000 June 1, ,000, School building 35,000,000 June 1, ,000, C... Refunding 32,200,000 June 1, ,200, B... Refunding 7,210,000 June 1, ,810, A... School building 45,000,000 June 1, ,000, A (2)... School building 68,500,000 June 1, ,240, School building 43,000,000 June 1, ,550, School building 64,000,000 June 1, ,055, School building 55,000,000 June 1, ,625, School building 47,000,000 June 1, ,375, B... Refunding 24,905,000 June 1, ,500, A (3)... School building 52,200,000 June 1, 2015 (5) 10,960, B (4)... School building 55,000,000 June 1, 2014 (6) 8,275, (4)... School building 38,930,000 June 1, 2013 (6) 2,625,000 Total direct general obligation debt (7)... $438,765,000 (a) For purposes of this OFFICIAL STATEMENT, the 2013 Bonds will be considered issued and outstanding. (1) All bonds of the Board are rated Aaa (State of Utah Guaranty; underlying Aa2 ), by Moody s, as of the date of this OFFICIAL STATEMENT. (2) These bonds were issued as federally taxable, 35% issuer subsidy Build America Bonds. (3) Portions of this bond were refunded by the 2013B Refunding Bonds. (4) Portions of this bond were refunded by the 2011C Bonds. (5) Final maturity date after portions of these bonds was refunded by the 2013B Refunding Bonds. (6) Final maturity date after portions of these bonds was refunded by the 2011C Bonds. (7) For accounting purposes, the outstanding general obligation debt as shown above is increased by the premium associated with debt issued and reduced by deferred amounts on refundings that are reported in the long term debt notes of the Board s financial statements. The total unamortized bond premium was $12,708,920 and the total deferred amount was $2,577,474 (as of June 30, 2012), and together with current outstanding debt of $438,765,000, results in total outstanding debt of $448,896,446. Future Issuance Of Debt; Capital Leases; Historical Tax Anticipation Note Borrowing Future Issuance Of Debt. The Board has $102.5 million authorized unissued general obligation bonds from the 2009 Bond Election. As of the date of this OFFICIAL STATEMENT, the Board may issue additional bonds from the 2009 Bond Election during the Board s Fiscal Years 2014 through Capital Leases. The Board has various capital leases outstanding. As of Fiscal Year 2012, the present value of the minimum lease payments of the District s capital leases totals $663,206, with annual payments scheduled through Fiscal Year See APPENDIX A COMPREHENSIVE ANNUAL FI- NANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 7. Long Term Liabilities Capital Leases. Historical Tax Anticipation Note Borrowing. The Board does not anticipate the issuance of tax and revenue anticipation notes for Fiscal Year

30 The Board has issued tax anticipation notes for the past five Fiscal Years as follows: Historical Moody s Fiscal Year Series Amount Date of Sale Type of Sale Rating 2013 (1) $20,000,000 June 7, 2011 Public MIG ,000,000 June 22, 2010 Public MIG ,000,000 June 16, 2009 Public MIG ,000,000 June 17, 2008 Public MIG 1 (1) No notes were issued in this Fiscal Year. (The remainder of this page has been intentionally left blank.) 24

31 Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Fiscal Series 2013B Series 2013A Series 2012 Series 2011C Series 2011B Year Ending $20,550,000 $20,000,000 $35,000,000 $32,200,000 $7,210,000 June 30 Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2012 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 1,354,524 $ 400,000 $ 355, ,476, ,464,350 3,610, , , , ,218,956 2,445,000 1,464,350 3,200, , , , ,218,956 6,965,000 1,342, ,845, , , ,218,956 7,250,000 1,063, ,960, , , ,218,956 7,600, , ,080, , , ,218,956 7,940, , ,245, ,263 1,060, ,513 1,965,000 1,218, ,420, ,850 1,100, ,113 2,005,000 1,179, ,145, ,113 2,085,000 1,099, ,190, ,313 2,170,000 1,016, ,230, ,613 2,255, , ,255, ,013 2,345, , ,280, ,344 2,440, , ,320, ,944 2,535, , ,355, ,344 2,640, , ,400, ,694 2,745, , ,440, ,694 2,825, , ,485, ,494 2,910, , ,530, ,088 2,995, , ,580, ,363 3,085,000 96, ,630,000 55,013 Totals $ 20,550,000 $ 4,028,295 $ 20,000,000 $ 8,514,252 $ 35,000,000 $ 17,147,860 $ 32,200,000 $ 7,786,824 $ 7,210,000 $ 755,900 Fiscal Series 2011A Series 2010A (1) Series 2009 Series 2008 Series 2007 Year Ending $45,000,000 $68,500,000 $43,000,000 $64,000,000 $55,000,000 June 30 Principal Interest Principal Interest (2) Principal Interest Principal Interest Principal Interest 2012 $ 0 $ 2,423,195 $ 1,165,000 $ 3,206,328 $ 1,475,000 $ 1,562,750 $ 2,350,000 $ 2,440,394 $ 500,000 $ 2,429, ,938,556 1,210,000 3,188,270 1,525,000 1,518,500 2,425,000 2,364,019 4,300,000 2,408, ,938, ,000 3,165,885 1,575,000 1,457,500 2,500,000 2,285,206 4,475,000 2,225, ,938, ,149,573 1,625,000 1,410,250 2,600,000 2,197,706 4,675,000 2,035, ,938, ,149,573 1,675,000 1,361,500 2,675,000 2,106,706 4,875,000 1,836, ,938,556 3,785,000 3,149,573 1,750,000 1,294,500 2,800,000 2,006,394 5,100,000 1,617, ,445,000 1,938,556 3,880,000 3,007,635 1,825,000 1,224,500 2,925,000 1,866,394 5,325,000 1,387, ,540,000 1,840,756 3,980,000 2,854,375 1,900,000 1,142,375 3,050,000 1,749,394 5,550,000 1,147, ,645,000 1,739,156 4,090,000 2,685,225 1,975,000 1,056,875 3,175,000 1,619,769 5,825, , ,750,000 1,633,356 4,205,000 (3) 2,505,265 2,075, ,125 3,300,000 1,484,831 6,100, , ,860,000 1,523,356 4,330,000 (3) 2,309,733 2,200, ,375 3,450,000 1,336,331 6,400, , ,975,000 1,408,956 4,465,000 (3) 2,108,388 2,300, ,375 3,625,000 1,181, ,095,000 1,289,956 4,595,000 1,900,765 2,400, ,375 3,775,000 1,017, ,215,000 1,166,156 4,740,000 1,677,908 2,500, ,375 3,950, , ,345,000 1,037,556 4,895,000 1,443,278 2,600, ,250 4,125, , ,490, ,394 5,055,000 1,196,080 2,700, ,750 4,325, , ,645, ,344 5,235, ,110 2,000, ,625 5,355, , ,815, ,763 5,425, ,950 2,925, , ,995, ,550 5,625, , ,185, , Totals $ 45,000,000 $ 28,484,620 $ 67,405,000 $ 42,574,348 $ 37,025,000 $ 16,934,625 $ 56,405,000 $ 25,869,444 $ 53,125,000 $ 16,855,000 (1) Issued as federally taxable, 35% federal interest subsidy payment, Build America Bonds. (2) Does not include 35% federal interest subsidy payments on the 2010A Bonds. (3) Mandatory sinking fund principal payments from a $13,000, % term bond due June 1,

32 Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year continued Fiscal Series 2006 Series 2005B Series 2005A Series 2003B Series 2003 Year Ending $47,000,000 $24,905,000 $52,200,000 $55,000,000 $38,930,000 June 30 Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2012 $ 2,975,000 $ 1,579,188 $ 3,130,000 $ 927,900 $ 3,340,000 $ 1,511,194 $ 3,900,000 $ 487,000 $ 2,500,000 $ 256, ,100,000 1,460,188 3,285, ,400 3,505, ,409 4,050, ,000 2,625, , ,225,000 1,336, , ,150 3,645, ,425 4,225, , (2) ,375,000 1,174,938 3,925, ,750 3,810, , (2) 0 0 (2) ,550,000 1,006,188 4,125, , (1) 0 0 (2) 0 0 (2) ,700, ,313 3,685, , (1) 0 0 (2) 0 0 (2) ,850, , (1) 0 0 (2) 0 0 (2) ,025, , (1) ,175, , (1) ,375, , Totals $ 36,350,000 $ 9,193,813 $ 18,630,000 $ 3,467,950 $ 14,300,000 $ 2,880,428 $ 12,175,000 $ 987,000 $ 5,125,000 $ 387,500 Fiscal Series 2002B (3) Series 2002A (3) Totals Year Ending $42,000,000 $27,240,000 Total Total Total Debt June 30 Principal Interest Principal Interest Principal Interest (6) Service 2012 $ 3,000,000 $ 142,500 $ 4,200,000 $ 220,875 $ 28,935,000 $ 18,896,909 $ 47,831, (4) 29,635,000 18,224,696 47,859, (4) 26,495,000 17,796,313 44,291, (5) 26,975,000 16,597,479 43,572, (5) 27,995,000 15,463,041 43,458, (5) 32,380,000 14,241,379 46,621, ,270,000 12,895,641 45,165, ,315,000 11,482,006 39,797, ,410,000 10,285,456 39,695, ,035,000 8,999,834 35,034, ,600,000 7,837,164 30,437, ,850,000 6,829,669 23,679, ,465,000 6,133,121 23,598, ,125,000 5,392,401 23,517, ,820,000 4,602,421 23,422, ,565,000 3,765,624 23,330, ,380,000 2,865,791 23,245, ,430,000 1,935,338 18,365, ,015,000 1,188,038 15,203, ,710, ,131 9,251, ,665, ,769 4,867, ,630,000 55,013 1,685,013 Totals $ 3,000,000 $ 142,500 $ 4,200,000 $ 220,875 $ 467,700,000 $ 186,231,234 $ 653,931,234 (1) Principal and interest will be refunded by the 2013B Refunding Bonds. (2) Principal and interest were refunded by the 2011C Refunding Bonds. (3) This bond issue is included in this table because final principal and interest payments occurred in Fiscal Year (4) Principal and interest were refunded by the 2011B Refunding Bonds. (5) Principal and interest were refunded by the 2005B Refunding Bonds. (6) Does not include 35% federal interest subsidy payments on the 2010A Bonds. 26

33 Additional Information. For detailed Fiscal Year information prepared by the District of general obligation bonds debt outstanding as of Fiscal Year 2012 see APPENDIX A COMPREHENSIVE AN- NUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Schedule of Annual Debt Service Requirements (page 79) and Debt Service Schedule of Outstanding General Obligation Bonds (page 80). (The remainder of this page has been intentionally left blank.) 27

34 Overlapping And Underlying General Obligation Debt Entity s 2012 Board s Board s General Board s Taxable Portion of Tax- Per- Obligation Portion of Taxing Entity Value (1) able Value centage Debt G.O. Debt Overlapping: State of Utah... $191,694,668,745 $15,881,144, % $3,225,435,000 $267,711,105 Davis County... 15,881,144,861 15,881,144, ,040,000 18,040,000 Total overlapping ,751,105 Underlying: WBWCD (2) (3)... 41,509,981,607 15,879,818, ,333,790 9,702,842 North Davis Sewer District (4)... 8,245,878,359 7,071,985, ,625,000 33,140,250 South Davis Rec. District (5)... 5,981,520,536 5,981,520, ,925,000 12,925,000 Clearfield City (3)... 1,348,927,498 1,348,927, ,160,000 0 North Salt Lake City (3)... 1,346,868,016 1,346,868, ,650,000 0 Farmington City... 1,041,922,031 1,041,922, ,830,000 3,830,000 West Bountiful City (3) ,318, ,318, ,000 0 Total underlying... 59,598,092 Total overlapping and underlying general obligation debt... $345,349,197 Total overlapping general obligation debt (excluding the State) (6)... $ 18,040,000 Total direct general obligation bonded indebtedness ,765,000 Total direct and overlapping general obligation debt (excluding the State) (6)... $456,805,000 This table excludes any additional principal amounts attributable to unamortized original issue bond premium and deferred amount on refunding. (1) Preliminary; subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The Weber Basin Water Conservancy District ( WBWCD ) covers all of Morgan County, most of the County and Weber County, and portions of Box Elder and Summit Counties. Principal and interest on WBWCD general obligation bonds are paid from sales of water. WBWCD s outstanding general obligation bonds are limited ad valorem tax bonds. By law, WBWCD may levy a tax rate of up to to pay, first, for any outstanding general obligation indebtedness, then for operation and maintenance expenses, and then for any other lawful purpose. (3) All or portions of these governmental entities outstanding general obligation debt are supported by user fee revenues from water or sewer. The Board s portion of overlapping general obligation debt has been reduced to the extent that such general obligation debt is supported by user fee revenues. (4) A portion of this entity is located in Weber County. (5) South Davis Recreation District members are Bountiful, Centerville, North Salt Lake, Woods Cross, and West Bountiful. (6) The State s general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. 28

35 Additional Information. For overlapping and underlying debt of the District as of Fiscal Year 2012 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Overlapping and Underlying Governmental Activities Debt (page 77). Debt Ratios The following table sets forth the ratios of general obligation debt (excluding any additional principal amounts attributable to unamortized original issue bond premium) that is expected to be paid from taxes levied specifically for such debt and not from other revenues over the taxable value of property within the District, the estimated market value of such property and the population of the District. The State s general obligation debt is not included in the debt ratios because the State currently levies no property tax for payment of general obligation debt. To 2012 To 2012 To 2011 Estimated Estimated Population Taxable Market Estimate Per Value (1) Value (2) Capita (3) Direct general obligation debt % 1.81% $1,407 Direct and overlapping general obligation debt $1,465 (1) Based on an estimated 2012 Taxable Value of $15,881,144,861, which value excludes the taxable value used to determine uniform fees on tangible personal property. (2) Based on an estimated 2012 Market Value of $24,280,545,258, which value excludes the taxable value used to determine uniform fees on tangible personal property. (3) Based on the 2011 population estimate of 311,811 from the U.S. Census Bureau. See FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Property Tax Matters Uniform Fees and Taxable, Fair Market And Market Value Of Property Within The District. Additional Information. For a 10 year history of various debt ratios calculated by the District see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DIS- TRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Ratios of Outstanding Debt Last Ten Fiscal Years (page 76). General Obligation Legal Debt Limit And Additional Debt Incurring Capacity The general obligation indebtedness of the Board is limited by State law to 4% of the fair market value of taxable property in the District. The legal debt limit and additional debt incurring capacity of the Board (after the issuance of the 2013 Bonds and including the refunding of the 2005 Refunded Bonds) are based on the estimated fair market value for 2012 and the calculated valuation value from 2011 uniform fees, and are calculated as follows: (The remainder of this page has been intentionally left blank.) 29

36 Estimated 2012 Fair Market Value... $24,280,545, valuation from uniform fees (1) ,462,915 Estimated 2012 Fair Market Value for Debt Incurring Capacity... $25,011,008,173 Fair Market Value for Debt Incurring Capacity times 4% (the Debt Limit )... $1,000,440,327 Less: current outstanding general obligation debt (2)... (448,896,446) Estimated additional debt incurring capacity... $ 551,543,881 (1) 2012 final information is not available. For debt incurring capacity only, in computing the fair market value of taxable property in the District, the value of all motor vehicles and state assessed commercial vehicles (which value is determined by dividing the uniform fee revenue by 1.5%) will be included as a part of the fair market value of the taxable property in the District. (2) For legal debt limit purposes, the outstanding general obligation debt as shown above is increased by the premium associated with debt issued and reduced by deferred amounts on refundings that are reported in the long term debt notes of the Board s financial statements. The total unamortized bond premium was $12,708,920 and the total deferred amount was $2,577,474 (as of June 30, 2012), and together with current outstanding debt of $438,765,000, results in total outstanding debt of $448,896,446. Additional Information. For a 10 year Fiscal Year history of the Board s general obligation legal debt limit and debt capacity see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section General Obligation Legal Debt Limit and Debt Capacity (page 78). No Defaulted Obligations The Board has never failed to pay principal of and interest on its financial obligations when due. FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Fund Structure; Accounting Basis The accounting policies of the District conform to all generally accepted accounting principles for governmental units in general and the State s school districts in particular. The accounts of the District are organized on the basis of funds or groups of accounts, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self balancing accounts which comprise its assets, liabilities, fund balances, revenues and expenditures. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped by type in the combined financial statements. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Notes to Basic Financial Statements 1. Summary of Significant Accounting Policies. Budgets And Budgetary Accounting The District operates within the budget requirements for school districts as specified by State law and as interpreted by the State Superintendent of Public Instruction. The Superintendent of each school district is the budget officer of each respective district. For the fiscal year beginning July 1, the Business Administrator under the supervision of the Superintendent prepares a tentative budget for all funds which is presented to the Board by the Superintendent on 30

37 or before June 1. State law requires budgets for all governmental fund types and the Board has adopted budgets for those funds. After a public hearing has been held, the Board, by resolution, legally adopts the final budget prior to June 22. If the tax rate in the proposed budget exceeds the certified tax rate, the Board shall, if required by State law, comply with the notice and hearing requirements contained in the Property Tax Act, Chapter 2, Title 59, Utah Code (the Property Tax Act ) in adopting the budget. See in this section Tax Levy And Collection and Public Hearing On Certain Tax Increases below. Once adopted, the budget can be amended by subsequent Board action. Reductions in appropriations can be approved by the Board upon recommendation of the Superintendent; however, increased appropriations require a public hearing prior to amending the budget. Adjustments in estimated revenue and revisions of appropriations due to operational changes in categorical program funding are integrated into the amended budget approved by the Board. A final amended budget is legally approved by the Board prior to the end of the fiscal year. The total budgeted expenditures of a given fund may not exceed the revenues expected to be received for the fiscal year plus the fund balance. Control of the budget is exercised at the program level. The General Fund, the Capital Projects Fund, the Non K 12 Programs, and the Food Service budgets are prepared using the modified accrual basis of accounting, adjusted for encumbrances. Unencumbered appropriations lapse at year end. Undistributed Reserve in School Board Budget. A local school board may adopt a budget with an undistributed reserve. The reserve may not exceed 5% of the maintenance and operation budget adopted by each local board in accordance with a scale developed by the State Board of Education. The scale is based on the size of the school district s budget. Each local board may appropriate all or a part of the undistributed reserve made to any expenditure classification in the maintenance and operation budget by written resolution adopted by majority vote of such board setting forth the reasons for the appropriation. The board may not use undistributed reserves in the negotiation or settlement of contract salaries for school district employees. Limits on Appropriations Estimated Expendable Revenue. A local school board may not make any appropriation in excess of its estimated expendable revenue, including undistributed reserves, for the following fiscal year. In determining the estimated expendable revenue, any existing deficits arising through excessive expenditures from former years are deducted from the estimated revenue for the ensuing year to the extent of at least 10% of the entire tax revenue of the school district for the previous year. In the event of financial hardships, a local board may deduct from the estimated expendable revenue for the ensuing year, by fund, at least 25% of the deficit amount. All estimated balances available for appropriations at the end of the fiscal year shall revert to the funds from which they were appropriated and shall be fund balances available for appropriation in the budget of the following year. 31

38 A local school board may reduce a budget appropriation at its regular meeting if notice of the proposed action is given to all board members and the district superintendent at least one week prior to the meeting. An increase in an appropriation may not be made by a local school board unless the following steps are taken: (a) the local school board receives a written request from the district superintendent that sets forth the reasons for the proposed increase; (b) notice of the request is published in a newspaper of general circulation within the school district at least one week prior to a local school board meeting at which the request will be considered; and (c) the local school board holds a public hearing on the request prior to the board s acting on the request. School District Interfund Transfers. The State Board of Education may authorize school district interfund transfers for financially distressed districts if the State Board of Education determines the following: (a) the school district has a significant deficit in its maintenance and operations fund which has resulted from circumstances not subject to the administrative decisions of the school district and which cannot be reasonably reduced under Section 53A of the Utah Code; and (b) without the transfer, the school district will not be capable of meeting statewide educational standards adopted by the State Board of Education. Adoption of Ad Valorem Tax Levy. The governing body of each taxing entity shall, before June 22 of each year, adopt a proposed or, if the tax rate is not more than the certified tax rate, a final tax rate for the taxing entity. The governing body shall report the rate and levy, and any other information prescribed by rules of the county commission for the preparation, review, and certification of the rate, to the county auditor of the county in which the taxing entity is located. Management s Discussion And Analysis The administration of the District prepared a narrative discussion, overview, and analysis of the financial activities of the District for Fiscal Year For the complete discussion see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Management s Discussion and Analysis (after the Independent Auditor s Report). The Management s Discussion and Analysis for Fiscal Year 2013 is not available. Under State law the Board must complete its annual financial report for Fiscal Year 2013 by November 30, For Fiscal Year 2014, the District expects a small increase in State funding which will be used to help offset increases in retirement and health insurance expenditures. Property tax revenues are expected to remain at current levels. The District will also continue its practice of reviewing programs to reduce or eliminate expenditures where feasible. Financial Summaries The summaries contained herein were extracted from the District s basic financial statements. The summaries have not been audited. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR (The remainder of this page has been intentionally left blank.) 32

39 Davis School District Statement of Net Assets Primary Government (This summary has not been audited) June Assets: Cash and investments $ 128,224,887 $ 136,944,968 $ 147,158,348 $ 91,709,371 $ 142,975,081 Receivables: Property taxes 132,298, ,330, ,397, ,354, ,245,364 Other local 1,081,462 1,881, ,140 1,879,630 1,443,469 State of Utah 1,797,283 1,896, ,273 1,965, ,387 Federal government 8,195,990 13,599,342 8,602,198 4,059,308 8,909,251 Inventories 7,423,280 7,750,901 7,249,251 8,231,384 7,069,016 Bond issuance costs, net 2,369,335 2,395,451 2,346,105 1,508,214 1,656,771 Internal balances 41,610 Capital assets: Land and construction 88,491,573 89,942,483 97,552, ,770,605 66,931,588 Other capital assets, net of depreciation 489,485, ,440, ,494, ,945, ,348,337 Total assets 859,367, ,181, ,741, ,424, ,939,874 Liabilities: Accounts payable 13,683,902 8,808,439 9,358,168 12,761,176 5,666,661 Accrued interest 1,431,558 1,653,285 1,126,751 1,074,361 1,038,995 Accrued salaries and benefits 43,884,251 63,355,999 63,871,293 59,428,395 58,741,506 Notes payable 200, , , ,000 Unearned revenue: Property taxes ,996, ,897, ,853, ,651, ,596,768 Local fees 27, ,032 State of Utah... 2,761,585 4,814,150 Federal government 32,648 Noncurrent liabilities: Due or payable within one year 37,473,380 38,178,850 36,556,836 32,668,121 29,075,864 Due or payable after one year 407,655, ,420, ,239, ,680, ,692,400 Total liabilities 630,946, ,093, ,306, ,514, ,062,194 Net Assets: Invested in capital assets, net of related debt 175,371, ,332, ,127, ,757, ,624,761 Restricted for: Debt service.. 333,482 6,484,749 8,286,758 8,906,841 4,586,918 Capital projects.. 24,885,467 17,999,755 19,927,941 2,088,686 28,487,591 State multi district programs 1,473,724 1,266,314 1,037, ,567 7,904,535 Student food services 4,147,549 3,945,590 Unrestricted... 22,209,543 15,059,073 18,945,243 16,811,425 (1,726,125) Total net assets.. $ 228,421,078 $ 222,087,544 $ 219,324,333 $ 210,471,719 $ 173,877,680 (Source: Information taken from the District s audited basic financial statements. This summary itself has not been audited.) 33

40 Davis School District Statement of Activities (1) Primary Government (This summary has not been audited) Net (Expense) Revenue and Changes in Net Assets June Primary government: Governmental activities: Instructional services.. $ (237,410,371) $ (229,506,229) $ (229,853,855) $ (235,368,028) $ (237,982,642) Supporting services: Students (9,980,398) (9,559,654) (10,439,991) (10,434,380) (9,378,058) Instructional staff (12,576,196) (12,883,997) (13,815,104) (14,773,028) (13,914,395) District administration (2,473,683) (2,433,806) (2,409,260) (2,380,173) (3,222,128) School administration (24,984,804) (24,823,804) (23,972,896) (23,724,658) (22,996,197) Central... (10,448,017) (9,413,911) (9,585,433) (10,206,241) (10,014,910) Operation and maintenance of facilities (39,907,063) (39,239,723) (38,599,553) (39,874,290) (38,927,930) Student transportation (5,656,961) (4,631,232) (4,425,945) (4,454,777) (5,190,767) School food service (192,171) 842, ,225 (784,497) 250,614 Interest on long term liabilities (16,129,645) (17,752,461) (16,246,318) (15,913,160) (13,534,129) Total governmental activities (359,759,309) (349,402,760) (348,717,130) (357,913,232) (354,910,542) Business type activities: Pioneer Adult Rehabilitation Center 627, ,541 (456,702) (801,575) 505,598 Total primary government (359,131,499) (348,766,219) (349,173,832) (358,714,807) (354,404,944) General revenues: Property taxes levied for: Basic levy set by state for K 12 instruction 31,448,165 29,806,450 26,424,606 23,949,080 20,755,944 Board voted leeway for K 12 instruction 30,299,651 30,287,036 26,723,064 26,184,419 24,268,903 Class size reduction 7,575,216 7,562,033 6,676,534 6,536,723 6,067,297 Reading program 2,466,437 2,312,953 2,141,564 1,977,499 1,835,310 Transportation 3,813,543 3,602,265 2,578,690 2,527,051 2,335,233 Community recreation 3,775,682 3,541,738 3,121,559 3,185,950 2,950,136 General obligation bond debt service 40,360,346 43,590,844 45,311,846 47,200,296 38,948,551 Capital outlay 5,507,806 5,858,126 1,218,874 1,190,090 1,104,479 10% of basic for capital outlay, textbooks, and supplies 13,628,609 6,480,977 11,498,609 11,261,168 10,408,239 Federal and state aid not restricted to specific purposes 206,430, ,946, ,766, ,038, ,324,714 Earnings on investments 1,540,530 1,216,690 1,426,461 3,012,985 5,270,686 Miscellaneous 18,618,204 16,022,937 18,137,903 17,979,165 20,191,090 Total general revenues 365,465, ,228, ,026, ,042, ,460,582 Change in net assets 6,333,534 8,462,726 8,852,614 21,327,620 20,055,638 Net assets beginning ,087, ,324, ,471, ,144, ,195,690 Adjustment from prior period... (5,699,515) 6,892,771 Net assets ending.. $ 228,421,078 $ 222,087,544 $ 219,324,333 $ 210,471,719 $ 189,144,099 (1) This report is presented is summary format concerning the single item of Net (Expense) Reveune and Changes in Net Assets and is not intended to be complete. For a detailed itemized report see BASIC FINANCIAL STATEMENTS FOR FISCAL YEAR 2011 Statement of Activities for the Fiscal Year Ended June 30, 2011 below. (Source: Information taken from the District s audited basic financial statements. This summary itself has not been audited.) 34

41 Davis School District Balance Sheet General Fund (This summary has not been audited) Fiscal Year Ended June Assets: Cash and investments $ 57,293,440 $ 58,517,887 $ 67,397,986 $ 62,106,823 $ 49,088,547 Receivables: Property taxes 77,963,761 84,383,565 63,950,176 60,822,736 57,366,237 Other local 58, ,197 1,082,294 1,327,652 State of Utah 463, , , , ,062 Federal government 7,897,070 13,286,850 8,298,868 2,767,319 8,890,879 Due from other funds 5,300,354 9,452,189 4,887,171 7,023,464 4,945,000 Inventories 1,563,781 1,524,352 1,871,715 2,891,149 3,068,975 Total assets and other debits $ 150,540,338 $ 167,881,501 $ 147,061,616 $ 137,283,678 $ 124,993,352 Liabilities and fund balances: Liabilities: Accounts payable $ 958,224 $ 918,418 $ 759,263 $ 813,287 $ 893,548 Accrued saleries and benefits 43,884,251 63,355,999 63,871,293 59,428,395 58,741,506 Due to other funds 4,638,104 Notes payable , , , ,000 Deferred revenue: Property taxes 75,930,068 80,466,184 61,942,452 59,785,234 55,355,386 State of Utah 2,761,585 4,814,150 Federal government 32, ,985 Total liabilities 128,204, ,937, ,873, ,276, ,240,440 Fund balances: Nonspendable: Inventories 1,563,781 1,524,352 1,871,715 2,891,149 3,068,975 Committed to: Workers Compensation 300, , , , ,000 Termination benefits 4,000,000 4,000,000 3,500,000 3,000,000 2,500,000 Assigned to: Programs 3,582,418 Schools 250,000 Unassigned 12,639,259 12,119,413 14,516,893 10,815,613 3,883,937 Total fund balances 22,335,458 17,943,765 20,188,608 17,006,762 9,752,912 Total liabilities, equity and other credits $ 150,540,338 $ 167,881,501 $ 147,061,616 $ 137,283,678 $ 124,993,352 (Source: Information taken from the District s audited basic financial statements. This summary itself has not been audited.) 35

42 Davis School District Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds General Fund (This summary has not been audited) Fiscal Year Ended June Revenues: Property taxes $ 79,639,044 $ 77,245,605 $ 67,524,002 $ 63,467,591 $ 57,768,398 Earnings on investments. 1,040, , ,292 2,928,666 2,246,225 Other local sources 10,434,724 8,295,387 8,875,414 11,397,676 8,133,104 State of Utah 269,878, ,822, ,934, ,161, ,130,055 Federal government 32,670,480 50,873,878 47,631,338 49,602,008 26,271,524 Total revenues 393,663, ,982, ,890, ,557, ,549,306 Expenditures: Current: Instruction 267,146, ,400, ,267, ,720, ,279,194 Support services: Students 14,514,691 14,254,115 14,954,793 14,352,317 13,312,679 Instructional staff 16,651,193 17,104,002 17,440,418 18,677,876 17,574,702 District administration 2,550,252 2,553,577 2,518,401 2,362,001 3,204,530 School administration 24,860,824 24,543,982 24,238,662 23,421,684 22,712,165 Central 11,754,227 10,739,697 10,536,906 10,896,515 10,946,328 Operation and maintenance of facilities 39,348,007 38,414,026 38,155,323 38,766,895 38,100,173 Student transportation. 11,823,524 10,863,057 10,460,090 11,809,938 12,138,708 Debt Service: Tax anticipation note interest. 622, , , ,904 1,345,800 Capital lease payments , , ,213 Total expenditures 389,272, ,527, ,708, ,304, ,281,492 Revenues over (under) expenditures 4,391,693 3,454, ,846 2,253,850 (2,732,186) Other financing sources (uses): Transfers 3,000,000 5,000,000 5,000,000 Total other financing sources (uses) 3,000,000 5,000,000 5,000,000 Net change in fund balances 4,391,693 3,454,671 3,181,846 7,253,850 2,267,814 Fund balances beginning, as restated 17,943,765 14,489,094 (1) 17,006,762 9,752,912 7,485,098 Fund balances ending $ 22,335,458 $ 17,943,765 $ 20,188,608 $ 17,006,762 $ 9,752,912 (1) Adjustments were made to prior year entries to better account for the timing of expenses made that straddled fiscal years. The District has adjusted the timing of payroll to the beginning of the month rather than the end of the month to clearly differentiate between fiscal years and improve the representation. (Source: Information taken from the District s audited basic financial statements. This summary itself has not been audited.) 36

43 Additional Information. For a 10 year financial history of various District funds see APPEN- DIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section at the indicated pages as set forth below. (i) Statement of net assets by component see Net Assets by Component Last Ten Fiscal Years (page 68); (ii) Statement of expenses and revenues see Expenses, Program Revenue, and Net (Expense) Revenue Last Ten Fiscal Years (page 69); (iii) Fund balances governmental funds see Fund Balances Governmental Funds Last Ten Fiscal Years (page 70); (iv) Changes in fund balances see Changes in Fund Balances Governmental Funds Last Ten Fiscal Years (page 71); and (iv) Expenditures by function in the General Fund see Expenditures by Function General Fund Last Ten Fiscal Years (page 86). Tax Levy And Collection The Utah State Tax Commission (the State Tax Commission ) must assess all centrally assessed property (as defined under Property Tax Matters below) by May 1 of each year. County assessors must assess all locally assessed property (as defined under Property Tax Matters below) before May 22 of each year. The State Tax Commission apportions the value of centrally assessed property to the various taxing entities within each county and reports such values to county auditors before June 8. The governing body of each taxing entity must adopt a proposed tax rate or, if the tax rate is not more than the certified tax rate, a final tax rate before June 22. County auditors must forward to the State Tax Commission a statement prepared by the legislative body of each taxing entity showing the amount and purpose of each levy. Upon determination by the State Tax Commission that the tax levies comply with applicable law and do not exceed maximum permitted rates, the State Tax Commission notifies county auditors to implement the levies. If the State Tax Commission determines that a tax levy established by a taxing entity exceeds the maximum levy permitted by law, the State Tax Commission must lower the levy to the maximum levy permitted by law, notify the taxing entity that the rate has been lowered and notify the county auditor (of the county in which the taxing entity is located) to implement the rate established by the State Tax Commission. On or before July 22 of each year, the county auditors must mail to all owners of real estate shown on their assessment rolls notice of, among other things, the value of the property, itemized tax information for all taxing entities and the date their respective county boards of equalization will meet to hear complaints. Taxpayers owning property assessed by a county assessor may file an application within statutorily defined time limits based on the nature of the contest with the appropriate county board of equalization for the purpose of contesting the assessed valuation of their property. The county board of equalization must render a decision on each appeal in the time frame prescribed by the Property Tax Act. Under certain circumstances, the county board of equalization must hold a hearing regarding the application, at which the taxpayer has the burden of proving that the property sustained a decrease in fair market value. Decisions of the county board of equalization may be appealed to the State Tax Commission, which must decide all appeals relating to real property by March 1 of the following year. Owners of centrally assessed property, or any county with a showing of reasonable cause, may, on or before the later of June 1 or a day within 30 days of the date the notice of assessment is mailed by the State Tax Commission, apply to the State Tax Commission for a hearing to contest the assessment of centrally assessed property. The State Tax Commission must render a written decision within 120 days after the hearing is completed and all post hearing briefs are submitted. The county auditor makes a record of all changes, corrections and orders, and delivers before November 1 the corrected assessment rolls to the county treasurers. By No- 37

44 vember 1, each county treasurer furnishes each taxpayer a notice containing the kind and value of the property assessed to the taxpayer, the street address of the property, where applicable, the amount of the tax levied on the property and the year the property is subject to a detailed review. Taxes are due November 30 (and if a Saturday, Sunday or holiday, the next business day). Each county treasurer is responsible for collecting all taxes levied on real property within that county. There are no prior claims to such taxes. As taxes are collected, each county treasurer must pay to the State and each taxing entity within the county its proportionate share of the taxes, on or before the tenth day of each month. Delinquent taxes are subject to a penalty of 2.5% of the amount of the taxes or $10 whichever is greater. Unless the delinquent taxes and penalty are paid before January 31 of the following year, the amount of delinquent taxes and penalty bears interest at the federal funds rate target established by the Federal Open Market Committee plus 6% from the January 1 following the delinquency date until paid (provided that said interest may not be less than 7% nor more than 10%). If delinquent taxes have not been paid by March 15 following the lapse of four years from the delinquency date, the affected county advertises and sells the property at a final tax sale held in May or June of the fifth year after assessment. The process described above changes if a county or other taxing entity proposes a tax rate in excess of the certified tax rate (as described under Public Hearing On Certain Tax Increases below). If such an increase is proposed, the taxing entity must adopt a proposed tax rate before June 22. In addition, the county auditor must include certain information in the notices to be mailed by July 22, as described in the second preceding paragraph, including information concerning the tax impact of the proposed increase on the property and the time and place of the public hearing described in Public Hearing On Certain Tax Increases below. In most cases, notice of the public hearing must also be advertised by publication. After the public hearing is held, the taxing entity may adopt a resolution levying a tax in excess of the certified tax rate. A resolution levying a tax in excess of the certified tax rate must be forwarded to the county auditor by August 17. The final tax notice is then mailed by November 1. Public Hearing On Certain Tax Increases Each taxing entity that proposes to levy a tax rate that exceeds the certified tax rate may do so, by resolution, only after holding a properly noticed public hearing. Generally, the certified tax rate is the rate necessary to generate the same property tax revenue that the taxing entity collected for the prior year, with certain exclusions. For purposes of calculating the certified tax rate, county auditors are to use the taxable value of property on the assessment rolls, exclusive of new growth. New growth is any increase in taxable value of the taxing entity from the previous calendar year to the current year less the amount of increase to locally assessed real property taxable values resulting from factoring, reappraisal, other adjustments, or changes in the method of apportioning taxable value. With certain exceptions, the certified tax rate for the minimum school levy, debt service voted on by the public and certain state and county assessing and collecting levies are the actual levies imposed for such purposes and no hearing is required for these levies. Among other requirements, on or before July 22 of the year in which such an increase is proposed, the county auditor must mail to all property owners a notice of the public hearing. In most cases, the taxing entity must advertise the notice of public hearing by publication in a newspaper. Such notices must state, among other things, the value of the property, the time and place of the public hearing, and the tax impact of the proposed increase. Property Tax Matters The Property Tax Act provides that all taxable property is required to be assessed and taxed at a uniform and equal rate on the basis of its fair market value as of January 1 of each year, unless otherwise provided by law. Fair market value is defined in the Property Tax Act as the amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Pursuant to an exemption for 38

45 residential property provided for under the Property Tax Act and Article XIII of the State Constitution, the fair market value of residential property is reduced by 45%. The residential exemption is limited to one acre of land per residential unit and to one primary residence per household, except that an owner of multiple residential properties may exempt his or her primary residence and each residential property that is the primary residence of a tenant. The Property Tax Act provides that the State Tax Commission shall assess certain types of property ( centrally assessed property ), including (i) properties that operate as a unit across county lines that must be apportioned among more than one county or state, (ii) public utility (including railroad) properties, (iii) airline operating properties, (iv) geothermal resources and (v) mines, mining claims and appurtenant machinery, facilities and improvements. All other taxable property ( locally assessed property ) is required to be assessed by the county assessor of the county in which such locally assessed property is located. Each county assessor must update property values annually based upon a systematic review of current market data and must also complete a detailed review of property characteristics for each parcel of property at least once every five years. The Property Tax Act requires that the State Tax Commission conduct an annual investigation in each county to determine whether all property subject to taxation is on the assessment rolls and whether the property is being assessed at its fair market value. The State Tax Commission and the county assessors utilize various valuation methods, as determined by statute, administrative regulation or accepted practice, to determine the fair market value of taxable property. Uniform Fees. An annual statewide uniform fee is levied on tangible personal property in lieu of the ad valorem tax. The uniform fee is based on the value of motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. The current uniform fee is established at 1.5% of the fair market value of motor vehicles that weigh 12,001 pounds or more, watercraft, recreational vehicles and all other tangible personal property required to be registered with the State, excluding exempt property such as aircraft and property subject to a fixed age based fee. Motor vehicles weighing 12,000 pounds or less and certain other vehicles are subject to an age based fee that is due each time the vehicle is registered. The revenues collected from the various uniform fees are distributed by the county to the taxing entity in which the property is located in the same proportion in which revenue collected from ad valorem real property is distributed. (The remainder of this page has been intentionally left blank.) 39

46 Historical Tax Rates Of The District Tax Rate Maximum (a) Tax Rate (1) General Fund: Board Local Leeway Basic program (2)... formula Voted leeway (3) Board voted leeway Special transportation Recreation K 3 reading program Tort liability Totals Capital outlay: Capital Local (4) % of basic program Totals Debt service (general obligation bonds): Debt service (5)... none Judgment recovery levy (6)... none Total all funds (a) The State changed its accounting/funding classifications for school districts beginning in Fiscal Year (1) Maximum tax rate where applicable under current State law. (2) Set by law for the District s portion of the State Minimum School Program. (3) General maintenance and operation revenue. In the early 1980 s, District residents approved a Voted Leeway Program of not to exceed a tax rate; in 1993, District residents approved an additional tax rate to the Voted Leeway Program; and in 1997, District residents approved an additional tax rate to the Voted Leeway Program (which results in a maximum tax rate of ). (4) Construction remodeling projects and purchase of school sites/equipment, etc. (5) This maximum limitation is not applicable to levies made to provide for payment of the principal of and interest on general obligation bonds authorized by vote of school district electors. (6) A judgment levy is levied for the purpose of collecting additional revenues. The Board has the legal right to levy a Judgment Levy in the succeeding tax year to make up for any tax revenue shortfall due to tax or revaluation judgment circumstances that the Board had no control over. (Source: Utah State Tax Commission.) See STATE OF UTAH SCHOOL FINANCE below. (The remainder of this page has been intentionally left blank.) 40

47 Comparative Total Property Tax Rates Within Davis County Total Tax Rate Within Taxing Area Tax Levying Entity (1) Davis School District: Bountiful City Centerville City Clearfield City Clinton City Farmington City Fruit Heights City Kaysville City Layton City North Salt Lake City South Weber City Sunset City Syracuse City West Bountiful City West Point City Woods Cross City Unincorporated areas (2) (1) These tax rates represent a taxing district within the city or town with the highest combined total tax rates of all overlapping taxing districts. (2) These tax rates represent a taxing district within the unincorporated municipalities within the County with the highest combined total tax rates of all overlapping taxing districts. (Source: Reports from the Utah State Tax Commission.) Additional Information. For a 10 year history of direct and overlapping property tax rates see AP- PENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Direct and Overlapping Property Tax Rates Last Ten Tax Years (page 73). (The remainder of this page has been intentionally left blank.) 41

48 Taxable, Fair Market And Market Value Of Property Within The District % Change % Change Taxable Over Fair Market/ Over Year Value (1) Prior Year Market Value (2) Prior Year 2012 (3)... $15,881,144, % $24,280,545, % ,697,107,746 (3.2) 23,932,780,710 (3.6) ,197,778,174 (2.0) 24,821,205,052 (2.1) ,525,415,746 (2.2) 25,356,431,456 (2.5) ,901,186, ,009,184, (1) Taxable valuation includes redevelopment agency valuation. The estimated redevelopment agency valuation for Calendar Year 2012 was approximately $555.6 million; Calendar Year 2011 was approximately $528.5 million; Calendar Year 2010 was approximately $550.4 million; for Calendar Year 2009 was approximately $529.1 million; for Calendar Year 2008 was approximately $522.5 million. (2) Estimated fair market values were calculated by dividing the taxable value of primary residential property by 55%, which eliminates the 45% exemption on primary residential property granted under the Property Tax Act. (Source: Financial Advisor.) (3) Preliminary; subject to change. See Historical Summaries Of Taxable Value Of Property below. (The remainder of this page has been intentionally left blank.) 42

49 Historical Summaries Of Taxable Values Of Property Taxable % of Taxable Taxable Taxable Taxable Set by State Tax Commission Value (1) T.V. Value Value Value Value (Centrally Assessed) Total centrally assessed $ 502,545, % $ 479,693,537 $ 493,463,739 $ 406,262,910 $ 366,649,840 Set by County Assessor (Locally Assessed) Real property: Primary residential 10,241,785, ,068,563,055 10,512,734,396 10,768,811,517 11,106,198,943 Other residential 60,000, ,149,688 46,382,286 46,642,937 63,827,316 Commercial and industrial 3,200,000, ,160,477,779 3,382,300,473 3,309,198,695 3,326,989,315 FAA 8,000, ,690,983 6,794,148 7,124,231 6,722,235 Unimproved non FAA 425,000, ,076, ,011, ,538, ,333,999 Agricultural 2,000, ,642,924 6,609,796 7,319,943 5,674,703 Total real property 13,936,785, ,753,600,663 14,518,833,080 14,811,635,646 15,327,746,511 Personal property (2): Primary mobile homes 24,148, ,148,346 27,009,566 24,652,128 25,798,093 Secondary mobile homes 470, , , , ,796 Other business personal 1,417,195, ,417,194,955 1,157,988,414 1,282,395,202 1,180,313,198 Total personal property 1,441,813, ,441,813,546 1,185,481,355 1,307,517,190 1,206,790,087 Total locally assessed 15,378,599, ,195,414,209 15,704,314,435 16,119,152,836 16,534,536,598 Total taxable value $ 15,881,144, % $ 15,675,107,746 $ 16,197,778,174 $ 16,525,415,746 $ 16,901,186,438 (1) Preliminary; subject to change. (2) Does not include taxable valuation associated with SCME (semi-conductor manfacturing equipment). (Source: Property Tax Division, Utah State Tax Commission.) 43

50 Additional Information. For the District s presentation of a 10 year history of taxable valuations and estimated actual valuations see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL RE- PORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Assessed Value and Estimated Actual Value of Taxable Property Last Ten Tax Years (page 72). Tax Collection Record (3) Deliq., % of % of Personal Current Total Tax (1) (2) Property (4) Collec- Collec- Year Total Trea- Current and Miscel- Total tions to tions to End Taxes surer s Net Taxes Col- leous Col- Col- Net Taxes Net Taxes 12/31 Levied Relief Assessed lections lections lections Assessed Assessed 2011 $132,718,043 $2,376,964 $130,341,079 $123,390,184 $8,081,659 $131,471, % 100.9% ,353,329 2,029, ,323, ,302,665 9,245, ,548, ,595,981 1,734, ,861, ,840,796 5,507, ,348, ,309,835 1,532, ,777, ,906,027 5,194, ,100, (5) 99,911,470 1,620,635 98,290,835 89,489,553 5,211,736 94,701, Ad valorem property taxes are due on November 30 th of each year. Final Calendar Year 2012 tax collections are not available. (1) Excludes redevelopment agencies valuation. (2) Treasurer s Relief includes abatements established by statue to low income, elderly and for hardship situations. These Treasurer s Relief items are levied against the property, but are never collected and paid to the entity. (3) Delinquent Collections include interest; sales of real and personal property; and miscellaneous delinquent collections. (4) In addition to the Total Collections indicated above, the District also collected Uniform Fees (fees in lieu payments) for tax year 2011 of $10,956,944; for tax year 2010 of $11,010,154; for tax year 2009 of $12,108,576; for tax year 2008 of $11,985,969; and for tax year 2007 of $12,178,987; from tax equivalent property associated with motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. (5) In tax year 2007, the Board s total tax collections were decreased by approximately $4.5 million due to an equity adjustment. This one time equity adjustment was given to certain property taxpayers who s residential and commercial market values were artificially increased due to technical errors. This adjustment lowered the District s current and total collections percentage ratios. (Source: Information taken from the Utah State Tax Commission and Davis County audited financial reports.) Additional Information. For the District s presentation of a 10 year history of property tax levies and collections see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Property Tax Levies and Collections Last Ten Tax Years (page 75). (The remainder of this page has been intentionally left blank.) 44

51 Some Of The Largest Taxpayers Information for Fiscal Year 2012 is currently not available. The District s single largest property tax payer in Fiscal Year 2011 (Calendar Year 2011) was Chevron U.S.A., a petroleum refinery located in North Salt Lake City. The company comprised approximately 2.2% of the District s total taxable valuation for Fiscal Year The top 10 largest property tax payers comprised approximately 9.0% of the District total taxable valuation for Fiscal Year Additional Information. For a list of the District s 10 largest property tax payers for Fiscal Year 2011 and Fiscal Year 2002 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Statistical Section Principal Property Tax Payers Current Year and Nine Years Ago (page 74). Sources Of Funds STATE OF UTAH SCHOOL FINANCE Funding for schools in the State is provided from local school district sources consisting of property taxes imposed by the local school district ( Local District Funding ), State sources that are funded primarily by State imposed personal income taxes and corporate franchise taxes ( State Funding ) and federal sources ( Federal Funding ). For Fiscal Year 2012, approximately 56% of the District s funding was provided by State Funding, approximately 35% from Local District Funding, and approximately 9% from Federal Funding. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR Local District Funding School districts are authorized by State law to levy taxes, certain of which require voter approval, on real property for various purposes. Funding for operation and maintenance is derived primarily through a minimum tax levy (the Minimum Tax Levy ) by each school district at a rate established each year by the State. Imposition of this Minimum Tax Levy is required for a school district to qualify for receipt of contributions by the State for such purposes. Additional tax levies for, among other things, educational programs and capital outlay and debt service to finance capital outlays may be made at the option of a school district. Certain of such levies will entitle a school district to State guaranteed levels of funding or receipt of specific additional contributions from the State. The Board has received all voter approval necessary for the taxes it currently levies. See FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Historical Tax Rates Of The District above. State Funding Under its school funding program, the State guarantees that in connection with the Minimum Tax Levy and certain of a school district s additional tax levies each school district will receive certain amounts based primarily on the number of students attending schools in such district. To the extent that such levies do not generate receipts at least equal to such guaranteed amounts, the State contributes funds to the school district in the amount of the shortfall. If a school district s receipts from such levies reach such prescribed levels, there is no State contribution to such district. Further, school district receipts from the Minimum Tax Levy in excess of the guaranteed amounts are required to be paid over to the State for distribution to other school districts. In addition to any contributions relating to shortfalls described above, the State annually appropriates fixed amounts to fund certain programs and services statewide. Funds for contributions to school districts and for other programs and services are appropriated from the State Uniform School Fund and the Education Fund, which are funded primarily from personal income taxes and corporate franchise taxes. State 45

52 Funding is also available, under certain circumstances, to school districts for payment of a portion of capital costs. Federal Funding Federal funding is provided for various school programs including child nutrition, vocational education and special education. Summary Of State And Federal Funding During the past years the District received the following in State and federal funding: State Funds Fiscal Year General... $269,878,986 $250,822,198 $255,934,337 $267,161,963 $285,130,055 Other Governmental... 5,677,141 5,246,925 1,934,133 2,246,175 2,282,212 School Food Services (1)... 3,553,525 3,291,921 3,047,853 3,049,869 2,937,430 Capital Projects , ,525 47,080 9,085,789 15,795,421 Total... $279,109,652 $259,598,569 $260,963,403 $281,543,796 $306,145,118 % change over prior year % (0.5)% (7.3)% (8.0)% 21.5% Federal Funds General... $32,670,480 $50,873,878 $47,631,338 $49,602,008 $26,271,524 Other Governmental... 11,577,877 11,407,448 4,127 51,242 School Food Services (1)... 11,474,048 11,386,448 8,846,341 8,265,296 7,358,251 Total... $55,722,405 $73,667,774 $56,477,679 $57,871,431 $33,681,017 % change over prior year... (24.4)% 30.4% (2.4)% 71.8% 0.1% (1) Accounted for as a Nonmajor Governmental/Special Revenue Fund. (Source: Information taken from the District s audited basic financial statements for the indicated years. This summary has not been audited.) See FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, UTAH Financial Summaries above. Absence Of Litigation LEGAL MATTERS The attorney for the Board, Michelle Beus, Legal Issues Specialist, has advised that, to the best of her knowledge after due inquiry, there is no pending or threatened litigation that would legally stop, enjoin, or prohibit the issuance, sale or delivery of the 2013 Bonds. Federal Income Tax Matters Excludability of Interest. In the opinion of Ballard Spahr LLP, Bond Counsel to the Board, interest on the 2013 Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the 2013 Bonds, assuming the accuracy of the certifications of the Board and continuing compliance by the Board with the requirements of the Internal Revenue Code of Interest on the 2013 Bonds is not an item of tax preference for purposes of either 46

53 individual or corporate federal alternative minimum tax ( AMT ); however, interest on 2013 Bonds held by a corporation (other than an S corporation, regulated investment company, or real estate investment trust) may be indirectly subject to AMT because of its inclusion in the adjusted current earnings of a corporate holder. Original Issue Premium. Certain 2013 Bonds may be offered at a premium ( original issue premium ) over their principal amount (collectively, the 2013 Premium Bonds ). For federal income tax purposes, original issue premium is amortizable periodically over the term of a 2013 Premium Bond through reductions in the holders tax basis in the 2013 Premium Bond for determining taxable gain or loss from the sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Holders of 2013 Premium Bonds should consult their tax advisors for an explanation of the amortization rules. Original Issue Discount. Certain 2013 Bonds may be offered at a discount ( original issue discount ) equal generally to the difference between the public offering price and principal amount (collectively, the 2013 Discount Bonds ). Original issue discount on a 2013 Discount Bond accrues as tax exempt interest periodically over the term of the 2013 Bond. The accrual of original issue discount increases the holder s tax basis in the 2013 Discount Bond for determining taxable gain or loss from the sale or from redemption prior to maturity. Holders of 2013 Discount Bonds should consult their tax advisors for an explanation of the accrual rules. State Of Utah Income Tax Bond Counsel is also of the opinion that interest on the 2013 Bonds is exempt from State individual income taxes under currently existing law. No Further Opinion Bond Counsel expresses no opinion regarding any other tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the 2013 Bonds. Changes In Federal And State Tax Laws From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the 2013 Bonds or otherwise prevent holders of the 2013 Bonds from realizing the full benefit of the tax exemption of interest on the 2013 Bonds. Further, such proposals may impact the marketability or market value of the 2013 Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the 2013 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the 2013 Bonds would be impacted thereby. Purchasers of the 2013 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the 2013 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. 47

54 General The authorization and issuance of the 2013 Bonds are subject to the approval of Ballard Spahr LLP, Bond Counsel to the Board. Certain legal matters will be passed upon for the Board by the attorney for the Board, Michelle Beus, Legal Issues Specialist. The approving opinion of Bond Counsel will be delivered with the 2013 Bonds. A copy of the opinion of Bond Counsel in substantially the form set forth in APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL will be made available upon request from the contact persons as indicated under INTRODUCTION Contact Persons above. Bond Counsel has not been retained or consulted on disclosure matters and has not undertaken to review or verify the accuracy, completeness, or sufficiency of the OFFICIAL STATEMENT or other offering material relating to the 2013 Bonds and assumes no responsibility for the statements or information contained in or incorporated by reference in this OFFICIAL STATEMENT. The various legal opinions to be delivered concurrently with the delivery of the 2013 Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Bond Ratings MISCELLANEOUS As of the date of this OFFICIAL STATEMENT, the 2013 Bonds have been rated Aaa by Moody s based upon the Guaranty Act. An explanation of the above rating may be obtained from Moody s. The Board has not directly applied to Fitch or S&P for a rating on the 2013 Bonds. Additionally, as of the date of this OFFICIAL STATEMENT, Moody s has given the 2013 Bonds an underlying rating of Aa2. Any explanation of the significance of these outstanding ratings may only be obtained from the rating service furnishing the same. There is no assurance that the ratings given the outstanding general obligation bonds will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by the rating agencies if, in their judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2013 Bonds. Escrow Verification Grant Thornton LLP, Minneapolis, Minnesota, Certified Public Accountants, will verify the accuracy of the mathematical computations concerning the adequacy of the maturing principal amounts of and interest earned on the obligations of the United States of America, together with other escrowed moneys to be placed in the Escrow Account to pay when due pursuant to prior redemption the redemption price of, and interest on the 2005 Refunded Bonds and the mathematical computations of the yield on the 2013 Bonds and the yield on the government obligations purchased with a portion of the proceeds of the sale of the 2013B Refunding Bonds. Such verifications shall be based in part upon information supplied by the successful bidder(s). 48

55 Financial Advisor The Board has entered into an agreement with the Financial Advisor whereunder the Financial Advisor provides financial recommendations and guidance to the Board with respect to preparation for sale of the 2013 Bonds, timing of sale, tax exempt bond market conditions, costs of issuance and other factors related to the sale of the 2013 Bonds. The Financial Advisor has read and participated in the drafting of certain portions of this OFFICIAL STATEMENT and has supervised the completion and editing thereof. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in the OFFICIAL STATEMENT, or any other related information available to the Board, with respect to accuracy and completeness of disclosure of such information, and the Financial Advisor makes no guaranty, warranty or other representation respecting accuracy and completeness of the OFFICIAL STATEMENT or any other matter related to the OFFICIAL STATEMENT. Independent Auditors The financial statements of the Board as of June 30, 2012 and for the year then ended, included in this OFFICIAL STATEMENT, have been audited by Squire & Company, PC, Certified Public Accountants and Business Consultants, Orem, Utah ( Squire ), as stated in their report in APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 to this OFFICIAL STATEMENT. Squire has not participated in the preparation or review of this OFFICIAL STATEMENT. Based upon their non participation, they have not consented to the use of their name in this OFFICIAL STATE- MENT. Additional Information All quotations contained herein from and summaries and explanations of the State Constitution, statutes, programs and laws of the State, court decisions and the Resolution, do not purport to be complete, and reference is made to said State Constitution, statutes, programs, laws, court decisions and the Resolution for full and complete statements of their respective provisions. Any statements in this OFFICIAL STATEMENT involving matters of opinion, whether or not expressly so stated, are intended as such and not as representation of fact. The appendices attached hereto are an integral part of this OFFICIAL STATEMENT and should be read in conjunction with the foregoing material. This OFFICIAL STATEMENT and its distribution and use have been duly authorized by the Board. Board of Education of Davis School District, Utah By: /s/ Tamara O. Lowe Tamara O. Lowe, President 49

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57 APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF DAVIS SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 The basic financial statements for Fiscal Year 2012 are contained herein. Copies of current and prior financial statements are available upon request from the contact persons as indicated under INTRO- DUCTION Contact Persons above. The District s basic financial statements for Fiscal Year 2013 must be completed under State law by November 30, Government Finance Officers Association Financial Reporting Certificate of Achievement for Excellence in Financial Reporting. The Government Finance Officers Association of the United States and Canada ( GFOA ) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the Board for its CAFR for the 30 th consecutive year, beginning with Fiscal Year 1982 through Fiscal Year In order to be awarded a certificate of achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A certificate of achievement is valid for a period of one year only. (The remainder of this page has been intentionally left blank.) A 1

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59 Davis School District Davis County, Utah For the Fiscal Year Ended June, 2012 N I T A R G YEA R S O F L E A EB R L N CE DSD IN G Comprehensive Annual Financial Report

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61 Comprehensive Annual Financial Report OF THE DAVIS SCHOOL DISTRICT 45 East State Street Farmington, Utah For the Fiscal Year Ended June 30, 2012 Marian H. Storey, President of the Board W. Bryan Bowles, Superintendent Craig Carter, Business Administrator Prepared by: Timothy Leffel, CPA & Steven Snow

62 DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2012 Page Title Page Table of Contents i ii-iv INTRODUCTORY SECTION: Letter of Transmittal 1-5 School Board Precinct Boundaries 6 List of Elected and Appointed Officials 7 Organizational Chart 8 GFOA Certificate of Achievement for Excellence in Financial Reporting 9 Model for Public Education 10 FINANCIAL SECTION: Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet - Governmental Funds 25 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 26 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 29 Statements of Fund Net Assets - Proprietary Funds 30 Statements of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 31 Statements of Fund Cash Flows - Proprietary Funds 32 Notes to the Basic Financial Statements ii-

63 DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2012 Page FINANCIAL SECTION (Continued): Individual Fund Statements and Schedules: Comparative Balance Sheets - General Fund 52 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund 53 Comparative Balance Sheets - Major Debt Service Fund 54 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Major Debt Service Fund 55 Comparative Balance Sheets - Major Capital Projects Fund 56 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Major Capital Projects Fund 57 Combining Balance Sheet - Nonmajor Governmental Funds 58 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 59 Comparative Balance Sheets - School Food Services Fund - Nonmajor Special Revenue Fund 60 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - School Food Services Fund - Nonmajor Special Revenue Fund 61 Comparative Balance Sheets - Student Activities Fund - Nonmajor Special Revenue Fund 62 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Student Activities Fund - Nonmajor Special Revenue Fund 63 Comparative Balance Sheets - State Multi-District Program Fund - Nonmajor Special Revenue Fund 64 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - State Multi-District Program Fund - Nonmajor Special Revenue Fund 65 STATISTICAL SECTION: Net Assets by Component 68 Expenses, Program Revenue, and Net (Expense) Revenue 69 Fund Balances - Governmental Funds 70 Changes in Fund Balances - Governmental Funds 71 Assessed Value and Estimated Actual Value of Taxable Property 72 Direct and Overlapping Property Tax Rates 73 Principal Property Tax Payers 74 Property Tax Levies and Collections 75 Ratios of Outstanding Debt 76 -iii-

64 DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2012 Page STATISTICAL SECTION (Continued): Overlapping and Underlying Governmental Activities Debt 77 General Obligation Legal Debt Limit and Debt Capacity 78 Schedule of Annual Debt Service Requirements 79 Debt Service Schedule of Outstanding General Obligation Bonds 80 Demographic and Economic Statistics 81 Labor Market Data 82 Principal Employers 83 District Facilities and Personnel Positions 84 Average Daily Membership and October Enrollment 85 Expenditures by Function - General Fund 86 Expenditures per ADM by Function - General Fund 87 Weighted Pupil Units (WPU's) - Regular WPU's and Other WPU's by Formula 88 Student Enrollment Projections 89 American College Test (ACT) Results 90 Advanced Placement Exams Attempted by Course 91 -iv-

65 Section I Introductory

66 ~ Davis School District,.,-!!!i~~~~~~imjii]I!BDIIIII.;;; Learning First! Established 1911 Finance Departmet November 6, 2012 To President Storey, Members of the Board of Education, and the Citizens of the Davis School District: State law requires that school districts publish within five months of the close of each fiscal year a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited by a firm of licensed certified public accountants 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 of the United States. Pursuant to that requirement, we hereby issue the comprehensive annual financial report (CAFR) of the Davis School Dish ict (District) for the fiscal year ended June 30, Designed to meet the needs of a broad specttum of readers of financial statements, this CAFR is divided into tlu ee major sectio ns: Introductory section - Introduces the reader to the report and includes this transmittal letter, a map of School Board precinct boundaries, the list of elected and appointed officials, the organization chart of the District, certificate of excellence in financial reporting, and the District's model for public education. Financial section- Consists of the independent auditor's report, management's discussion and analysis, the basic financial statements, and combining and individual fund statements and schedules. Statistical section- Contains substantial financial information, but presents tables that differ from financial statements in that they present non-accounting data, cover several years, and are designed to reflect social and economic data and financial and fiscal trends as well as the fiscal capacity of the District. Internal controls. This report consists of management's representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this repmt. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District's assets from loss, theft, or misuse and to compile sufficient reliable infom1ation for the preparation of the District's fmancial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the District's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial rep01t is complete and reliable in all material respects. 45 East State Street PO Box 588 Farmington, Utah (801) Board of Education: Marian Storey, President Tamara 0. Lowe, Vice-President Barbara A. Smith James E. Clark L. Burke Larsen David Lovato Peter Cannon

67 Independent audits. Squire & Company, PC, a firm of licensed certified public accountants, has audited the District s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2012 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion, and that the District s financial statements for the fiscal year ended June 30, 2012 are fairly presented in conformity with GAAP. The independent auditor s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the District was part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. The District was also subject to and underwent a state legal compliance audit, the purpose of which is to examine general and major state program compliance with applicable state laws and regulations. These reports are available in a separately issued report. Management s discussion and analysis. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of management s discussion and analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in connection with it. The District s MD&A can be found immediately following the report of the independent auditors. District profile. The District is located in the north central part of the state of Utah. The boundaries of the District are contiguous with those of Davis County, Utah. Davis County is largely an urban county with high concentrations of residential development. The District is a legally separate and fiscally independent entity enjoying all rights and privileges accorded political subdivisions in the state of Utah. Policymaking and legislative authority are vested in the Board of Education (the Board) consisting of seven members. The Board is responsible for, among other things, developing policy, adopting the budget, levying taxes, incurring bonded debt, supervising committees, and hiring both the superintendent and business administrator. The superintendent and business administrator are responsible for carrying out the policies of the Board of Education and oversee the day-to-day operations of the District. The Board is elected on a non-partisan basis. Board members serve four-year staggered terms with no more than four board members elected every two years. The major purpose of the District is to provide public education for those who reside within the boundaries of the District. To accomplish this purpose, as of fall 2012, the District operates eight traditional high schools, sixteen junior high schools, and 59 elementary schools. The District also offers three special purpose programs: Pioneer Adult Rehabilitation Center (a community rehabilitation program serving persons with disabilities), the Family Enrichment Center (providing preschool and Head Start programs), and Farmington Bay (a youth correctional facility). In addition, the District operates two alternative high schools, Mountain High and Canyon Heights, and one alternative junior high, Davis Junior High. The District serves 68,376 students based on the October 1, 2012 enrollment report. 2

68 The District also acts as the fiscal agent for the Davis County School District Foundation (Foundation). The Foundation is a separate legal 501(c)(3) entity, and is reported as a discretely presented component unit in the District s financial statements. The Foundation is a not-for-profit entity that solicits financial support of public education through local school communities and community business partners. Budgetary control. The District adopts an annual budget for its funds. This budget acts as the financial operating plan for the entire year. Revisions may be implemented during the year authorizing a larger appropriation of available resources through a public hearing and approval from the Board. All annual appropriations lapse at fiscal year end with the exception of those reported as a commitment of fund balance resources. During May of each year, the District superintendent submits to the Board a proposed operating budget for the next fiscal year commencing July 1. This budget includes proposed expenditures and the means of financing them. Included also is a final budget for the current year ending June 30. If the District does not exceed the certified tax rate, a public hearing is held prior to June 22 at which time the budget is legally adopted by resolution of the Board after obtaining taxpayer input. If the District exceeds the certified tax rate the budget is adopted in August after required advertisement of proposed tax rate increases and a public hearing. The level by which expenditures may not exceed appropriations has been interpreted by the State Superintendent of Public Instruction to be the total budgeted expenditures of a given fund. Economic condition and outlook. The economic outlook of the District is tied to and dependent on the economic condition and outlook of the state of Utah since state aid provides 70% of general fund revenues. Although Utah s economy had experienced steady growth since 2004, the state s economy is experiencing the effects of the national economic recession. The state reduced the 2010 and 2011 budgets and struggled to fund growth for Revenues however, were slightly up for 2013 and current revenue projections for 2014 are modestly higher as well. The District projects student growth of over 600 in 2013 and approximately 500 in In response to these economic conditions, the District has taken steps to reduce budgets and cut back programs. A hiring freeze was instituted in 2009 to help deal with the mid-year cut, and reductions were made in all other non-personnel budget categories. Today, every position that becomes vacant in the District is evaluated by the District administration to determine if it must be re-filled. For the 2013 school year, the Board left tax rates within the certified rate and funded new fiscal demands with increased State revenues and a reallocation of taxes between capital and the general fund rates. According to the National Center on Budget and Policy Priorities, State funding for public education has declined by more than 8%. This decline correlates with the national recession; however, the expectations on public education continue to increase in both the quantity and quality of services provided. Utah ranks 51 st in the nation in per pupil funding which creates significant challenges in maintaining services as indicated above. The District s taxing authority rests with property taxes on residential and commercial property within the District. District taxable property values in tax year 2011 decreased 6.6% in response to the national economic recession; however, values are estimated to increase for 2012 by 0.8%. This is compared to a decrease of 2.2% in Local taxation accounts for only 20.0% of general fund revenues, and 27.4% of all governmental fund revenues. 3

69 Long-term financial planning. State revenue projections appear to be slightly increasing for 2013 and These funds will be utilized to offset District expenditures for state retirement and health insurance which continue to rise as well. The District is closely examining all revenue and expenditure categories and programs to identify budget reductions. The driving force is to meet the demands of an ever changing budget without significant impact to our students and classrooms. Dealing with the challenges and demands of budgets is further complicated by the fact the student population of the District and the state of Utah is continuing to grow. Based on information from Utah s Bureau of Vital Records, the District expects the kindergarten enrollment increase to accelerate because of a climb in the birth rate for Davis County. The District also expects net migration into the County to remain positive, but to slow moderately. The District projects an additional 2,500 students over the next five years measured from October 2012 to October The state 2013 fiscal year school finance program is designed to provide every Utah school district with a basic operation program of $2,842 per weighted pupil unit (WPU). Current budget projections indicate a small increase in the value of the WPU for In response to continued student growth, the District went to the taxpayers on June 20, 2006 for a $230.0 million bonding authorization. The authorization passed with 79.2% approval, which provided for facilities for student growth into The District concluded another successful campaign on November 3, 2009, when voters passed a $250.0 million bonding authorization with a 63.2% approval margin. This authorization will provide for facilities for student growth over the next five years, with the first issue of $47.5 million being sold on February 23, The second issue of $45.0 million was issued on March 1, 2011, and the third issue of $35.0 million was issued February 23, Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement for Excellence, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. This is the twenty-ninth year that the District has received this prestigious award. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowledgments. The efficient and dedicated staff of the business department accomplished the preparation of this report on a timely basis. We would like to express appreciation to all members of the department who assisted in the preparation of this report. Special appreciation is expressed to the District s Finance Department, who did most of the work in preparation of this report, and to Lori Todd, Coordinator of Printing Services, and her staff for printing, layout, and design of the report. We would also like to thank the members of the Board of Education for their interest and support in conducting the financial affairs of the District in a responsible and progressive manner. 4

70 Respectfully submitted, 5

71 DAVIS SCHOOL DISTRICT School Board Precinct Boundaries Year Ended June 30, 2012 Clinton Sunset Hill Airforce Base West Point Clearfield Syracuse 7 6 Layton South Weber 5 4 Kaysville Fruit Heights This map of Davis County displays the seven precincts of School Board representation. Precinct First Year Term Expires 4 Marian H. Storey Board President Jan 1997 Jan Tamara Lowe Board Vice-President Jan 2003 Jan Barbara A. Smith Board Member Jan 1993 Jan James E. Clark Board Member Jan 2009 Jan Peter Cannon Board Member Jan 2011 Jan David Lovato Board Member Jan 2011 Jan L. Burke Larsen Board Member Jan 2010 Jan 2015 West Bountiful Farmington 3 2 Centerville Woods Cross 1 Bountiful 6

72 DAVIS SCHOOL DISTRICT List of Elected and Appointed Officials Year Ended June 30, 2012 Elected Officials Members of the Board of Education Present Term Began Present Term Expires Initial Appointment Barbara A. Smith January 2009 January 2013 January 1993 Precinct 1 James E. Clark January 2009 January 2013 January 2009 Precinct 2 Peter Cannon January 2011 January 2015 January 2011 Precinct 3 Marian H. Storey January 2009 January 2013 January 1997 President of the Board Precinct 4 David Lovato January 2011 January 2015 November 2010 Precinct 5 L. Burke Larsen January 2011 January 2015 January 2010 Precinct 6 Tamara O. Lowe January 2011 January 2015 January 2003 Vice President of the Board Precinct 7 The term of office for a board member is four years, beginning in January following the November election. Appointed Officials Present Term Began Present Term Expires Initial Appointment W. Bryan Bowles July 2012 July 2014 July 2002 Superintendent Craig Carter July 2011 July 2013 January 2010 Business Administrator The term of office for the Superintendent and Business Administrator is two years. 7

73 DAVIS SCHOOL DISTRICT Organizational Chart Year Ended June 30, 2012 Citizens of Davis County Board of Education Superintendent Business Administrator Assistant Superintendent Assistant Superintendent Assistant Superintendent School Directors Finance Department Curriculum & Professional Development Facilities Management Special Education - School Age & Preschool Senior High Schools Accounting Budgeting Payroll Career and Technical Education Alternative Ed/K12 New Construction Environmental Maintenance Custodial Services Student Services Federal Programs Junior High Schools Elementary Schools Accounts Payable Community Relations Research, Assessment and Accountability Adult Education Community School Planning Risk Management / School Security Nutrition Services Headstart Information and Communication Technology Human Resources Internal Audit Policy and School Law Gifted and Talented Foundation Administration Purchasing / Warehouse Transportation P.A.R.C. 8

74 9

75 10

76 Section II Financial

77 AUDIT TAX ADVISORY 1329 South 800 East Orem, Utah (801) Fax (801) Independent Auditor s Report Board of Education Davis School District We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Davis School District (the District), as of and for the year ended June 30, 2012, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the District as of June 30, 2012, and the respective changes in financial position and, where applicable cash flows thereof, and the respective budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 6, 2012 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, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that management s discussion and analysis, as listed in the table of contents, 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 11

78 management about the methods of preparing the information and comparing the information for consistency with managements 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. November 6,

79 Management s Discussion and Analysis This section of Davis School District s (District) comprehensive annual financial report presents management s discussion and analysis of the District s financial performance during the year ended June 30, Please read it in conjunction with the transmittal letter found on pages 1 through 5 of this report and the District s financial statements, which follow this section. Financial Highlights The District s total assets exceeded liabilities by $228.4 million at the close of the most recent fiscal year. During the year, expenses were $5.7 million less than the $493.2 million generated in taxes and other revenues for governmental activities. Last year, expenses were less than revenues by $7.8 million. Actual expenditures in the General Fund were $2.5 million less than final budgeted amounts, and actual revenues were $0.9 million more than final budgeted amounts. The District s fund balance in the General Fund increased by $4.4 million. An increase of $1.0 million in fund balance was budgeted for the year. The District continued providing for its student growth by issuing $35.0 million of new bonds. Wasatch Elementary (estimated cost of $14.7 million) was substantially completed and is on schedule to open for the school year. In addition, significant progress was made on the Layton High addition (estimated cost of $21.2 million) and the Vista Center (estimated cost of $12.0 million). The District has $122.5 million of authorization left to issue of the approved $250.0 million. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-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 assets presents information on all of the assets and liabilities of the District, with the difference between the two reported as net assets. Over time, increases or decreases in net assets 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 net assets of the District changed during the most recent fiscal year. All changes in net assets 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 unpaid employee benefits). The government-wide financial statements can be found on pages 23 to 24 of this report. The government-wide financial statements of the District are divided into three categories: Governmental activities. Most of the District s basic services are included here, such as instruction, various supporting services and interest on long-term liabilities. Property taxes and state and federal grants finance most of these activities. 13

80 Business-type activities. The District charges fees to students and customers and receives specific grants from various local, state, and federal agencies to help cover the costs of certain services it provides. The Pioneer Adult Rehabilitation Center is included here. Component unit. The District includes one other entity in the report, the Davis County School District Foundation. Although legally separate, this component unit is included because the District is the fiscal agent and is financial accountable for it, and its purpose is to solicit donations to support educational programs of the District. 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 legal requirements. All of the funds of the District can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the government s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains six individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Debt Service Fund, and the Capital Projects Fund, each of which are considered to be major funds. Data from the other three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the governmental funds is provided in the form of combining and individual fund statements and schedules elsewhere in the report. The District adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 25 to 29 of this report. Proprietary funds. The District maintains two proprietary fund types. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the District s various functions. The District uses one internal service fund, and it is included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for its enterprise fund and for the internal service fund. The basic proprietary fund financial statements can be found on pages 30 to 32 of this report. Notes to the basic financial statements. The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 33 to 49 of this report. 14

81 Other information. Individual fund statements and schedules are presented immediately following the notes to the basic financial statements. Individual fund statements and schedules can be found on pages 51 to 65 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities by $228.4 million at the close of the most recent fiscal year. DAVIS SCHOOL DISTRICT'S Net Assets June 30, 2012 and 2011 (in millions of dollars) Governmental Business-type Total Activities Activities Total Change Current and other assets $ $ $ 4.5 $ 3.7 $ $ $ (17.5) Capital assets Total assets (4.9) Current and other liabilities (15.7) Long-term liabilities outstanding Total liabilities (11.2) Net assets: Invested in capital assets, net of related debt (2.0) Restricted Unrestricted Total net assets $ $ $ 6.6 $ 6.0 $ $ $ 6.3 Net assets of the District s governmental activities increased to $221.8 million. However, most of the net assets are either restricted as to the purposes they can be used for or are invested in capital assets (land, buildings and improvements, equipment, and so on), net of related debt. Therefore, unrestricted net assets showed a $17.9 million balance at the end of this year, an increase of $6.4 million from last year. These assets will be used to meet the District s obligations to students, employees, and creditors and to honor next year s budget. The net assets of the District s business-type activities increased by 10.0% to $6.6 million. Unrestricted net assets increased by 22.9% to $4.3 million. The District can only use these net assets to finance the continuing operations of the Pioneer Adult Rehabilitation Center. A portion of the District s net assets reflects its investment in capital assets less any related debt (general obligation bonds payable and obligations under capital leases less unspent bond proceeds) still outstanding used to acquire those assets. The District uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the District s net assets represents resources that are subject to external restrictions on how they may be used. The majority of the restricted balance is for debt service, school food services and capital projects. 15

82 The District s total net assets increased $6.3 million during the current year. This increase was the result of fiscal controls to help maintain or lower costs. Of the $6.3 million increase in total net assets, unrestricted net assets increased by $7.2 million, while restricted net assets increased by $1.1 million. The amount invested in capital assets net of related debt decreased by $2.0 million. The District s total revenues increased 1.8% to $501.3 million. Federal and state aids make up 64.0% of the District s revenues; property taxes generate 27.7% of the District s revenues. The total cost of all programs and services increased by 2.3% to $495.0 million. Instruction and support services make up 65.1% and 25.4%, respectively, of the District s expenses. DAVIS SCHOOL DISTRICT'S Changes in Net Assets Years Ended June 30, 2012 and 2011 (in millions of dollars) Governmental Business-type Total Activities Activities Total Change Revenues: Program revenues: Charges for services $ 14.3 $ 13.9 $ 7.3 $ 8.9 $ 21.6 $ 22.8 $ (1.2) Operating grants and contributions General revenues: Property taxes Federal and state aid not restricted to specific purposes (0.6) Interest Miscellaneous Total revenues Expenses: Instruction Support services: Student Instructional staff (0.4) District administration (0.1) School administration Business administration Operation and maintenance of facilities Student transportation School food services Interest on long-term liabilities (1.7) Pioneer Adult Rehab Center (1.6) Total expenses Changes in net assets (2.2) Net assets, beginning Net assets, ending $ $ $ 6.6 $ 6.0 $ $ $ 6.3 The narrative that follows considers the operations of governmental and business-type activities separately. Governmental activities. The key elements of the increase in the District s net assets for the year ended June 30, 2012 are as follows: Revenues increased $10.5 million or 2.2% and continue to be primarily from federal and state aid and local property taxes. 16

83 Federal and state aid not restricted to specific purposes decreased by 0.3% or $0.6 million. Total federal aid decreased 29.1% to $44.2 million primarily due to the loss of Education Jobs funding of $11.5 million and ARRA funding. State aid is based primarily on weighted pupil units (WPUs) and other appropriations. If a student is in membership a full 180 days, the state awards the District one WPU. The state guarantees that if local taxes do not provide money equal to the amount generated by the WPU the state will make up the difference with state funding. The value of the WPU increased by 9.3% during the year ended June 30, 2012 ($2,816 during 2012 as compared to $2,577 in 2011). This increase is due to the consolidation of the flexible WPU line item being rolled into the WPU line item. Tax revenues increased to $138.9 million or by 4.4%. This increase was the result of an $8.5 million tax increase approved by the Board of Education and growth in the overall tax base, as the property taxable values remained near constant. Davis School District Revenues by Source - Governmental Activities Year Ended June 30, 2012 Charges for services, interest, and miscellaneous 7% Operating grants and contributions 23% Federal and state aid not restricted to specific purposes 42% Property taxes 28% Expenses for governmental activities increased $12.6 million, or 2.7% due to increased retirement and health insurance costs. The District also funded contractual increases in personnel costs. 17

84 Davis School District Expenses by Function - Governmental Activities Year Ended June 30, 2012 Instruction 69% Interest on long-term liabilities 4% Operation and maintenance of facilities 9% Other supporting services 18% Business-type activities. The $0.6 million increase in the District s net assets for the year ended June 30, 2012 were a result of the operations of the Pioneer Adult Rehabilitation Center. Overall revenues decreased $1.7 million due to decreased contract agreements and expenses decreased $1.6 million due to reduced salaries and wages and other operating expenses. Financial Analysis of the District s Funds As noted 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. As the District completed the year, its governmental funds reported a combined fund balance of $87.3 million, $2.7 million less than the previous year. This decrease was due primarily to a $6.1 million decrease in the Debt Service Fund which was used to make payments on the District s bond obligations. The Capital Projects Fund decreased by $2.1 million as one-time building projects were completed. The General Fund had a $4.4 million increase in fund balance. In addition, the following changes in revenues and expenditures should be noted: Revenues for general District purposes totaled $393.7 million, an increase of 1.5%, during the current fiscal year. Revenues for debt service were down 7.3% and capital projects up 51.4%, respectively. State revenues were up 7.6% in the General Fund due to increases in state appropriations for enrollment growth. Taxes were up 3.1% due to the tax increase approved by the school board. Federal revenues were down $18.2 million or 55.7% due to the loss of ARRA and Education Jobs funding designed to maintain teacher positions in conjunction with State budget cuts. Expenditures for general District purposes totaled $389.3 million, an increase of 1.2% during the current fiscal year. Instruction represents 68.6% of General Fund expenditures. Debt service expenditures increased 3.7%, and capital project expenditures were down 3.5%. 18

85 General Fund salaries totaled $236.7 million while the associated employee benefits of retirement, social security, and insurance (health and accident, industrial, and unemployment) added $101.3 million to arrive at 89.8% of total General Fund expenditures. Governmental funds report the differences between their assets and liabilities as fund balance, which is divided into non-spendable, restricted, and unrestricted portions. Non-spendable fund balance represents items such as inventories which are not resources that can be readily converted to cash. Restricted includes net fund resources of the District that are subject to external constraints due to state or federal laws, or externally imposed conditions by grantors or creditors. The unrestricted fund balance is, in turn, subdivided between committed, assigned, and unassigned portions. Committed and assigned balances reflect the District s self-imposed limitation of the use of otherwise available expendable financial resources in governmental funds. Unassigned balances in the General Fund are all other available net fund resources. At June 30, 2012, the District s combined governmental fund balance is $87.3 million ($3.6 million in non-spendable, $53.3 million in restricted, $13.9 million in committed, $3.8 million assigned and $12.7 in unassigned fund balances). General Fund Budgetary Highlights During the year, the Board revised the District s budget. Budget amendments were to reflect changes in programs and related funding. The difference between the original budget and the final amended budget was an increase of $9.7 million or 2.5% in total General Fund expenditures. The increase is a result of additional state funds associated with higher than expected student growth. This increase was partially offset by the District s continued implementation of cost reduction measures in expectation of additional decreases in funding for the following budget year. These current year cuts are reflected in the amended budget. The most significant differences may be summarized as follows: $8.0 million or 3.0% increase in instruction, a $1.4 million or 14.9% increase in supporting services central, and a $0.9 million or 8.3% increase in student transportation. During the year, final budgeted revenues were more than original budgetary estimates by $11.5 million or 3.0%. The increase reflects the additional state funds referenced above. Even with these adjustments, the District put in place cost cutting measures to hold expenditures below the amended budget in order to build some reserves to help with possible state or federal budget reductions for Consequently, actual expenditures were $2.5 million below final budgeted amounts. The most significant positive variance was $3.6 million in instruction. Additionally, actual revenues were $0.9 million above the final budgeted amount. Capital Asset and Debt Administration Capital Assets. The Capital Projects Fund is used to account for the costs incurred in acquiring and improving sites, constructing and remodeling facilities, and procuring equipment necessary for providing educational programs for all students within the District. The District spent $34.2 million for capital assets. Major projects include the construction of Wasatch Elementary (estimated cost of $14.7 million), Layton High addition (estimated cost of $21.2 million), and the Vista Center (estimated cost of $12.0 million). The District continues to experience both growth in total students and a shift in student population to the northwest section of the District. The opening of these new schools and additions and renovations at existing schools help meet some of the needs, but temporary classrooms are still in use to accommodate housing needs until other permanent facilities can be constructed. The District constructed 8 new portable classrooms this year for a total inventory of 344 portable classrooms representing approximately 293,000 square feet of instructional space. 19

86 Capital assets at June 30, 2012 and 2011 are outlined below: DAVIS SCHOOL DISTRICT'S Capital Assets June 30, 2012 and 2011 (net of accumulated depreciation in millions of dollars) Governmental Business-type Total Activities Activities Total Change Land $ 43.1 $ 42.2 $ - $ - $ 43.1 $ 42.2 $ 0.9 Construction in progress (2.3) Buildings and improvements Furniture and equipment (0.2) Transportation equipment (0.2) Net capital assets $ $ $ 2.3 $ 2.5 $ $ $ 12.6 Additional information on the District s capital assets can be found in Note 4 to the basic financial statements. Debt Administration. On November 3, 2009, the registered voters of Davis County passed a bond authorization in the amount of $250.0 million for general obligation school building bonds for new school construction, land acquisitions, renovation of existing school facilities, and related equipment and improvements. This debt authorization was sought to cope with the demands of student growth over the next five years, with student migration to the northwest portion of the county, and to help maintain the District s investment in its capital assets. The voter authorization passed convincingly with 63.2% in favor. The District issued $35.0 million of the new authorization on February 23, Of the $250.0 million, $127.5 million has been issued leaving $122.5 million available for future issues as of June 30, The general obligation bonded debt of the District is limited by state law to 4% of the fair market value of the total taxable property in the District. The legal debt limit at June 30, 2012, is $1,071.5 million. General obligation debt, net of unamortized premiums and deferred amounts on refunding, at June 30, 2012, is $429.8 million, resulting in a legal debt margin of $641.7 million. DAVIS SCHOOL DISTRICT'S Outstanding Debt June 30, 2012 and 2011 Net of Accumulated Amortization (in millions of dollars) Governmental activities Total Change Net general obligation bonds $ $ $ 7.4 Although it is not unusual for governments to have a 30-year bond payoff schedule, the District maintains an aggressive schedule to retire all of its general obligation bonds by Additional information on the District s long-term debt can be found in Note 7 to the basic financial statements. 20

87 Changing Enrollment within the District Student enrollment counts are officially taken on October 1 of each year. Student growth continues to be strong as reflected in the October 2012 count. The District anticipated around 900 new students for the school year however, actual growth was under 600. Growth continues to be focused in the northwest section of the District. The chart below reflects the counts taken between October 1, 2008, and October 1, 2012, and shows a total student growth of 5,544 students over the five-year period, a 8.5% increase. DAVIS SCHOOL DISTRICT'S Student Enrollment District fiscal year Total October 1st enrollment 65,014 65,452 66,019 67,778 68,376 Total enrollment change 2, , ,544 Percentage change 3.5% 0.7% 0.9% 2.7% 0.9% 8.5% The District has ongoing planning efforts to analyze and deal with the issues related to new growth. A bond authorization approved by voters on November 3, 2009, for $250.0 million will help meet the ongoing needs of the District s 20-year capital plan and to provide continuous cash flows for the necessary capital projects. With bond proceeds as well as ongoing capital funds from taxes, the District expects to meet the demands of projected student growth over both the short-term planning horizon (5 years) as well as the long-term (20+ years). Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have any questions about this report or need additional financial information, please contact the Davis School District, Office of the Business Administrator, 45 East State Street (P.O. Box 588), Farmington, UT

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89 DAVIS SCHOOL DISTRICT Statement of Net Assets June 30, 2012 Component Primary Government Unit Governmental Business-type District Activities Activities Total Foundation Assets: Cash and investments $ 127,835,745 $ 389,142 $ 128,224,887 $ 1,100,895 Receivables: Property taxes 132,298, ,298,516 - Other local 107, ,500 1,081,462 - State of Utah 1,797,283-1,797,283 - Federal government 8,195,990-8,195,990 - Internal balances (2,995,527) 2,995, Inventories 7,261, ,223 7,423,280 - Bond issuance costs, net of accumulated amortization 2,369,335-2,369,335 - Capital assets: Land and construction in progress 88,491,573-88,491,573 - Other capital assets, net of accumulated depreciation 487,178,596 2,306, ,485,049 - Total assets 852,540,530 6,826, ,367,375 1,100,895 Liabilities: Accounts payable 13,562, ,911 13,683,902 - Accrued interest 1,431,558-1,431,558 - Accrued salaries and benefits 43,884,251-43,884,251 - Unearned revenue: Property taxes 123,996, ,996,523 - Local fees 27,425-27,425 - State of Utah 2,761,585-2,761,585 - Federal government 32,648-32,648 - Noncurrent liabilities: Due or payable within one year 37,435,189 38,191 37,473,380 - Due or payable after one year 407,599,885 55, ,655,025 - Total liabilities 630,732, , ,946,297 - Net Assets: Invested in capital assets, net of related debt 173,064,860 2,306, ,371,313 - Restricted for: Debt service 333, ,482 - Capital projects 24,885,467-24,885,467 - State multi-district program 1,473,724-1,473,724 - School food services 4,147,549-4,147,549 - Scholarships and awards ,100,895 Unrestricted 17,903,393 4,306,150 22,209,543 - Total net assets $ 221,808,475 $ 6,612,603 $ 228,421,078 $ 1,100,895 The notes to basic financial statements are an integral part of this statement. 23

90 DAVIS SCHOOL DISTRICT Statement of Activities Year Ended June 30, 2012 Net (Expense) Revenue and Changes in Net Assets Program Revenues Component Operating Primary Government Unit Charges for Grants and Governmental Business-type District Activities/Functions Expenses Services Contributions Activities Activities Total Foundation Primary government: Governmental activities: Instruction $ 321,957,585 $ 5,615,784 $ 78,931,430 $ (237,410,371) $ (237,410,371) Supporting services: Students 14,678,910-4,698,512 (9,980,398) (9,980,398) Instructional staff 16,766,753-4,190,557 (12,576,196) (12,576,196) District administration 2,580, ,884 (2,473,683) (2,473,683) School administration 25,766, ,061 (24,984,804) (24,984,804) Central 12,138,177-1,690,160 (10,448,017) (10,448,017) Operation and maintenance of facilities 40,874, , ,799 (39,907,063) (39,907,063) Student transportation 12,996,197-7,339,236 (5,656,961) (5,656,961) School food service 23,662,972 8,443,228 15,027,573 (192,171) (192,171) Interest on long-term liabilities 16,129, (16,129,644) (16,129,644) Total governmental activities 487,552,330 14,278, ,514,211 (359,759,309) (359,759,309) Business-type activities: Pioneer Adult Rehabilitation Center 7,507,772 7,291, ,109 - $ 627, ,810 Total primary government $ 495,060,102 $ 21,570,283 $ 114,358,320 (359,759,309) 627,810 (359,131,499) Component unit: Davis School District Foundation $ 899,033 $ - $ 1,036,913 $ 137,880 General revenues: Property taxes levied for: Basic levy set by state for K-12 instruction 31,448,165-31,448,165 - Board voted leeway for K-12 instruction 30,299,651-30,299,651 - Class size reduction 7,575,216-7,575,216 - Reading program 2,466,437-2,466,437 - Transportation 3,813,543-3,813,543 - Community recreation 3,775,682-3,775,682 - General obligation bond debt service 40,360,346-40,360,346 - Capital outlay 5,507,806-5,507,806 - Ten percent of basic for capital outlay, textbooks and supplies 13,628,609-13,628,609 - Federal and state revenue not restricted to specific purposes 206,430, ,430,844 - Earnings on investments 1,523,932 16,598 1,540,530 5,058 Miscellaneous 18,618,204-18,618,204 - Total general revenues 365,448,435 16, ,465,033 5,058 Change in net assets 5,689, ,408 6,333, ,938 Net assets - beginning 216,119,349 5,968, ,087, ,957 Net assets - ending $ 221,808,475 $ 6,612,603 $ 228,421,078 $ 1,100,895 The notes to basic financial statements are an integral part of this statement. 24

91 DAVIS SCHOOL DISTRICT Balance Sheet Governmental Funds June 30, 2012 Major Funds Other Total Debt Capital Governmental Governmental General Service Projects Funds Funds Assets: Cash and investments $ 57,293,440 $ - $ 60,209,414 $ 10,332,891 $ 127,835,745 Receivables: Property taxes 77,963,761 38,064,220 16,270, ,298,516 Other local 58,547-13,375 6,821 78,743 State of Utah 463, ,333,898 1,797,283 Federal government 7,897, ,920 8,195,990 Due from other funds 5,300, ,067 1,410,510 6,942,931 Inventories 1,563, ,080,190 3,643,971 Total assets $ 150,540,338 $ 38,064,220 $ 76,725,391 $ 15,463,230 $ 280,793,179 Liabilities and fund balances: Liabilities: Accounts payable $ 958,224 $ - $ 11,708,106 $ 185,608 $ 12,851,938 Accrued salaries and benefits 43,884, ,884,251 Due to other funds 4,638, , ,300,354 Deferred revenue: Property taxes 75,930,068 37,001,252 15,703, ,634,977 Other local ,425 27,425 State of Utah 2,761, ,761,585 Federal government 32, ,648 Total liabilities 128,204,880 37,663,502 27,411, , ,493,178 Fund balances: Nonspendable: Inventories 1,563, ,080,190 3,643,971 Restricted for: Debt service - 400, ,718 Capital projects ,313,628-49,313,628 School food services ,067,359 2,067,359 State multi-district program ,473,724 1,473,724 Committed to: Workers compensation 300, ,000 Termination benefits 4,000, ,000,000 Schools ,628,924 9,628,924 Assigned to: Programs 3,582, ,582,418 Schools 250, ,000 Unassigned 12,639, ,639,259 Total fund balances 22,335, ,718 49,313,628 15,250,197 87,300,001 Total liabilities and fund balances $ 150,540,338 $ 38,064,220 $ 76,725,391 $ 15,463,230 $ 280,793,179 The notes to basic financial statements are an integral part of this statement. 25

92 DAVIS SCHOOL DISTRICT Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2012 Total fund balances for governmental funds $ 87,300,001 Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land $ 42,470,490 Construction in progress 45,372,261 Buildings and improvements, net of $279,263,622 accumulated depreciation 476,729,843 Furniture and equipment, net of $10,741,682 accumulated depreciation 3,449,780 Transportation equipment, net of $21,609,232 accumulated depreciation 5,901, ,924,068 Some of the District's property taxes will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as deferred revenue in the funds. Interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is $1,413,074 and accrued interest for obligations under capital leases is $18,484. Bond issuance costs are reported as expenditures in the governmental funds. The cost is $3,760,435 and accumulated amortization is $1,391,100. An internal service fund is used by management to charge the costs of warehouse services to individual funds and other school districts. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets. Internal service fund net assets at year-end are: 4,638,454 (1,431,558) 2,369,335 - Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of net assets. Balances at year-end are: Bonds payable (419,690,000) Unamortized premiums (12,708,920) Unamortized refunding deferrals 2,577,474 Obligations under capital leases (663,206) Accrued vacation (3,607,306) Accrued sick leave (1,929,815) Accrued personal leave (1,308,831) Early retirement payable (7,661,221) (444,991,825) Total net assets - governmental activities $ 221,808,475 The notes to basic financial statements are an integral part of this statement. 26

93 DAVIS SCHOOL DISTRICT Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2012 Major Governmental Funds Other Total Debt Capital Governmental Governmental General Service Projects Funds Funds Revenues: Property taxes $ 79,639,044 $ 40,580,369 $ 18,804,702 $ - $ 139,024,115 Earnings on investments 1,040, , ,979 1,523,932 Other local sources 10,434, ,668 14,354,065 24,944,457 School lunch sales ,969,119 7,969,119 State of Utah 269,878, ,571 5,677, ,696,698 Federal government 32,670, ,577,877 44,248,357 Total revenues 393,663,833 40,580,369 19,445,295 39,717, ,406,678 Expenditures: Current: Instruction 267,146, ,354, ,501,091 Supporting services: Students 14,514, ,514,691 Instructional staff 16,651, ,651,193 District administration 2,550, ,550,252 School administration 24,860, ,860,824 Central 11,754, ,754,227 Operation and maintenance of facilities 39,348, ,348,007 Student transportation 11,823, ,823,524 School food service ,268,842 23,268,842 Capital outlay ,224,251-58,224,251 Debt service: Tax anticipation note interest 622, ,548 Bond principal - 28,935, ,935,000 Bond interest - 17,774, ,774,694 Bond issuance costs , ,980 Capital lease payments , ,310 Fees and miscellaneous charges - 15, ,350 Total expenditures 389,272,140 46,725,044 59,093,541 38,623, ,713,784 Excess (deficiency) of revenues over (under) expenditures 4,391,693 (6,144,675) (39,648,246) 1,094,122 (40,307,106) Other financing sources (uses): General obligation bonds issued ,000,000-35,000,000 General obligation bonds premium - - 2,543,576-2,543,576 Proceeds from sale of capital assets ,878-21,878 Total other financing sources (uses) ,565,454-37,565,454 Net change in fund balances 4,391,693 (6,144,675) (2,082,792) 1,094,122 (2,741,652) Fund balances - beginning 17,943,765 6,545,393 51,396,420 14,156,075 90,041,653 Fund balances - ending $ 22,335,458 $ 400,718 $ 49,313,628 $ 15,250,197 $ 87,300,001 The notes to basic financial statements are an integral part of this statement. 27

94 DAVIS SCHOOL DISTRICT Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2012 Net change in fund balances-total governmental funds $ (2,741,652) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, equipment with an initial, individual cost of more than $5,000 and buildings and improvements with an initial, individual cost of more than $100,000 are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlays $ 34,196,283 Gain on sale of capital assets (16,562) Proceeds from sale of capital assets (21,878) Depreciation expense (21,250,194) 12,907,649 Some capital asset additions are financed through capital leases. In governmental funds, a capital lease arrangement is considered a source of financing, but in the statement of net assets, the lease obligation is reported as a liability. Repayment of capital lease principal is an expenditure in the governmental funds, but repayment reduces the lease obligation in the statement of net assets. Interest expense - capital leases 8,296 Principal payments on capital leases 1,536,816 1,545,112 The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, governmental funds report the effect of issuance costs and premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: General obligation bond proceeds (35,000,000) Bond premium (2,543,576) Bond issuance costs 221,980 Amortization of deferred amounts on refunding (505,265) Amortization of bond premium 1,676,980 Amortization of bond issuance costs (248,096) Repayment of bond principal 28,935,000 Interest expense - general obligation bonds 213,431 (7,249,546) Property tax revenue is recognized when levied (claim to resources established) rather than when available. The portion not available soon enough to pay for the current period's expenditures is deferred in the funds. (148,660) In the statement of activities, certain operating expenses - compensated absences (vacation and sick and personal leave) and termination benefits (early retirement) - are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During this year, benefit obligations changed by the following amounts: Accrued vacation 241,778 Accrued sick and personal leave 84,812 Early retirement payable 1,049,633 1,376,223 Internal service fund are used by the District to charge the costs of warehouse services to individual funds. The change in net assets of the internal service funds is reported with governmental activities. Change in net assets of governmental activities $ 5,689,126 - The notes to basic financial statements are an integral part of this statement. 28

95 DAVIS SCHOOL DISTRICT Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund Year Ended June 30, 2012 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Property taxes $ 80,153,600 $ 79,202,300 $ 79,639,044 $ 436,744 Earnings on investments 950, ,500 1,040, ,099 Other local sources 9,050,000 8,426,000 10,434,724 2,008,724 State of Utah 261,637, ,859, ,878,986 (2,980,497) Federal government 29,478,941 31,480,168 32,670,480 1,190,312 Total revenues 381,269, ,790, ,663, ,382 Expenditures: Current: Instruction 262,806, ,761, ,146,874 3,614,270 Supporting services: Students 14,913,100 14,416,300 14,514,691 (98,391) Instructional staff 16,979,400 16,710,200 16,651,193 59,007 District administration 2,548,700 2,543,600 2,550,252 (6,652) School administration 25,470,700 24,940,207 24,860,824 79,383 Central 9,411,600 10,815,200 11,754,227 (939,027) Operation and maintenance of facilities 38,685,100 39,447,500 39,348,007 99,493 Student transportation 10,776,400 11,678,300 11,823,524 (145,224) Debt service - interest on tax anticipation notes 478, , ,548 (144,548) Total expenditures 382,069, ,790, ,272,140 2,518,311 Excess (deficiency) of revenues over (under) expenditures (800,000) 1,000,000 4,391,693 3,391,693 Other financing sources (uses): Transfers 800, Net change in fund balances - 1,000,000 4,391,693 3,391,693 Fund balances - beginning 17,943,765 17,943,765 17,943,765 - Fund balances - ending $ 17,943,765 $ 18,943,765 $ 22,335,458 $ 3,391,693 The notes to basic financial statements are an integral part of this statement. 29

96 DAVIS SCHOOL DISTRICT Statements of Fund Net Assets Proprietary Funds June 30, 2012, with comparative totals for 2011 Governmental Activities - Enterprise Fund - Internal Service Fund Pioneer Adult Rehab Center District Warehouse Assets: Current assets: Cash and investments $ 389,142 $ 2,421,298 $ - $ - Receivables: Other local 973,500 1,200,891 29,219 43,817 Due from other funds 2,995, Inventories of supplies 162,223 26,325 3,617,086 3,780,942 Total current assets 4,520,392 3,648,514 3,646,305 3,824,759 Noncurrent assets: Capital assets: Land , ,822 Buildings and improvements 3,660,322 3,660,322 1,519,215 1,519,215 Equipment 586, ,388 1,242,687 1,227,492 Accumulated depreciation (1,940,257) (1,774,842) (1,664,623) (1,501,100) Net capital assets 2,306,453 2,471,868 1,746,101 1,894,429 Total assets 6,826,845 6,120,382 5,392,406 5,719,188 Liabilities: Current liabilities: Accounts payable 120,911 66, , ,234 Compensation liability 38,191 34,861 16,274 17,186 Due to other funds - - 4,638,104 5,075,282 Total current liabilities 159, ,855 5,365,431 5,690,702 Noncurrent liabilities: Compensation liability 55,140 50,332 26,975 28,486 Total liabilities 214, ,187 5,392,406 5,719,188 Net assets: Invested in capital assets 2,306,453 2,471,868 1,746,101 1,894,429 Unrestricted 4,306,150 3,496,327 (1,746,101) (1,894,429) Total net assets $ 6,612,603 $ 5,968,195 $ - $ - The notes to basic financial statements are an integral part of these statements. 30

97 DAVIS SCHOOL DISTRICT Statements of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2012, with comparative totals for 2011 Governmental Activities - Enterprise Fund - Internal Service Fund Pioneer Adult Rehab Center District Warehouse Operating revenues: Charges for services $ 6,669,924 $ 8,054,295 $ 957,021 $ 1,002,505 Other local 621, , Total operating revenues 7,291,473 8,868, ,021 1,002,505 Operating expenses: Salaries and benefits 5,175,471 6,047, , ,869 Depreciation 165, , , ,790 Indirect charges 205, , Other 1,961,568 2,622,265 71, ,939 Total operating expenses 7,507,772 9,090, ,021 1,096,598 Operating income (loss) (216,299) (222,115) - (94,093) Nonoperating income: Earnings on investments 16,598 13, State of Utah subsidies 844, , Total nonoperating income 860, , Change in net assets 644, ,633 - (94,093) Total net assets - beginning 5,968,195 5,318,562-94,093 Total net assets - ending $ 6,612,603 $ 5,968,195 $ - $ - The notes to basic financial statements are an integral part of these statements. 31

98 DAVIS SCHOOL DISTRICT Statements of Fund Cash Flows Proprietary Funds Year Ended June 30, 2012, with comparative totals for 2011 Governmental Activities - Enterprise Fund - Internal Service Fund Pioneer Adult Rehab Center District Warehouse Cash flows from operating activities: Receipts from interfund services provided $ - $ - $ 534,441 $ 1,220,907 Receipts from customers 7,518,864 8,400, Payments to suppliers (5,244,394) (2,900,468) 205,270 (206,940) Payments to employees (5,167,333) (6,036,378) (724,515) (768,404) Net cash provided (used) by operating activities (2,892,863) (536,407) 15, ,563 Cash flows from noncapital financing activities: Receipt of earnings on investments 16,598 13,092 Receipt of state subsidies 844, , Net cash provided by noncapital financing activities 860, , Cash flows from capital and related financing activities: Acquisition of capital assets - - (15,196) (245,563) Net increase (decrease) in cash and cash equivalents (2,032,156) 335, Cash and cash equivalents - beginning 2,421,298 2,085, Cash and cash equivalents - ending (displayed as cash and investments on the statements of fund net assets) $ 389,142 $ 2,421,298 $ - $ - Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (216,299) $ (222,115) $ - $ (94,093) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 165, , , ,790 Changes in operating assets and liabilities: Accounts receivable 227,391 (468,306) 14,598 30,291 Due from other funds (2,995,527) Inventories (135,898) (26,325) 163,856 (102,411) Accounts payable 53,917 3, ,819 60,410 Compensation liability 8,138 11,337 (2,423) 465 Due to other funds - - (437,178) 188,111 Total adjustments (2,676,564) (314,292) 15, ,656 Net cash provided (used) by operating activities $ (2,892,863) $ (536,407) $ 15,196 $ 245,563 Noncash investing, capital, and financing activities none none none none The notes to basic financial statements are an integral part of these statements. 32

99 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Davis School District (the District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to local government units. The Governmental Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the District are described below. Reporting entity The Board of Education, comprised of seven elected individuals, is the primary governing authority for the District. As required by GAAP, these financial statements present the District and its component unit, Davis School District Foundation, a legally separate organization for which the District is considered to be financially accountable. Due to the relationship between the District and the Foundation, it would be misleading to exclude the financial information of the Foundation from this report. The Foundation exclusively services the District. The District makes all personnel decisions for the Foundation and pays for all operating costs of the Foundation. The Foundation is reported as a separate column in the District s government-wide financial statements as a discretely presented component unit; the Foundation is reported as a governmental fund type. Separate financial statements for the Foundation may be obtained at the District s administrative office. Government-wide and fund financial statements The government-wide financial statements (the statement of net assets and the statement of changes in net assets) display information about the primary government (the District) and its component unit. These statements include the financial activities of the overall government. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions occur only when the elimination of such activity would distort the expenses and revenues reported by function. These statements distinguish between the governmental and business-type activities of the District. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for each function of the District s governmental activities. Direct expenses are those that are specifically associated with a function and, therefore, are clearly identifiable to a particular function. Depreciation expense for capital assets that can specifically be identified with a function are included in its direct expenses. Depreciation expense for shared capital assets (for example, a school building is used primarily for instruction, school administration, and operation and maintenance of facilities) are ratably included in the direct expenses of the appropriate functions. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Interest on general long-term liabilities is considered an indirect expense and is reported in the statement of activities as a separate line. Program revenues include 1) fees and charges paid by students and other recipients of goods or services offered by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Revenues that are not classified as program revenues, including property taxes, are presented as general revenues. The fund financial statements provide information about the District s funds. Separate statements for each fund category (governmental and proprietary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The remaining governmental funds are reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party 33

100 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Operating expenses result from transactions directly associated with the fund s principal services. The District reports the following major governmental funds: The General Fund is the District s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for resources accumulated and payments made for principal and interest on general obligation school building bonds. The Capital Projects Fund accounts for resources accumulated and payments made for the acquisition and improvement of sites, construction and remodel of facilities, and procurement of equipment necessary for providing educational programs for all students within the District. The District reports the Pioneer Adult Rehabilitation Center Fund which accounts for revenues and expenses related to fostering independence for people with disabilities as a major enterprise fund. Additionally, the District reports the District Warehouse Internal Service Fund (a proprietary fund) which accounts for warehouse services provided to other funds of the District on a cost-reimbursement basis. Measurement focus, basis of accounting, and financial statement presentation The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and are reported using 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 flows take place. Nonexchange transactions, in which the District receives value without directly giving equal value in exchange, include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental fund financial 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 sixty days after year-end. Property taxes and interest are considered to be susceptible to accrual. All other revenue items are considered to be measurable and available only when the District receives cash. Expenditures generally are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, early retirement, 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. Under the terms of grant agreements, the District funds certain programs by a combination of specific costreimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the District s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. 34

101 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Budgetary Data The District operates within the budget requirements for school districts as specified by state law and as interpreted by the Utah State Superintendent of Public Instruction. Budgets are presented on the modified accrual basis of accounting for all governmental funds. All annual appropriations lapse at fiscal year-end with the exception of those indicated as a fund balance commitment. The following procedures are used in establishing the budgetary data reflected in the financial statements. By June 1 of each year, the District business administrator prepares a proposed annual budget (for the fiscal year beginning July 1) for all applicable funds. The budget is presented to the Board of Education by the superintendent. This budget includes proposed expenditures and the means of financing them. Also included is a final budget for the current fiscal year ending June 30. Copies of the proposed budget are made available for public inspection and review by the District s patrons. If the District does not exceed the certified tax rate, a public hearing is held prior to June 22 at which the budget is legally adopted by resolution of the Board after obtaining taxpayer input. If the District exceeds the certified tax rate, the budget is adopted in August when additional data is available to set the rates. Once adopted, the budget can be amended by subsequent Board action. The Board upon recommendation of the superintendent can approve reductions in appropriations, but increases in appropriations by fund require a public hearing prior to amending the budget. In accordance with Utah state law, interim adjustments may be made by administrative transfer of money from one appropriation to another within any given fund. Certain interim adjustments in estimated revenue and expenditures during the year ended June 30, 2012, have been included in the final budget approved by the Board, as presented in the financial statements. Expenditures may not legally exceed budgeted appropriations at the fund level. Deposits and Investments The cash balances of substantially all funds are pooled and invested by the District for the purpose of increasing earnings through investment activities and providing efficient management of temporary investments. Investments for the District, as well as for its component unit, are reported at fair value. Changes in the fair value of investments are recorded as investment earnings. Earnings on pooled funds are apportioned and paid or credited to the funds based on the average balance of each participating fund. Cash and Cash Equivalents The District considers cash and cash equivalents in proprietary funds to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition, including investments in the Utah Public Treasurers Investment Fund (PTIF). Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at year-end are referred to as either due to/from other funds (i.e., current portion of interfund loans). Any residual balances outstanding between governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Inventories Inventories are valued at cost or, if donated, at fair value when received, using the moving average method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Donated food commodities are reported as revenue when received. Inventories 35

102 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued reported in the governmental funds are equally offset by a nonspendable portion of fund balance, indicating that they are not expected to be converted to cash. Capital Assets Capital assets, which include land, buildings and improvements, furniture and equipment, and transportation equipment are reported in the government-wide financial statements and proprietary fund financial statements. The District defines capital assets as assets with an initial, individual cost of more than $5,000 for land, furniture and equipment, and transportation equipment and $100,000 for buildings and improvements. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the lives of the assets are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction is not capitalized. Buildings and improvements, furniture and equipment, and transportation equipment of the District are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 40 Building improvements and portable classrooms 20 Kitchen equipment appliances 15 Maintenance and CTE equipment 15 School buses 10 Furniture and office equipment 10 Heavy trucks 7 Audio visual equipment 6 Light trucks 6 Copiers, printers, etc 5 Miscellaneous equipment and accessories 5 Passenger cars and vans 5 Computer equipment and software 3 Compensated Absences Under terms of association agreements, twelve-month or full-year employees earn vacation and sick leave in amounts varying with tenure and classification. Nine-month full-time employees earn sick leave and personal leave in amounts varying with tenure and classification. In the event of termination or death, an employee is reimbursed for the current value of accumulated vacation days to a maximum of 40 days, and is reimbursed for unused personal leave days at an appropriate substitute rate. Upon retirement, employees are compensated for accumulated sick leave at 21.5% of the current value. All vacation pay, personal leave pay, and an estimated potential amount for sick leave pay, are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Compensated absences will be paid by the fund in which the employee worked (typically the general fund). 36

103 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Long-term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported in the applicable statement of net assets. Bond premiums and discounts, as well as issuance and refunding costs, are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of unamortized bond premiums or discounts and refunding costs. In the fund financial statements, governmental fund types recognize bond premiums, discounts, and deferred amounts on refunding, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. Fund Balance Classifications Beginning with fiscal year 2011, the District implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government s fund balances more transparent. Implementation of the new statement had no effect on the total fund balance amounts. The governmental fund financial statements present fund balances based on a hierarchy that shows, from highest to lowest, the level or form of constraints on fund balance resources and the extent to which the District is bound to honor them. The District first determines and reports nonspendable balances, then restricted, then committed, and so forth. Fund balance classifications are summarized as follows: Nonspendable. This category includes fund balance amounts that cannot be spent because they are either a) not in spendable form or b) legally or contractually required to be maintained intact. Fund balance amounts related to inventories are classified as nonspendable. Restricted. This category includes net fund resources that are subject to external constraints that have been placed on the use of the resources either a) imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments or b) imposed by law through constitutional provisions or enabling legislation. Restricted fund balance amounts include the following: a) Unspent tax revenues for specific purposes. b) Remaining fund balances in the Debt Service Fund, Capital Projects Fund, and amounts in other governmental funds for school food services and state multi-district programs. Committed. This category includes amounts that can only be used for specific purposes established by formal action of the District s Board of Education. Fund balance commitments can only be removed or changed by the same type of action (for example, resolution) of the Board of Education. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. The Board of Education has approved to commit fund balance amounts for the following purposes: The District s compensated absences liability includes amounts for accrued vacation, sick, and personal leave totaling $6,982,532. The District has committed $4,000,000 of its General Fund balance for this future obligation. 37

104 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued The District has committed $300,000 of its General Fund to cover potential workers compensation claims. The District has committed $9,628,924 of its other governmental fund resources for schools. Assigned. This category includes amounts set aside by management for specific uses. The District has assigned $3,582,418 for district programs and $250,000 for schools in its General Fund. Unassigned. Residual balances in the General Fund are classified as unassigned. When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first, then unrestricted resources. Of the unrestricted resources, committed resources will be used first, followed by assigned resources, and then unassigned resources. 2. DEPOSITS AND INVESTMENTS Deposits and investments are carried at fair value. A reconciliation of cash and investments at June 30, 2012, as shown on the financial statements is as follows: Carrying amount of deposits $ 1,289,833 Carrying amount of investments 128,035,949 Total cash and investments $ 129,325,782 Governmental funds cash and investments $ 127,835,745 Enterprise funds cash and investments 389,142 Primary government 128,224,887 Component unit cash and investments 1,100,895 Total cash and investments $ 129,325,782 The District complies with the State Money Management Act (Utah Code Section 51, Chapter 7) (Act) and related Rules of the Money Management Council (Council) in handling its depository and investing transactions. District funds are deposited in qualified depositories as defined by the Act. The Act also authorizes the District to invest in the Utah Public Treasurers Investment Fund (PTIF), certificates of deposit, US Treasury obligations, US agency issues, high-grade commercial paper, banker s acceptances, repurchase agreements, corporate bonds, money market mutual funds, and obligations of governmental entities within the state of Utah. The Act and Council rules govern the financial reporting requirements of qualified depositories in which public funds may be deposited and prescribe the conditions under which the designation of a depository shall remain in effect. The District considers the actions of the Council to be necessary and sufficient for adequate protection of its uninsured bank deposits. Rules of the Council allow Davis School District Foundation to invest private grants, contributions, and endowments in any deposit or investment authorized by the Act and certain investment funds, equity securities, fixed-income securities, and investment strategies with institutions that meet certain restrictions. 38

105 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Deposits At June 30, 2012, the District and the Foundation have the following deposits with financial institutions: Carrying Bank Amount Amount Balance Insured Davis County School District $ 199,611 $ 2,775,833 $ 2,775,833 Davis School District Foundation 1,090,222 1,090,222 1,090,222 Total deposits $ 1,289,833 $ 3,866,055 $ 3,866,055 Custodial credit risk Custodial credit risk for deposits is the risk that, in the event of a bank failure, a government s deposits may not be returned to it. The District does not have a formal deposit policy for custodial credit risk. At June 30, 2012, the uninsured amount of the District s and Foundation s bank deposits was uncollateralized. Investments All of the District s investments are with the PTIF. The Foundation has deposits separate from the District and invests private funds through a broker. The PTIF is an external government investment pool managed by the Utah State Treasurer. The PTIF is authorized and makes investments in accordance with the Act. The Council provides regulatory oversight for the PTIF. Participant accounts with the PTIF are not insured or otherwise guaranteed by the state of Utah. Participants in the PTIF share proportionally in the income, costs, gains and losses from investment activities. The degree of risk of the PTIF depends upon the underlying portfolio, which primarily consists of money market securities including certificates of deposit and top-rated domestic commercial paper held by the Utah State Treasurer; the portfolio has a weighted average life of 90 days or less. The reported value of the pool is the same as the fair value of the pool shares. At June 30, 2012, the District has $128,025,276 invested in the Utah Public Treasurers Investment Fund; the PTIF is not rated. The Davis School District Foundation has $10,673 invested in mutual funds which are also unrated. The District and the Foundation have the following investments summarized by investment type and maturities: Investment Maturities (in Years) Fair Less More Investment Type Value Than Than 10 Davis County School District: Utah Public Treasurers' Investment Fund (PTIF) $ 128,025,276 $ 128,025,276 $ - $ - $ - Davis School District Foundation, a component unit of the District: Mutual funds investing in: Taxable bonds 3,115 3, International stock 7,558 7, Total Foundation 10,673 10, Total investments $ 128,035,949 $ 128,035,949 $ - $ - $ - 39

106 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District manages its exposure to interest rate risk by complying with the Act, which requires that the remaining term to maturity of investments to not exceed the period of availability of the funds invested. Except for endowments, the Act further limits the remaining term to maturity on all investments in commercial paper and bankers acceptances to 270 days or less and fixed-income securities to 365 days or less. In addition, variable-rate securities may not have a remaining term to final maturity exceeding two years. The Foundation can invest private funds in fixed-income securities with a dollar-weighted average maturity not to exceed ten years. The District has no investment policy that would further limit its interest rate risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District s policy for reducing its exposure to credit risk is to comply with the Act and related rules. The Act and related rules limit investments in commercial paper to a first tier rating and investments in fixed-income and variable-rate securities to a rating of A or higher as rated by Moody s Investors Service or by Standard & Poor s. The District has no investment policy that would further limit its investment choices. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government s investment in a single issuer. The District s policy for managing this risk is to comply with the Act and related rules. The Act limits investments in commercial paper and or corporate obligations to 5% of the District s total portfolio with a single issuer. The District places no other limits on the amount it may invest in any one issuer. The Foundation can invest private funds in certain equity and fixed-income securities provided no more than 5% of all funds are invested in any one issuer and no more than 25% of all funds are invested in a particular industry. Also, for the Foundation s investments in private funds, no more than 75% may be invested in equity securities and no more than 5% in collateralized mortgage obligations. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The District s policy for managing this risk is to comply with the Act and related rules. The District places no other limit on the amount of investments to be held by counterparties. The Act requires the Foundation s public treasurer to have custody of all securities purchased or held or deposit these securities with a bank or trust company to be held in safekeeping by that custodian. The Foundation s investments held in a brokerage account are covered by Securities Investor Protection Corporation up to $500, PROPERTY TAXES The property tax revenue of the District is collected and distributed by the Davis County treasurer as an agent of the District. Utah statutes establish the process by which taxes are levied and collected. The county assessor is required to assess real property as of January 1 (the legal lien date) and complete the tax rolls by May 15. By July 21, the county auditor is to mail assessed value and tax notices to property owners. A taxpayer may then petition the County Board of Equalization between August 1 and August 15 for a revision of the assessed value. The county auditor makes approved changes in assessed value by November 1 and on this same date the county auditor is to deliver the completed assessment rolls to the county treasurer. Tax notices are mailed with a due date of November 30. An annual uniform fee based on the value of motor vehicles is levied in lieu of an ad valorem tax on motor vehicles. This uniform fee was 1.5% of the fair market statewide value of the property, as established by the State Tax Commission. Legislation requires motor vehicles be subject to an age-based fee that is due 40

107 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued each time a vehicle is registered. The revenues collected in each county from motor vehicle fees is distributed by the county to each taxing entity in which the property is located in the same proportion in which revenue collected from ad valorem real property tax is distributed. The District recognizes motor vehicle fees as property tax revenue when collected. As of June 30, 2012, property taxes receivable by the District includes uncollected taxes assessed as of January 1, 2012 or earlier. It is expected that all assessed taxes (including delinquencies plus accrued interest and penalties) will be collected within a five-year period, after which time the county treasurer may force sale of property to collect the delinquent portion. The property taxes receivable and property taxes deferred revenue accounts in the governmental funds at June 30, 2012, are summarized as follows: Debt Capital General Service Projects Total Property taxes - receivable: Levied for current and prior years - collected during July and August 2012 $ 2,033,693 $ 1,062,968 $ 566,878 $ 3,663,539 Levied for current and prior years (delinquent) 2,192,285 1,345,838 1,100,331 4,638,454 Levied for future year 73,737,783 35,655,414 14,603, ,996,523 $ 77,963,761 $ 38,064,220 $ 16,270,535 $ 132,298,516 Property taxes - deferred revenue: Levied for future year $ 73,737,783 $ 35,655,414 $ 14,603,326 $ 123,996,523 Levied for current and prior years (delinquent) 2,192,285 1,345,838 1,100,331 4,638,454 Deferred property tax revenue - governmental funds, balance sheet $ 75,930,068 $ 37,001,252 $ 15,703,657 $ 128,634,977 41

108 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 4. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2012, is as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated Land $ 42,239,034 $ 880,278 $ - $ 43,119,312 Construction in progress 47,703,449 30,701,319 (33,032,507) 45,372,261 Total capital assets, not being depreciated 89,942,483 31,581,597 (33,032,507) 88,491,573 Capital assets, being depreciated: Buildings and improvements 724,325,959 33,259,552 (72,831) 757,512,680 Furniture and equipment 15,220,696 1,093,369 (879,916) 15,434,149 Transportation equipment 27,120,677 1,309,467 (919,218) 27,510,926 Total capital assets, being depreciated 766,667,332 35,662,388 (1,871,965) 800,457,755 Accumulated depreciation for: Buildings and improvements (261,394,304) (18,723,363) 36,092 (280,081,575) Furniture and equipment (11,267,448) (1,200,820) 879,916 (11,588,352) Transportation equipment (21,037,215) (1,489,534) 917,517 (21,609,232) Total accumulated depreciation (293,698,967) (21,413,717) 1,833,525 (313,279,159) Total capital assets, being depreciated, net 472,968,365 14,248,671 (38,440) 487,178,596 Governmental activity capital assets, net $ 562,910,848 $ 45,830,268 $ (33,070,947) $ 575,670,169 Business-type activities: Capital assets, being depreciated: Buildings and improvements $ 3,660,322 $ - $ - $ 3,660,322 Furniture and equipment 586, ,388 Total capital assets, being depreciated 4,246, ,246,710 Accumulated depreciation for: Buildings and improvements (1,354,753) (95,386) - (1,450,139) Furniture and equipment (420,089) (70,029) - (490,118) Total accumulated depreciation (1,774,842) (165,415) - (1,940,257) Business-type activity capital assets, net $ 2,471,868 $ (165,415) $ - $ 2,306,453 42

109 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued For the year ended June 30, 2012, depreciation expense was charged to functions of the District as follows: Governmental activities: Instruction $ 16,556,653 Supporting services: Students 164,219 Instructional staff 115,560 District administration 30,315 School administration 906,041 Central 383,950 Operation and maintenance of facilities 1,526,653 Student transportation 1,172,673 School food services 394,130 Capital assets held by the District's internal service fund are charged to the various functions based on their usage of the assets 163,523 Total depreciation expense, governmental activities $ 21,413,717 Business-type activities: Pioneer Adult Rehabilitation Center $ 165,415 The District is obligated at June 30, 2012, under construction commitments as follows: Project Costs to Costs to Project Authorized Date Complete Bountiful High $ 8,558,795 $ 1,736,155 $ 6,822,640 Information Systems Building 3,532,311 2,039,881 1,492,430 Layton High addition 21,199,062 20,849, ,963 Vista Center 12,040,891 8,194,384 3,846,507 Wasatch Elementary 14,667,186 12,336,305 2,330,881 Additions and renovations at various locations 1,180, , ,963 Total $ 61,178,645 $ 45,372,261 $ 15,806,384 The general obligation school building bonds will be used to finance the costs to complete these projects (See Note 7). 5. RETIREMENT PLANS Defined Benefit Plans The District contributes to the following cost-sharing multiple-employer defined benefit pension plans administered by the Utah Retirement Systems (URS) and Plans (Systems). Tier 1 State and School Contributory System Tier 1 State and School Noncontributory System Tier 2 State and School Contributory System (new in 2012) The Systems provides refunds, retirement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement statutes. 43

110 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued The Systems are established and governed by the respective sections of Chapter 48 of the Utah Code. The Utah State Retirement Act in Chapter 49 provides for the administration of the Systems under the direction of the Utah State Retirement Board whose members are appointed by the Governor. The Systems issue a publicly available financial report that includes financial statements and required supplementary information for the Systems. A copy of the report may be obtained by writing to the Utah Retirement Systems, 540 East 200 South, Salt Lake City, UT or by calling The contributions requirements of the Systems are authorized by statute and specified by the Utah State Retirement Board. The District s required contribution rates (actuarially determined) for the year ended June 30, 2012 and required contributions to the Systems for the years ended June 30, 2012, 2011, and 2010 are as follows: Plan members in the Tier 1 State and School Contributory Retirement System are required to contribute 1.00% of annual covered salary, and the District contributes 17.37% of annual covered salary. For employees participating in the Tier 1 State and School Noncontributory System, the District contributes 16.86% of annual covered salary. For employees participating in the Tier 2 State and School Contributory System, the District contributes 7.59% of annual covered salary. The District s contributions to the Tier 1 State and School Contributory Retirement System for the years ended June 30, 2012, 2011, and 2010 are $373,256, $271,785, and $248,462, respectively, and employee contributions were $21,608, $33,439, and $25,535, respectively. The District s contributions to the Tier 1 State and School Noncontributory Retirement System for the years ended June 30, 2012, 2011, and 2010 were $36,574,894, $35,627,647, and $32,141,012, respectively. The District s contributions to the Tier 2 State and School Contributory System for the year ended June 30, 2012 were $392,133. The contributions were equal to the required contributions for each year. Defined Contribution Plans The District also participates in a defined contribution plan under Internal Revenue Code Section 401(k) to supplement retirement benefits accrued by participants in the Systems. Employees covered by the State and School Noncontributory Retirement System have a contribution of 1.5% of covered salaries automatically made by the District. Employees participating in the Systems can make additional contributions to the 401(k) plan up to specified limits. Contributions and earnings may be withdrawn by the employee upon termination or may be used as supplemental income upon retirement. The employer 401(k) contributions for the years ended June 30, 2012, 2011 and 2010 are $4,037,548, $4,050,516, and $4,275,939, respectively; the employee contributions for the years ended June 30, 2012, 2011 and 2010 are $3,510,281, $3,785,150, and $3,927,421, respectively. The 401(k) plan funds are fully vested to the participants at the time of deposit. Plan assets are administered and held by URS and the URS has the authority to establish or amend contribution requirements and other plan provisions. The District also offers its employees a deferred compensation plans created in accordance with Internal Revenue Service Code Section 457. The plan, available to all full-time employees, permit them to defer a portion of their salary until future years. Employees are eligible to voluntarily participate from the date of employment and are vested immediately upon participating. Employee contributions to the Section 457 plans totaled $437,237, $443,347, and $451,457 for the years ended June 30, 2012, 2011, and 2010, respectively. The assets of the plan are administered and held by URS and a third-party administrator. The plan administrators have the authority to amend the plans. In addition to the defined contribution and deferred compensation plans, the District offers its employees two tax-advantaged savings plans authorized by Internal Revenue Service Code Section 408. Employees are eligible to participate from the date of employment and are vested immediately upon participation. For the years ended June 30, 2012, 2011, and 2010, employee contributions to the Roth IRA were $146,679, 44

111 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued $116,073, and 92,828, respectively, and employee contributions to the Traditional IRA were $9,650, $4,730, and $3,252, respectively. The assets of the plan are administered and held by URS and the URS has the authority to amend the plan. Early Retirement Incentive The District provides an early retirement incentive program. Eligibility is restricted to those employees with a minimum of ten years of service in the District, and who meet the eligibility requirements for and will be receiving Utah State Retirement System benefits. Eligible retirees will receive a contribution of 16% of their annual salary per year, for up to three consecutive years, into a qualified 401(a) and/or 403(b) plan, or until they become eligible to receive unreduced social security benefits, whichever occurs first. Employees who retire under the incentive program will continue to be enrolled in group medical and dental programs until they become eligible for Medicare, or for 10 consecutive years following retirement, whichever comes first. Enrollment is contingent upon the retiree contributing the same premium as required of active employees for the first 3 years and the full premium for the following 7 years. The District s direct payments to retirees for the years ended June 30, 2012 and 2011, were $2,797,354 and $2,684,419, respectively. Future retirement payments of employees who have elected early retirement are recognized on an accrual basis as an expense in the government-wide statements in the year of retirement. This liability is paid from the fund from which the employee retires. 6. RISK MANAGEMENT The District maintains insurance coverage for general, automobile, personal injury, errors and omissions, employee dishonesty, and malpractice liability up to $10 million per occurrence through policies administered by the Utah State Risk Management Fund (Fund). The District also insures its buildings, including those under construction, and contents against all insurable risks of direct physical loss or damage with the Fund. Property physical damage is insured to replacement value with a $1,000 deductible; automobile physical damage is insured to actual value with a $350 deductible; other liability is limited to the lesser of $10 million or the statutory limit. The Fund is a public entity risk pool operated by the State for the benefit of the State and local governments within the State. The District pays annual premiums to the Fund; the Fund obtains independent coverage for insured events, up to $25 million per location. This is a pooled arrangement where the participants pay experience rated annual premiums, which are designed to pay claims and build sufficient reserves so that the pool will be able to protect the participating entities with its own capital. The pool reinsures excess losses to preserve the capital base. Insurance coverage by major category of risk has remained relatively constant as compared to the prior fiscal year. Insurance settlements have not exceeded insurance coverage for the past three years. Unemployment compensation is handled on a cost of benefits reimbursement basis with the State of Utah. The District is self-insured for worker s compensation claims up to $250,000 per incident. Worker s compensation claims are processed by a third party administrator. The District has not established a reserve for either claims outstanding or for claims incurred but not reported (IBNR) because management believes the amount to be immaterial to the financial statements. During the year ended June 30, 2012, the District paid claims in the amount of $247,417. A co-insurance policy provides for individual claims in excess of $250,

112 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 7. LONG-TERM LIABILITIES Long-term liability activity for the year ended June 30, 2012, is as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: General obligation bonds $ 413,625,000 $ 35,000,000 $ (28,935,000) $ 419,690,000 $ 29,635,000 Deferred amounts for issuance premium 11,842,324 2,543,576 (1,676,980) 12,708,920 - Deferred amounts on refunding (3,082,739) - 505,265 (2,577,474) - Total bonds payable, net 422,384,585 37,543,576 (30,106,715) 429,821,446 29,635,000 Obligations under capital lease 2,200,022 - (1,536,816) 663, ,228 Accrued vacation 3,890,461 2,387,139 (2,631,550) 3,646,050 2,466,228 Accrued sick leave 2,015, ,618 (227,982) 1,934, ,779 Accrued personal leave 1,312, ,690 (672,928) 1,308, ,267 Early retirement payable 8,710,854 2,861,255 (3,910,888) 7,661,221 4,160,687 Total governmental activity long-term liabilities $ 440,513,675 $ 43,608,278 $ (39,086,879) $ 445,035,074 $ 37,435,189 Business-type activities: Accrued vacation $ 67,892 $ 51,401 $ (43,321) $ 75,972 $ 31,088 Accrued sick leave 14,836 1,055 (725) 15,166 6,206 Accrued personal leave 2, (713) 2, Total business-type activity long-term liabilities $ 85,193 $ 52,897 $ (44,759) $ 93,331 $ 38,191 General Obligation Bonds The District issues general obligation bonds to provide funds for the construction of new facilities, acquisition of property, renovation and improvement of facilities, and procurement of other equipment. General obligation bonds are direct obligations and pledge the full faith and credit of the District. The annual requirements to amortize all general obligation bonds outstanding as of June 30, 2012, including interest payments, are listed as follows: Year Ending June 30, Principal Interest Total 2013 $ 29,635,000 $ 18,668,480 $ 48,303, ,495,000 17,200,098 43,695, ,975,000 16,093,925 43,068, ,115,000 14,959,485 43,074, ,540,000 13,694,573 46,234, ,780,000 48,706, ,486, ,385,000 24,729, ,114, ,765,000 5,734,735 62,499,735 Total $ 419,690,000 $ 159,787,396 $ 579,477,396 46

113 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued General obligation school building bonds payable at June 30, 2012, with their outstanding balances are comprised of the following individual issues: Bond Series GO Bonds - original issue of $38,930,000 with interest rates ranging from 2.0% to 5.0% $ 2,625,000 Bond Series 2003B - GO Bonds - original issue of $55,000,000 with interest rates ranging from 2.0% to 5.0% 8,275,000 Bond Series 2005A - GO Bonds - original issue of $52,200,000 with interest rates ranging from 3.0% to 5.0% 32,435,000 Bond Series 2005B - GO Refunding Bonds - original issue of $24,905,000 with interest rates ranging from 3.25% to 5.0% 15,500,000 Bond Series GO Bonds - original issue of $47,000,000 with interest rates ranging from 4.0% to 5.0% 33,375,000 Bond Series GO Bonds - original issue of $55,000,000 with interest rates ranging from 4.0% to 5.0% 52,625,000 Bond Series GO Bonds - original issue of $64,000,000 with interest rates ranging from 3.0% to 5.0% 54,055,000 Bond Series GO Bonds - original issue of $43,000,000 with interest rates ranging from 2.0% to 5.0% 35,550,000 Bond Series 2010A - GO Bonds (BABs) - original issue of $68,500,000 with interest rates ranging from 1.0% to 5.75% (35% interest rate subsidy) 66,240,000 Bond Series 2011A - GO Bonds - original issue of $45,000,000 with interest rates ranging from 4.0% to 4.75% 45,000,000 Bond Series 2011B - GO Refunding Bonds - original issue of $7,210,000 with interest rates ranging from 3.0% to 4.0% 6,810,000 Bond Series 2011C - GO Refunding Bonds - original issue of $33,200,000 with interest rates ranging from 4.0% to 5.0% 32,200,000 Bond Series GO Bonds - original issue of $35,000,000 with interest rates ranging from 2.0% to 4.0% $ 35,000, ,690,000 The general obligation bonded debt of the District is limited by state law to 4% of the fair market value of the total taxable property in Davis County. The legal debt limit at June 30, 2012, is $1,071,516,515, with general obligation debt outstanding, net of deferred amounts for issuance premiums and on refundings, of $429,821,446, resulting in a legal debt margin of $641,695,069. Payments on the general obligation bonds are made by the Debt Service Fund from property taxes and earnings on investments. The obligations under capital leases are paid by the Capital Projects Fund. Compensated absences, claims payable, and early retirement benefits will be paid by the fund in which the employee worked, including the General Fund and other governmental funds. Bond Issuance On February 23, 2012, the District issued $35,000,000 of general obligation school building bonds. The bonds were issued at an effective interest rate of 2.84% (annual rates range between 2.00% and 4.00%) and will mature on June 1,

114 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Capital Leases The District has acquired buildings of $6,819,624 and equipment of $3,605,599 under capital lease agreements over the past several years. Lease payments for the year ended June 30, 2012, totaled $1,536,816. Future minimum payments under capital lease obligations together with their present values as of June 30, 2012, are summarized as follows: Year Ending June 30, 2013 $ 311, , , ,271 Total minimum lease payments 720,212 Amount representing interest (57,006) Present value of minimum lease payments $ 663, INTERFUND BALANCES The composition of interfund balances as of June 30, 2012, is as follows: Receivable Fund Payable Fund Amount General Debt Service $ 662,250 General Internal Service - District Warehouse 4,638,104 Capital General 232,067 State Multi-District Program General 1,410,510 Pioneer Adult Rehab General $ 2,995,527 9,938,458 The amounts payable to the General Fund are related to working capital advances made to the District Warehouse Internal Service Fund and the Debt Service Fund. The amounts payable from the General Fund are related to working capital advances made from the State Multi-District Program Fund and the Pioneer Adult Rehabilitation Center Fund. 9. LITIGATION There are several lawsuits pending in which the District is involved. The District s legal counsel and insurance carriers estimate that the potential claims against the District, not covered by insurance, resulting from such litigation would not significantly affect the financial statements of the District. 48

115 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 10. GRANTS The District receives significant financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the District s independent auditors and other governmental auditors. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable fund. Based on prior experience, District administration believes such disallowance, if any, would be insignificant. 49

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117 Individual Fund Statements and Schedules General Fund The General Fund is used to account for all financial resources applicable to the general operations of the District which are not required to be accounted for in another fund. Utah law defines the General Fund as the Maintenance and Operations Fund. Debt Service Fund The Debt Service Fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources. Financing is provided by an annual property tax levy for general obligation debt as authorized by Utah Code Capital Projects Fund The Capital Projects Fund is used to account for the resources used in acquiring and improving sites, constructing and remodeling facilities, and procuring equipment for the education programs for all students within the District. Financing is provided by an annual property tax levy not to exceed.0024 and an additional levy to generate an amount not to exceed 10% of the cost of the basic program as authorized by Utah Code 53 A and 53 A-17a-145. Also, state funds can be obtained by qualifying under guidelines established for districts determined to be in critical need for construction building aid. State Multi-District Program Fund The State Multi-District Program Fund is used to account for resources provided by the state for operation of state-wide or regional public education programs. School Food Services Fund The School Food Services Fund is used to account for the food service activities of the District as required by state and federal law. Financing is provided by local sales along with substantial subsidies from the State of Utah and the U.S. Government to help ensure that students receive low cost, nutritionally balanced meals. Student Activities Fund The Student Activities Fund is used to account for revenues and expenditures from school-based operations. The revenues comprise of interest earnings, gate receipts, fundraisers, and student fees. Expenditures support curricular and extra-curricular activities. 51

118 DAVIS SCHOOL DISTRICT Comparative Balance Sheets General Fund June 30, 2012 and Assets: Cash and investments $ 57,293,440 $ 58,517,887 Receivables: Property taxes 77,963,761 84,383,565 Other local 58,547 - State of Utah 463, ,658 Federal government 7,897,070 13,286,850 Due from other funds 5,300,354 9,452,189 Inventories 1,563,781 1,524,352 Total assets $ 150,540,338 $ 167,881,501 Liabilities and fund balances: Liabilities: Accounts payable $ 958,224 $ 918,418 Notes payable - 200,000 Accrued salaries and benefits 43,884,251 63,355,999 Deferred revenue: Property taxes 75,930,068 80,466,184 State of Utah 2,761,585 4,814,150 Federal government 32, ,985 Due to other funds 4,638,104 - Total liabilities 128,204, ,937,736 Fund balances: Nonspendable: Inventories 1,563,781 1,524,352 Committed to: Workers compensation 300, ,000 Termination benefits 4,000,000 4,000,000 Assigned to: Programs 3,582,418 - Schools 250,000 - Unassigned 12,639,259 12,119,413 Total fund balances 22,335,458 17,943,765 Total liabilities and fund balances $ 150,540,338 $ 167,881,501 52

119 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Amounts Amounts Final Budget Amounts Revenues: Property taxes $ 79,202,300 $ 79,639,044 $ 436,744 $ 77,245,605 Earnings on investments 822,500 1,040, , ,331 Other local sources 8,426,000 10,434,724 2,008,724 8,295,387 State of Utah 272,859, ,878,986 (2,980,497) 250,822,198 Federal government 31,480,168 32,670,480 1,190,312 50,873,878 Total revenues 392,790, ,663, , ,982,399 Expenditures: Current: Instruction 270,761, ,146,874 3,614, ,400,084 Supporting services: Students 14,416,300 14,514,691 (98,391) 14,254,115 Instructional staff 16,710,200 16,651,193 59,007 17,104,002 District administration 2,543,600 2,550,252 (6,652) 2,553,577 School administration 24,940,207 24,860,824 79,383 24,543,982 Central 10,815,200 11,754,227 (939,027) 10,739,697 Operation and maintenance of facilities 39,447,500 39,348,007 99,493 38,414,026 Student transportation 11,678,300 11,823,524 (145,224) 10,863,057 Debt service-interest on tax anticipation notes 478, ,548 (144,548) 655,188 Total expenditures 391,790, ,272,140 2,518, ,527,728 Excess of revenues over expenditures / net change in fund balances 1,000,000 4,391,693 3,391,693 3,454,671 Fund balances - beginning 17,943,765 17,943,765-14,489,094 Fund balances - ending $ 18,943,765 $ 22,335,458 $ 3,391,693 $ 17,943,765 53

120 DAVIS SCHOOL DISTRICT Comparative Balance Sheets Debt Service Fund June 30, 2012 and Assets: Cash and investments $ - $ 4,135,795 Receivables - property taxes 38,064,220 39,435,036 Total assets $ 38,064,220 $ 43,570,831 Liabilities and fund balances: Liabilities: Accounts payable $ - $ 91,417 Deferred revenue - property taxes 37,001,252 36,934,021 Due to other funds 662,250 - Total liabilities 37,663,502 37,025,438 Fund balances: Restricted for: Debt service 400,718 6,545,393 Total fund balances 400,718 6,545,393 Total liabilities and fund balances $ 38,064,220 $ 43,570,831 54

121 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Debt Service Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Amounts Amounts Final Budget Amounts Revenues: Property taxes $ 40,330,500 $ 40,580,369 $ 249,869 $ 43,762,293 Expenditures: Debt service: Bond principal 28,935,000 28,935,000-27,725,000 Bond interest 17,774,694 17,774,694-17,124,320 Bond issuance costs ,612 Fees and miscellaneous charges 30,000 15,350 14,650 14,255 Total expenditures 46,739,694 46,725,044 14,650 45,079,187 Excess (deficiency) of revenues over (under) expenditures (6,409,194) (6,144,675) 264,519 (1,316,894) Other financing sources (uses): Refunding bonds issued ,410,000 Refunding bonds premium ,511,216 Refunded bonds escrow payment (44,700,377) Total other financing sources (uses) ,839 Net change in fund balances (6,409,194) (6,144,675) 264,519 (1,096,055) Fund balances - beginning 6,545,393 6,545,393-7,641,448 Fund balances - ending $ 136,199 $ 400,718 $ 264,519 $ 6,545,393 55

122 DAVIS SCHOOL DISTRICT Comparative Balance Sheets Capital Projects Fund June 30, 2012 and Assets: Cash and investments $ 60,209,414 $ 61,390,064 Receivables: Property taxes 16,270,535 10,511,586 Other local 13,375 72,024 State of Utah - 34,091 Due from General Fund 232,067 - Total assets $ 76,725,391 $ 72,007,765 Liabilities and fund balances: Liabilities: Accounts payable $ 11,708,106 $ 6,950,499 Due to other funds - 4,376,907 Deferred revenue - property taxes 15,703,657 9,283,939 Total liabilities 27,411,763 20,611,345 Fund balances: Restricted for: Capital projects 49,313,628 51,396,420 Total fund balances 49,313,628 51,396,420 Total liabilities and fund balances $ 76,725,391 $ 72,007,765 56

123 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Projects Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Revenues: Amounts Amounts Final Budget Amounts Local sources: Property taxes $ 19,467,200 $ 18,804,702 $ (662,498) $ 12,057,240 Earnings on investments 300, ,354 44, ,130 Other local revenue 415, ,668 (259,332) 195,999 State building aid 140, , ,525 Total revenues 20,322,771 19,445,295 (877,476) 12,843,894 Expenditures: Capital outlay: Buildings and improvements 68,792,645 50,637,235 18,155,410 53,277,524 Equipment 7,034,600 7,396,272 (361,672) 5,743,642 Other 352, , , ,852 Debt service: Bond issuance costs 202, ,980 (19,780) 255,210 Capital lease payments 647, ,310-1,565,081 Total expenditures 77,029,455 59,093,541 17,935,914 61,153,309 Excess (deficiency) of revenues over (under) expenditures (56,706,684) (39,648,246) 17,058,438 (48,309,415) Other Financing Sources (Uses): General obligation bonds issued 35,000,000 35,000,000-45,000,000 General obligation bonds premium 2,543,576 2,543, ,687 Proceeds from sale of capital assets - 21,878 21,878 60,554 Total other financing sources (uses) 37,543,576 37,565,454 21,878 45,630,241 Net change in fund balances (19,163,108) (2,082,792) 17,080,316 (2,679,174) Fund balances - beginning 51,396,420 51,396,420-54,075,594 Fund balances - ending $ 32,233,312 $ 49,313,628 $ 17,080,316 $ 51,396,420 57

124 DAVIS SCHOOL DISTRICT Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 Special Revenue State Total School Student Multi-District Nonmajor Food Activities Program Governmental Services Fund Fund Funds Assets: Cash and investments $ 631,636 $ 9,701,255 $ - $ 10,332,891 Receivables: Other local 6, ,821 State of Utah 1,333, ,333,898 Federal government 235,706-63, ,920 Due from other funds - - 1,410,510 1,410,510 Inventories 2,080, ,080,190 Total assets $ 4,288,251 $ 9,701,255 $ 1,473,724 $ 15,463,230 Liabilities and fund balances: Liabilities: Accounts payable $ 140,702 $ 44,906 $ - $ 185,608 Deferred revenue - local - 27,425-27,425 Total liabilities 140,702 72, ,033 Fund balances: Nonspendable: Inventories 2,080, ,080,190 Restricted for: School food services 2,067, ,067,359 State multi-district program - - 1,473,724 1,473,724 Committed to: Schools - 9,628,924-9,628,924 Total fund balances 4,147,549 9,628,924 1,473,724 15,250,197 Total liabilities and fund balances $ 4,288,251 $ 9,701,255 $ 1,473,724 $ 15,463,230 58

125 Revenues: Local sources: DAVIS SCHOOL DISTRICT Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2012 Special Revenue State Total School Student Multi-District Nonmajor Food Activities Program Governmental Services Fund Fund Funds Earnings on investments $ - $ 138,979 $ - $ 138,979 School lunch sales 7,969, ,969,119 Student fees - 11,324,756-11,324,756 Other local revenue 474,109 2,535,887 19,313 3,029,309 State of Utah 3,553,525-2,123,616 5,677,141 Federal government 11,474, ,829 11,577,877 Total revenues 23,470,801 13,999,622 2,246,758 39,717,181 Expenditures: Current: Food 10,679, ,679,647 Salaries and benefits 7,953,739 1,152,725 2,917 9,109,381 Indirect charges 2,593, ,593,983 Purchased services - 905,195 1,982,714 2,887,909 Supplies and equipment - 11,256,949 53,717 11,310,666 Other 2,041, ,041,473 Total expenditures 23,268,842 13,314,869 2,039,348 38,623,059 Excess of revenues over expenditures / net change in fund balances 201, , ,410 1,094,122 Fund balances - beginning 3,945,590 8,944,171 1,266,314 14,156,075 Fund balances - ending $ 4,147,549 $ 9,628,924 $ 1,473,724 $ 15,250,197 59

126 DAVIS SCHOOL DISTRICT Comparative Balance Sheets School Food Services Fund Nonmajor Special Revenue Fund June 30, 2012 and Assets: Cash and investments $ 631,636 $ 235,252 Receivables: Local 6,821 - State of Utah 1,333,898 1,145,451 Federal government 235, ,492 Inventories 2,080,190 2,419,282 Total assets $ 4,288,251 $ 4,091,477 Liabilities and fund balances: Liabilities: Accounts payable $ 140,702 $ 145,887 Fund balances: Nonspendable: Inventories 2,080,190 2,419,282 Restricted for: School food services 2,067,359 1,526,308 Total fund balances 4,147,549 3,945,590 Total liabilities and fund balances $ 4,288,251 $ 4,091,477 60

127 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual School Food Services Fund Nonmajor Special Revenue Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Amounts Amounts Final Budget Amounts Revenues: Local sources: School lunch sales $ 8,486,500 $ 7,969,119 $ (517,381) $ 8,069,906 Other local revenue 459, ,109 14, ,478 State of Utah subsidies 3,377,700 3,553, ,825 3,291,921 Federal sources: Federal government subsidies 10,014,600 9,795,681 (218,919) 9,675,515 Contributed food commodities 1,720,000 1,678,367 (41,633) 1,710,933 Total revenues 24,058,300 23,470,801 (587,499) 23,142,753 Expenditures: Current: Food 10,694,700 10,679,647 15,053 8,943,773 Salaries and benefits 9,023,800 7,953,739 1,070,061 8,740,467 Indirect charges 1,866,100 2,593,983 (727,883) 2,200,000 Other 2,473,700 2,041, ,227 2,030,313 Total expenditures 24,058,300 23,268, ,458 21,914,553 Excess of revenues over expenditures / net change in fund balances - 201, ,959 1,228,200 Fund balances - beginning 3,945,590 3,945,590-2,717,390 Fund balances - ending $ 3,945,590 $ 4,147,549 $ 201,959 $ 3,945,590 61

128 DAVIS SCHOOL DISTRICT Comparative Balance Sheets Student Activities Fund Nonmajor Special Revenue Fund June 30, 2012 and Assets: Cash and investments $ 9,701,255 $ 8,999,358 Liabilities and fund balances: Liabilities: Accounts payable $ 44,906 $ 36,990 Deferred revenue - local 27,425 18,197 Total liabilities 72,331 55,187 Fund balances: Committed to: Schools 9,628,924 8,944,171 Total fund balances 9,628,924 8,944,171 Total liabilities and fund balances $ 9,701,255 $ 8,999,358 62

129 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Student Activities Fund Nonmajor Special Revenue Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Amounts Amounts Final Budget Amounts Revenues: Local sources: Earnings on investments $ 105,200 $ 138,979 $ 33,779 $ 105,137 Student fees 11,325,100 11,324,756 (344) 10,594,501 Other local revenue 2,556,500 2,535,887 (20,613) 2,338,977 Total revenues 13,986,800 13,999,622 12,822 13,038,615 Expenditures: Current: Salaries and benefits 1,175,800 1,152,725 23, ,532 Purchased services 1,055, , , ,964 Supplies and equipment 11,755,400 11,256, ,451 10,467,951 Total expenditures 13,986,800 13,314, ,931 12,395,447 Excess of revenues over expenditures / net change in fund balances - 684, , ,168 Fund balances - beginning 8,944,171 8,944,171-8,301,003 Fund balances - ending $ 8,944,171 $ 9,628,924 $ 684,753 $ 8,944,171 63

130 DAVIS SCHOOL DISTRICT Comparative Balance Sheet State Multi-District Program Fund Nonmajor Special Revenue Fund June 30, 2012 and Assets: Cash and investments $ - $ 1,245,314 Receivables - federal government 63,214 21,000 Due from other funds 1,410,510 - Total assets $ 1,473,724 $ 1,266,314 Liabilities and fund balances: Liabilities: Accounts payable $ - $ - Fund balances: Restricted for: State multi-district program 1,473,724 1,266,314 Total fund balances 1,473,724 1,266,314 Total liabilities and fund balances $ 1,473,724 $ 1,266,314 64

131 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual State Multi-District Program Fund Nonmajor Special Revenue Fund Year Ended June 30, 2012, With Comparative Totals for Final Budgeted Actual Variance with Actual Amounts Amounts Final Budget Amounts Revenues: Local revenue $ 17,800 $ 19,313 $ 1,513 $ 9,264 State of Utah 2,126,000 2,123,616 (2,384) 1,955,004 Federal government - 103, ,829 21,000 Total revenues 2,143,800 2,246, ,958 1,985,268 Expenditures: Current: Salaries and benefits 3,300 2, ,321 Purchased services 3,355,514 1,982,714 1,372,800 1,677,710 Supplies and equipment 51,300 53,717 (2,417) 76,101 Total expenditures 3,410,114 2,039,348 1,370,766 1,756,132 Excess (deficiency) of revenues over (under) expenditures / net change in fund balances (1,266,314) 207,410 1,473, ,136 Fund balances - beginning 1,266,314 1,266,314-1,037,178 Fund balances - ending $ - $ 1,473,724 $ 1,473,724 $ 1,266,314 65

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133 Section III Statistical

134 STATISTICAL SECTION This part of the Davis School District's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the District's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the District's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 67

135 DAVIS SCHOOL DISTRICT Net Assets by Component Last Ten Fiscal Years (accrual basis of accounting) Governmental activities: Invested in capital assets, net of related debt $ 173,064,860 $ 174,860,195 $ 162,525,261 $ 172,706,765 $ 134,624,761 $ 149,364,856 $ 122,391,589 $ 124,199,055 $ 124,238,028 $ 116,182,367 Restricted 30,840,222 29,696,408 37,552,880 19,656,001 40,979,044 2,667,453 14,663,747 3,971,276 5,578,548 7,314,576 Unrestricted 17,903,393 11,562,746 5,341,079 4,390,406 (1,726,125) (4,346,827) (5,857,924) (2,772,659) (1,896,086) (2,148,750) Total governmental activities net assets 221,808, ,119, ,419, ,753, ,877, ,685, ,197, ,397, ,920, ,348,193 Business-type activities: Invested in capital assets, net of related debt 2,306,453 2,471,868 8,601,952 9,050,435 9,421,174 9,872,671 10,285,758 10,506,045 11,003,534 9,840,343 Restricted Unrestricted 4,306,150 3,496,327 5,303,161 4,668,112 5,845,245 4,637,536 2,583,417 1,220, , ,829 Total business-type activities net assets 6,612,603 5,968,195 13,905,113 13,718,547 15,266,419 14,510,207 12,869,175 11,726,304 11,519,838 10,054,172 Primary government: Invested in capital assets, net of related debt 175,371, ,332, ,127, ,757, ,045, ,237, ,677, ,705, ,241, ,022,710 Restricted 30,840,222 29,696,408 37,552,880 19,656,001 40,979,044 2,667,453 14,663,747 3,971,276 5,578,548 7,314,576 Unrestricted 22,209,543 15,059,073 10,644,240 9,058,518 4,119, ,709 (3,274,507) (1,552,400) (1,379,782) (1,934,921) Total primary government net assets $ 228,421,078 $ 222,087,544 $ 219,324,333 $ 210,471,719 $ 189,144,099 $ 162,195,689 $ 144,066,587 $ 137,123,976 $ 139,440,328 $ 131,402,365 Note: The School Food Services Fund was reclassified from a business-type activity to a governmental activity effective July 1,

136 DAVIS SCHOOL DISTRICT Expenses, Program Revenue, and Net (Expense) Revenue Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities: Instruction $ 321,957,585 $ 312,117,909 $ 310,189,021 $ 316,419,648 $ 315,325,500 $ 253,530,785 $ 239,681,284 $ 230,210,116 $ 216,235,269 $ 207,796,373 Supporting services: Student 14,678,910 14,411,550 14,938,346 14,480,533 13,436,051 11,887,545 11,482,626 10,904,832 10,340,410 10,068,576 Instructional staff 16,766,753 17,203,966 17,540,865 18,784,230 17,679,053 15,303,396 14,268,236 13,928,829 14,172,015 12,560,334 District administration 2,580,567 2,563,461 2,530,814 2,380,765 3,223,304 3,272,516 2,871,469 2,779,347 2,576,429 2,582,947 School administration 25,766,865 25,410,359 24,433,070 24,114,226 23,358,895 21,054,535 19,637,675 18,781,192 17,870,998 16,711,711 Central 12,138,177 11,127,059 10,967,498 11,250,051 11,225,624 9,659,034 8,842,764 8,332,384 8,432,651 7,726,503 Operation and maintenance of facilities 40,874,660 39,985,531 39,100,467 40,207,052 39,353,038 36,471,202 34,719,958 31,546,601 28,782,093 26,660,315 Student transportation 12,996,197 12,034,150 11,700,687 13,051,891 13,318,469 12,437,899 12,048,701 9,691,248 9,409,323 8,677,925 School food service 23,662,972 22,300, Interest on long-term liabilities 16,129,644 17,752,462 16,246,317 15,913,160 13,534,129 12,435,282 12,102,047 11,129,849 8,837,120 8,877,188 Total governmental activities expenses 487,552, ,907, ,647, ,601, ,454, ,052, ,654, ,304, ,656, ,661,872 Business-type activities: School food services ,545,474 23,044,968 20,750,195 18,838,343 17,914,642 16,939,064 15,980,327 15,683,848 Pioneer Adult Rehabilitation Center 7,507,772 9,090,860 9,375,339 9,317,305 7,722,053 7,788,524 7,629,873 7,597,058 7,407,741 6,689,259 Total business-type activities expenses 7,507,772 9,090,860 30,920,813 32,362,273 28,472,248 26,626,867 25,544,515 24,536,122 23,388,068 22,373,107 Total primary government expenses $ 495,060,102 $ 483,998,003 $ 478,567,898 $ 488,963,829 $ 478,926,311 $ 402,679,061 $ 381,199,275 $ 361,840,520 $ 340,044,376 $ 324,034,979 Program Revenues Governmental activities: Charges for services: Instruction $ 5,615,784 $ 5,121,667 $ 5,344,050 $ 6,097,770 $ 5,685,499 $ 6,101,367 $ 5,110,542 $ 5,101,662 $ 3,960,580 $ 5,546,152 Operation and maintenance of facilities 219, , , , , ,952 98,718 1,113, ,215 88,902 School food services 8,443,228 8,464, Operating grants and contributions 113,514, ,641,078 92,780,152 93,062,061 89,205,740 80,263,213 75,607,227 59,393,900 72,457,836 52,317,066 Total governmental activities program revenues 127,793, ,504,383 98,298,730 99,472,821 95,292,907 87,289,532 80,816,487 65,609,123 76,527,631 57,952,120 Business-type activities: Charges for services: School food services - 8,624,099 9,258,379 9,317,741 8,561,595 8,049,391 7,653,133 7,122,428 7,060,491 Pioneer Adult Rehabilitation Center 7,291,473 8,868,745 8,163,327 7,850,429 7,585,887 7,968,431 7,425,563 6,991,536 6,609,824 6,351,109 Operating grants and contributions 844, ,656 14,307,910 13,667,393 12,324,832 11,737,873 11,212,432 10,097,919 11,121,482 9,525,760 Total business-type activities program revenues 8,135,582 9,727,401 31,095,336 30,776,201 29,228,460 28,267,899 26,687,386 24,742,588 24,853,734 22,937,360 Total primary government program revenues $ 135,928,603 $ 135,231,784 $ 129,394,066 $ 130,249,022 $ 124,521,367 $ 115,557,431 $ 107,503,873 $ 90,351,711 $ 101,381,365 $ 80,889,480 Net (expense)/revenue Governmental activities $ (359,759,309) $ (349,402,760) $ (349,348,355) $ (357,128,735) $ (355,161,156) $ (288,762,662) $ (274,838,273) $ (271,695,275) $ (240,128,677) $ (243,709,752) Business-type activities 627, , ,523 (1,586,072) 756,212 1,641,032 1,142, ,466 1,465, ,253 Total primary government net expense $ (359,131,499) $ (348,766,219) $ (349,173,832) $ (358,714,807) $ (354,404,944) $ (287,121,630) $ (273,695,402) $ (271,488,809) $ (238,663,011) $ (243,145,499) General Revenues and Other Changes in Net Assets Governmental activities: Property taxes levied for: General purposes $ 71,789,469 $ 69,968,472 $ 61,965,768 $ 58,647,721 $ 52,927,454 $ 47,794,781 $ 47,640,833 $ 45,875,875 $ 43,524,583 $ 41,255,388 Transportation 3,813,543 3,602,265 2,578,690 2,527,051 2,335,233 1,959,023 1,891,874 1,789,916 1,747,691 1,554,397 Recreation 3,775,682 3,541,738 3,121,559 3,185,950 2,950,136 2,804,354 2,702,677 2,553,765 2,488,801 1,554,397 Debt service 40,360,346 43,590,844 45,311,846 47,200,296 38,948,551 34,497,583 31,584,472 28,899,586 27,952,903 27,372,285 Capital outlay 19,136,415 12,339,103 12,717,483 12,451,258 11,512,718 10,962,477 10,577,297 10,046,025 9,801,214 9,283,793 Federal and state revenue not restricted to specific purposes 206,430, ,946, ,766, ,038, ,324, ,629, ,255, ,206, ,464, ,013,017 Earnings on investments 1,523,932 1,203,598 1,414,418 2,974,785 5,270,686 5,265,672 3,583,858 3,155, ,855 1,399,845 Miscellaneous 18,618,204 16,022,937 18,137,903 17,979,165 20,191,090 6,337,369 2,401,407 (354,693) 34,027 1,825,090 Business-type activities: Earnings on investments 16,598 13,092 12,043 38, Total primary government general revenues $ 365,465,033 $ 357,228,945 $ 358,026,446 $ 380,042,427 $ 374,460,582 $ 305,250,732 $ 280,638,013 $ 269,172,457 $ 243,886,021 $ 253,258,212 Change in Net Assets Governmental activities $ 5,689,126 $ 7,813,093 $ 8,666,048 $ 22,875,492 $ 19,299,426 $ 16,488,070 $ 5,799,740 $ (2,522,818) $ 3,757,344 $ 9,548,460 Business-type activities 644, , ,566 (1,547,872) 756,212 1,641,032 1,142, ,466 1,465, ,253 Total primary government $ 6,333,534 $ 8,462,726 $ 8,852,614 $ 21,327,620 $ 20,055,638 $ 18,129,102 $ 6,942,611 $ (2,316,352) $ 5,223,010 $ 10,112,713 Note: The School Food Services Fund was reclassified from a business-type activity to a governmental activity effective July 1,

137 DAVIS SCHOOL DISTRICT Fund Balances - Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Years Ended June 30, 2003 to 2012 General Fund: Nonspendable (Inv. & Prepaid) $ 1,563,781 $ 1,524,352 $ 1,871,715 $ 2,891,149 $ 3,068,975 $ 1,619,498 $ 1,668,283 $ 1,395,663 $ 819,464 $ 878,232 Restricted for State Programs - - 4,833,446 3,353,937 3,638,413 2,153,217 1,248,058 3,346,244 3,127,025 2,186,392 Committed Workers Comp Res. 300, , , , , , , , , ,000 Committed Termination Ben. 4,000,000 4,000,000 3,500,000 3,000,000 2,500,000 1,500, , Assigned 3,832, Unaasigned 12,639,259 12,119,413 9,683,447 7,461, ,524 1,912,383 2,115, ,701 1,000,198 1,386,333 Total fund balances $ 22,335,458 $ 17,943,765 $ 20,188,608 $ 17,006,762 $ 9,752,912 $ 7,485,098 $ 6,081,412 $ 5,279,608 $ 5,196,687 $ 4,700,957 Debt Service Fund: Restricted for Debt Service $ 400,718 $ 6,545,393 $ 7,641,448 $ 6,642,114 $ 2,404,428 $ 804,090 $ 689,543 $ (27,606) $ 229,727 $ 3,374,601 Total fund balances $ 400,718 $ 6,545,393 $ 7,641,448 $ 6,642,114 $ 2,404,428 $ 804,090 $ 689,543 $ (27,606) $ 229,727 $ 3,374,601 Capital Projects Fund: Restricted for Capital Projects $ 49,313,628 $ 51,396,420 $ 54,075,594 $ 1,658,065 $ 81,539,741 $ 202,890 $ 9,894,442 $ 36,639,062 $ 22,009,309 $ 19,245,177 Total fund balances $ 49,313,628 $ 51,396,420 $ 54,075,594 $ 1,658,065 $ 81,539,741 $ 202,890 $ 9,894,442 $ 36,639,062 $ 22,009,309 $ 19,245,177 Nonmajor Governmental Funds: Nonspendable (Inventory) $ 2,080,190 $ 2,419,282 $ - $ - $ - $ - $ - $ - $ - $ - Restricted for Nutrition Services 3,541,083 2,792,622 1,037, , , ,747 55,004 41, , ,335 Committed to Schools 9,628,924 8,944,171 8,301,003 7,752,907 7,357, Total fund balances $ 15,250,197 $ 14,156,075 $ 9,338,181 $ 8,660,474 $ 7,904,535 $ 242,747 $ 55,004 $ 41,954 $ 178,261 $ 192,335 Total Governmental Funds: Nonspendable (Inv. & Prepaid) $ 3,643,971 $ 3,943,634 $ 1,871,715 $ 2,891,149 $ 3,068,975 $ 1,619,498 $ 1,668,283 $ 1,395,663 $ 819,464 $ 878,232 Restricted 53,255,429 60,734,435 67,587,666 12,561,683 88,129,715 3,402,944 11,887,047 39,999,654 25,544,322 24,998,505 Committed 13,928,924 13,244,171 12,101,003 11,052,907 10,157,402 1,800,000 1,050, , , ,000 Assigned 3,832, Unaasigned 12,639,259 12,119,413 9,683,447 7,461, ,524 1,912,383 2,115, ,701 1,000,198 1,386,333 Total fund balances $ 87,300,001 $ 90,041,653 $ 91,243,831 $ 33,967,415 $ 101,601,616 $ 8,734,825 $ 16,720,401 $ 41,933,018 $ 27,613,984 $ 27,513,070 Note: The School Food Services Fund was reclassified from a business-type activity to a governmental activity effective July 1, As a result of this change, the beginning net asset balance was increased by $2,717,390. Prior years have not been restated. * Note: The Student Activities Fund was reclassified from an agency fund to a special revenue fund effective July 1, As a result of this change, the beginning net asset balance was increased by $6,892,772. Prior Years have not been restated. Notes: Nonspendable includes inventories that are not expected to be converted to cash. Restricted includes net fund resources of the District that are subject to external contraints due to state or federal laws, or externally imposed conditions by grantors or creditors. Committed balances reflect the District's self-imposed limitation on the use of otherqise available expendable financial resources in government funds. Assigned balances in the general fund and other governmental funds are those that do not meet the requirements of restricted or committed but that are intended to be used for specific purposes. Unassigned balances in the general fund are all other available net fund resources. The District implemented GASB Statement No. 54 in Fund balance categories for all years have been restated to reflect the new statement as if commitments and assignments had been approved in those years. Source: District records 70

138 DAVIS SCHOOL DISTRICT Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Years Ended June 30, 2003 to 2012 Revenues: Property taxes $ 139,024,115 $ 133,065,138 $ 125,590,761 $ 122,201,760 $ 107,842,358 $ 98,061,449 $ 94,764,236 $ 89,175,738 $ 85,466,645 $ 81,232,455 Interest 1,523,932 1,203,598 1,414,418 2,974,785 5,270,686 5,265,672 3,583,858 3,155, ,855 1,399,845 Other local sources 24,944,457 21,828,606 23,653,481 24,296,610 25,684,292 13,244,520 7,440,822 5,860,530 4,103,822 7,460,144 School lunch sales 7,969,119 8,069, State of Utah 275,696, ,306, ,915, ,493, ,207, ,278, ,993, ,841, ,417, ,381,451 Federal government 44,248,357 62,281,326 47,631,338 49,606,135 26,322,766 26,614,635 24,868,938 25,759,457 24,505,419 21,948,632 Total revenues 493,406, ,755, ,205, ,573, ,327, ,464, ,651, ,792, ,365, ,422,527 Expenditures: Current: Instruction 282,501, ,551, ,043, ,621, ,577, ,498, ,582, ,179, ,750, ,907,872 Supporting services: Students 14,514,691 14,254,115 14,954,793 14,352,317 13,312,679 11,782,588 11,362,816 10,782,609 10,253,567 9,986,622 Instructional staff 16,651,193 17,104,002 17,440,418 18,677,876 17,574,702 15,202,804 14,165,716 13,826,643 13,606,938 12,437,559 District administration 2,550,252 2,553,577 2,518,401 2,362,001 3,204,530 3,253,753 2,851,311 2,758,154 2,555,220 2,564,213 School administration 24,860,824 24,543,982 24,238,662 23,421,684 22,712,165 20,512,554 19,052,775 18,186,049 17,458,085 16,166,539 Central 11,754,227 10,739,697 10,536,906 10,896,515 10,946,328 9,428,097 8,584,891 8,059,917 7,704,925 7,501,076 Operation and maint of facilities 39,348,007 38,414,026 38,155,323 38,766,895 38,100,173 35,542,521 33,694,624 30,770,797 29,447,103 25,739,092 Student transportation 11,823,524 10,863,057 10,460,090 11,809,938 12,138,708 11,153,436 11,033,880 8,790,782 8,457,092 7,751,334 School food service 23,268,842 21,914, Capital outlay 58,224,251 59,333,018 70,280,016 94,623,465 68,920,760 77,481,911 41,118,011 47,246,910 61,892,934 63,777,728 Debt service: Tax anticipation note interest 622, , , ,904 1,345,800 1,373, , , , ,250 Bond principal 28,935,000 27,725,000 28,825,000 27,380,000 23,605,000 22,880,000 19,940,000 18,995,000 22,780,000 17,925,000 Bond interest 17,774,694 17,124,320 15,515,618 15,242,302 12,968,323 11,194,210 11,009,634 9,921,781 7,898,464 7,939,123 Advance funding escrow , Bond issuance costs 221, ,822 1,016, , , , , ,544 Capital lease payments 647,310 1,565,081 1,847,456 2,208,107 2,208,107 2,208,107 1,483,838 1,298,521 1,491,306 1,206,855 Fees and miscellaneous charges 15,350 14,255 23,050 14,520 38,285 46,851 40, , , ,973 Total expenditures 533,713, ,826, ,641, ,322, ,078, ,836, ,915, ,873, ,415, ,188,780 Excess (deficiency) of revenues over (under) expenditures (40,307,106) (44,071,134) (55,436,309) (67,749,116) (39,750,629) (59,372,446) (27,263,837) (42,081,486) (59,050,099) (52,766,253) Other financing sources (uses): General obligation bonds issued 35,000,000 45,000, ,500, ,000,000 47,000,000-52,200,000 55,000,000 38,930,000 General obligation bonds premium 2,543, ,687 1,209,725-2,364,047 1,062,080-1,082,905 1,327,852 2,028,833 Refunding bond issued - 39,410, ,905, Refunding bond premium - 5,511, ,894, Payment to refunded bond escrow agent - (44,700,377) (26,020,216) - - Capital leases ,617,600 3,064,491 1,455,276 1,964, ,000 1,808,860 Proceeds from sale of capital assets 21,878 60,554 3, ,915 1,743, , , ,294 1,872, ,239 Total other financing sources (uses) 37,565,454 45,851, ,712, , ,724,648 51,386,870 2,051,220 56,400,520 59,151,013 43,055,932 Net change in fund balances (2,741,652) 1,779,946 57,276,416 (67,634,201) 85,974,019 (7,985,576) (25,212,617) 14,319, ,914 (9,710,321) Fund balances - beginning 90,041,653 88,261,707 33,967, ,601,616 15,627,597 16,720,401 41,933,018 27,613,984 27,513,070 37,223,391 Fund balances - ending $ 87,300,001 $ 90,041,653 $ 91,243,831 $ 33,967,415 $ 101,601,616 $ 8,734,825 $ 16,720,401 $ 41,933,018 $ 27,613,984 $ 27,513,070 Debt service as a percentage of noncapital expenditures 9.7% 9.7% 10.5% 9.8% 8.8% 9.8% 9.3% 9.4% 10.1% 9.1% * Note: The School Food Services Fund from an enterprise fund to a special revenue fund effective July 1, As a result of this change, the beginning net asset balance was increased by $2,717,390. Prior Years have not been restated. * Note: The Student Activities Fund was reclassified from an agency fund to a special revenue fund effective July 1, As a result of this change, the beginning net asset balance was increased by $6,892,772. Prior Years have not been restated. ** Note: The beginning fund balances for FY2011 were restated for prior period adjustment in the General Fund and added to the fund balance in School Food Services Fund. 71

139 DAVIS SCHOOL DISTRICT Assessed Value and Estimated Actual Value of Taxable Property Last Ten Tax Years December 31, 2002 through 2011 Assessed Total Taxable Total Estimated Value as a Tax Commercial & Assessed Direct Actual Percentage of Year Residential Industrial Agriculture Personal Value Tax Rate Value Actual Value 2011 $ 10,127,751,543 $ 3,993,246,252 $ 117,895,470 $ 1,441,813,546 $ 15,680,706, $ 25,595,666, % ,657,206,804 4,210,672, ,417,417 1,185,481,355 16,197,778, ,058,738, % ,031,774,065 4,035,424, ,847,356 1,307,517,190 16,532,563, ,477,711, % ,483,109,031 4,019,964, ,089,731 1,206,790,087 16,904,953, ,372,578, % ,955,671,253 3,141,846, ,379,683 1,059,363,010 14,280,260, ,432,352, % ,026,810,761 2,998,155, ,163, ,077,858 12,014,208, ,457,991, % ,154,484,948 3,589,684, ,545,034 26,354,229 10,890,068, ,135,120, % ,718,404,694 3,398,273, ,938,108 28,804,941 10,254,421, ,667,356, % ,578,592,182 3,076,474, ,213,529 31,431,844 9,786,712, ,509,725, % ,949,628,780 2,919,479, ,450,603 32,116,988 9,400,676, ,205,806, % * Source: Davis County Clerk / Auditor's Office 72

140 DAVIS SCHOOL DISTRICT Direct and Overlapping Property Tax Rates Last Ten Tax Years December 31, 2002 through 2011 (rate per $1 of assessed value) Davis School District direct rates: General Capital Outlay & Debt Service Tort Liability Special Transportation Recreation Total direct rate Overlapping Rates: * County Funds County Library Average Cities and Towns Miscellaneous Taxing Districts * Source: Davis County Clerk / Auditor's Office 73

141 DAVIS SCHOOL DISTRICT Principal Property Tax Payers Current Year and Nine Years Ago December 31, 2011 and 2002 December 31, 2011 December 31, 2002 Percent of Percent of District's Total District's Total Taxable Taxable Taxable Taxable Taxpayer Type of Business Value Rank Value Value Rank Value Chevron U.S.A. Inc Petroleum Refinery $ 349,539, % $ 87,445, % Freeport Center Distribution / Warehouse 190,756, % 101,494, % PacifiCorp Electrical Distribution 184,837, % 61,742, % Woods Cross Refining Comp - LLC Petroleum Distribution 162,234, % 43,137, % LHM Utah LLC Real Estate (Mall) 96,117, % 48,016, % Big West Oil Petroleum Distribution 84,858, % 29,274, % Wal-Mart Distribution / Retail sales 79,145, % n/a n/a n/a Smith s Food King Properties Distribution / Retail sales 67,849, % 69,820, % Qwest Communications Communication 69,766, % 107,966, % Davis Hospital & Medical Hospital Facilities 65,773, % n/a n/a n/a Questar Gas Natural Gas Utility 64,830, % 37,394, % Albertson s Distribution / Retail sales n/a n/a n/a 59,345, % Lifetime Products Manufacturing n/a n/a n/a 45,511, % Totals $ 1,415,707, % $ 691,147, % * Source: Davis County Clerk / Auditor's Office 74

142 DAVIS SCHOOL DISTRICT Property Tax Levies and Collections Last Ten Tax Years December 31, 2002 through 2011 Property Taxes Property Taxes Collected within Total Property Tax Tax Year Levied the Calendar Year of the Levy Collections Collections to Date Ended For The Percentage in Subsequent Percentage December 31, Calendar Year Amount of Levy Years Amount of Levy 2011 $ 132,718,042 $ 123,390, % $ - $ 123,390, % ,353, ,302, % 7,814, ,117, % ,595, ,840, % 7,108, ,949, % ,309, ,906, % 8,057, ,963, % ,911,471 89,489, % * 10,245,890 99,735, % ,572,399 81,008, % 4,561,802 85,570, % ,303,555 76,725, % 4,577,397 81,302, % ,870,844 73,207, % 4,663,398 77,870, % ,661,072 71,635, % 4,025,308 75,661, % ,539,146 67,537, % 3,995,771 71,533, % * In 2007, there was a tax abatement of $5,698,691. Were it not the case, the collection rate would have been 94.99%. Source: Davis County Treasurer's Office (excludes fee-in-lieu and age-based collections on motor vehicles). This schedule recognizes collections on a calendar year (tax year) cash basis, whereas property tax collections reported in the basic financial statements are on a fiscal year modified accrual basis of accounting. 75

143 DAVIS SCHOOL DISTRICT Ratios of Outstanding Debt Last Ten Fiscal Years Debt As Fiscal Outstanding Net General Net Net Debt As Percentage Year General Bonded Debt As Bonded Bonded Percentage of Total Debt Debt Ended Obligation Percentage of Debt Per Debt Per Capital Total of Taxable Personal Per Per June 30, Bonds Taxable Value Capita Student Leases Debt Value Income Capita Student 2012 $ 419,690, % $ 1,363 $ 6,196 $ 663,206 $ 420,353, % (1) $ 1,366 $ 6, ,625, % 1,350 6,265 2,200, ,825, % 4.10% 1,357 6, ,175, % 1,294 6,083 3,665, ,840, % 4.07% 1,306 6, ,500, % 1,045 4,853 5,029, ,529, % 3.33% 1,062 4, ,880, % 1,158 5,312 7,621, ,501, % 3.76% 1,184 5, ,485, % 864 3,939 7,663, ,148, % 2.91% 890 4, ,365, % 803 3,582 6,698, ,063, % 2.84% 827 3, ,305, % 905 4,014 6,783, ,088, % 3.37% 930 4, ,890, % 805 3,514 5,815, ,705, % 3.13% 827 3, ,670, % 700 3,001 6,110, ,780, % 2.79% 724 3,104 (1) Personal income data was not available at time of printing this report 76

144 DAVIS SCHOOL DISTRICT Overlapping and Underlying Governmental Activities Debt June 30, 2012 District's Entity's District's 2011 Estimated Estimated General Estimated Taxable Portion of District's Obligation Portion of Taxing Entity Value (1) Taxable Value Percentage Debt Debt Overlapping: State of Utah $ 193,170,017,535 $ 15,680,706, % $ 3,487,680,000 $ 283,114,783 Davis County 15,680,706,811 15,680,706, % 19,805,000 19,805,000 Total Overlapping 302,919,783 Underlying: WBWCD (2) (3) 40,949,961,771 15,679,374, % 26,749,989 10,242,332 North Davis Sewer District 8,230,437,229 7,035,846, % 45,806,000 39,157,578 South Davis Rec. District (4) 5,918,427,058 5,918,427, % 14,185,000 14,185,000 North Salt Lake City (3) 1,326,990,653 1,326,990, % 3,135,000 - Clearfield City (3) 1,383,954,252 1,383,954, % 7,895,000 - Farmington City 985,019, ,019, % 4,265,000 4,265,000 West Bountiful City (3) 477,793, ,793, % 435,000 - Total Underlying 67,849,910 Total Overlapping and Underlying General Obligation Debt $ 370,769,693 Total Overlapping General Obligation Debt (Excluding the State) (5) $ 19,805,000 Total Direct General Obligation Bonded Indebtedness 419,690,000 Total Direct Capital Lease Debt 663,206 Total Direct and Overlapping General Obligation Debt (Exluding the State) (5) $ 440,158,206 (1) 2011 values are preliminary and subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The Weber Basin Water Conservancy District ("WBWCD") covers all of Morgan County, most of Davis County and Weber County, and portions of Box Elder and Summit Counties. Principal and interest on WBWCD general obligation bonds are paid from sales of water. WBWCD's outstanding general obligation bonds are limited ad valorem tax bonds. By law, WBWCD may levy a tax rate of up to to pay, first, for any outstanding general obligation indebtedness, then for operation and maintenance expenses, and then for any other lawful purpose (3) All or portions of these governmental entities' outstanding general obligation debt are supported by user fee revenues from water or sewer. The County's portion of overlapping general obligation debt has been reduced to the extent that such general obligation debt is supported by "user fee revenues". (4) South Davis Recreation District members are Bountiful, Centerville, North Salt Lake, Woods Cross, and West Bountiful. (5) The State's general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. (6) Overlapping governments are those that coincide, at least in part, with geographic boundaries of the District. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the taxpayers of the District. This process recognizes, that, when considering the District's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taxen into account. * Source: Davis County Clerk / Auditor's Office 77

145 DAVIS SCHOOL DISTRICT General Obligation Legal Debt Limit and Debt Capacity Last Ten Years Fiscal Estimated Fair Debt Limit Percentage Year Estimated Market Value for (4% of Fair General Debt Deferred Additional of Debt Ended Estimated Fair Value from Debt Incurring Market Obligation Issuance Amounts on Debt To Debt June 30, Market Value Uniform Fees Capacity Value) Debt Premiums Refunding Capacity Limit 2012 $ 25,595,666,942 $ 1,192,245,935 $ 26,787,912,877 $ 1,071,516,515 $ 419,690,000 $ 12,708,920 $ 2,577,474 $ 641,695, % ,058,738,383 1,219,363,049 26,278,101,432 1,051,124, ,625,000 11,842,324 3,082, ,739, % ,477,711,753 1,361,982,489 26,839,694,242 1,073,587, ,175,000 7,624, , ,387, % ,372,578,441 1,353,063,017 27,725,641,458 1,109,025, ,500,000 7,163, , ,096, % ,432,352,520 1,347,035,643 23,779,388, ,175, ,880,000 7,853, , ,309, % ,457,991,962 1,277,851,892 19,735,843, ,433, ,485,000 6,122,926 1,002, ,828, % ,135,120,877 1,237,153,267 18,372,274, ,890, ,365,000 5,602,338 1,137, ,060, % ,667,356,241 1,201,209,533 16,868,565, ,742, ,305,000 6,084,164 1,271, ,624, % ,509,725,213 1,377,761,676 15,887,486, ,499, ,890,000 3,506, , ,452, % ,205,806,672 1,180,455,311 15,386,261, ,450, ,670,000 2,398, , ,784, % 78

146 DAVIS SCHOOL DISTRICT Schedule of Annual Debt Service Requirements Years Ending June 30, 2013 to 2032 Year Ending Total June 30, Principal Interest Payment 2013 $ 29,635,000 $ 18,668,481 $ 48,303, ,495,000 17,200,098 43,695, ,975,000 16,093,922 43,068, ,115,000 14,959,484 43,074, ,540,000 13,694,574 46,234, ,475,000 12,302,834 44,777, ,470,000 10,881,001 38,351, ,535,000 9,717,711 38,252, ,890,000 8,460,722 33,350, ,410,000 7,343,853 28,753, ,620,000 6,372,056 21,992, ,210,000 5,700,108 21,910, ,845,000 4,986,058 21,831, ,500,000 4,234,478 21,734, ,210,000 3,437,280 21,647, ,980,000 2,578,098 21,558, ,990,000 1,689,644 16,679, ,530, ,544 13,515, ,180, ,044 7,565, ,085,000 96,406 3,181,406 $ 419,690,000 $ 159,787,393 $ 579,477,393 79

147 DAVIS SCHOOL DISTRICT Debt Service Schedule of Outstanding General Obligation Bonds Year Ended June 30, 2012 PRINCIPAL B 2005A 2005B AB 2011A 2011B 2011C 2012 $38,930,000 $55,000,000 $52,200,000 $24,905,000 $47,000,000 $55,000,000 $64,000,000 $43,000,000 $68,500,000 $45,000,000 $7,210,000 $32,200,000 $35,000,000 Total ,625,000 4,050,000 3,505,000 3,285,000 3,100,000 4,300,000 2,425,000 1,525,000 1,210,000-3,610, ,635, ,225,000 3,645, ,000 3,225,000 4,475,000 2,500,000 1,575, ,000-3,200,000 2,445,000-26,495, ,810,000 3,925,000 3,375,000 4,675,000 2,600,000 1,625, ,965,000-26,975, ,965,000 4,125,000 3,550,000 4,875,000 2,675,000 1,675, ,250,000-28,115, ,120,000 3,685,000 3,700,000 5,100,000 2,800,000 1,750,000 3,785, ,600,000-32,540, ,285,000-3,850,000 5,325,000 2,925,000 1,825,000 3,880,000 2,445,000-7,940,000-32,475, ,460,000-4,025,000 5,550,000 3,050,000 1,900,000 3,980,000 2,540, ,965,000 27,470, ,645,000-4,175,000 5,825,000 3,175,000 1,975,000 4,090,000 2,645, ,005,000 28,535, ,375,000 6,100,000 3,300,000 2,075,000 4,205,000 2,750, ,085,000 24,890, ,400,000 3,450,000 2,200,000 4,330,000 2,860, ,170,000 21,410, ,625,000 2,300,000 4,465,000 2,975, ,255,000 15,620, ,775,000 2,400,000 4,595,000 3,095, ,345,000 16,210, ,950,000 2,500,000 4,740,000 3,215, ,440,000 16,845, ,125,000 2,600,000 4,895,000 3,345, ,535,000 17,500, ,325,000 2,700,000 5,055,000 3,490, ,640,000 18,210, ,355,000 2,000,000 5,235,000 3,645, ,745,000 18,980, ,925,000 5,425,000 3,815, ,825,000 14,990, ,625,000 3,995, ,910,000 12,530, ,185, ,995,000 7,180, ,085,000 3,085,000 Total $ 2,625,000 $ 8,275,000 $ 32,435,000 $ 15,500,000 $ 33,375,000 $ 52,625,000 $ 54,055,000 $ 35,550,000 $ 66,240,000 $ 45,000,000 $ 6,810,000 $ 32,200,000 $ 35,000,000 $ 419,690,000 INTEREST B 2005A 2005B AB 2011A 2011B 2011C 2011C Total , ,000 1,344, ,400 1,460,188 2,408,063 2,364,019 1,518,500 3,188,270 1,938, ,400 1,464,350 1,476,292 18,668, ,000 1,203, ,150 1,336,188 2,225,313 2,285,206 1,457,500 3,165,885 1,938, ,000 1,464,350 1,218,957 17,200, ,039, ,750 1,174,938 2,035,125 2,197,706 1,410,250 3,149,573 1,938,556-1,342,100 1,218,956 16,093, , ,500 1,006,188 1,836,437 2,106,706 1,361,500 3,149,573 1,938,556-1,063,500 1,218,956 14,959, , , ,313 1,617,063 2,006,394 1,294,500 3,149,573 1,938, ,000 1,218,957 13,694, , ,063 1,387,562 1,866,394 1,224,500 3,007,635 1,938, ,000 1,218,956 12,302, , ,438 1,147,938 1,749,394 1,142,375 2,854,375 1,840, ,218,956 10,881, , , ,436 1,619,769 1,056,875 2,685,225 1,739, ,179,656 9,717, , ,750 1,484, ,125 2,505,265 1,633, ,099,456 8,460, ,001 1,336, ,375 2,309,733 1,523, ,016,057 7,343, ,181, ,375 2,108,388 1,408, ,256 6,372, ,017, ,375 1,900,765 1,289, ,056 5,700, , ,375 1,677,908 1,166, ,256 4,986, , ,250 1,443,278 1,037, ,657 4,234, , ,750 1,196, , ,256 3,437, , , , , ,656 2,578, , , , ,306 1,689, , , , , , , , ,406 96,406 Total $ 131,250 $ 500,000 $ 6,364,850 $ 2,540,050 $ 7,614,625 $ 14,425,688 $ 23,429,050 $ 15,371,875 $ 39,368,020 $ 26,061,424 $ 400,400 $ 6,432,300 $ 17,147,860 $ 159,787,393 TOTAL PAYMENT B 2005A 2005B AB 2011A 2011B 2011C 2011C Total ,756,250 4,381,000 4,849,194 4,056,400 4,560,188 6,708,063 4,789,019 3,043,500 4,398,270 1,938,556 3,882,400 1,464,350 1,476,292 48,303, ,394,000 4,848,994 1,087,150 4,561,188 6,700,313 4,785,206 3,032,500 3,890,885 1,938,556 3,328,000 3,909,350 1,218,957 43,695, ,849,969 4,511,750 4,549,938 6,710,125 4,797,706 3,035,250 3,149,573 1,938,556-8,307,100 1,218,956 43,068, ,852,569 4,515,500 4,556,188 6,711,437 4,781,706 3,036,500 3,149,573 1,938,556-8,313,500 1,218,956 43,074, ,848,969 3,869,250 4,555,313 6,717,063 4,806,394 3,044,500 6,934,573 1,938,556-8,301,000 1,218,957 46,234, ,849,169-4,548,063 6,712,562 4,791,394 3,049,500 6,887,635 4,383,556-8,337,000 1,218,956 44,777, ,852,769-4,559,438 6,697,938 4,799,394 3,042,375 6,834,375 4,380, ,183,956 38,351, ,848,219-4,538,375 6,695,436 4,794,769 3,031,875 6,775,225 4,384, ,184,656 38,252, ,560,939 6,693,750 4,784,831 3,033,125 6,710,265 4,383, ,184,456 33,350, ,704,001 4,786,331 3,054,375 6,639,733 4,383, ,186,057 28,753, ,806,081 3,044,375 6,573,388 4,383, ,184,256 21,992, ,792,956 3,052,375 6,495,765 4,384, ,184,056 21,910, ,793,363 3,053,375 6,417,908 4,381, ,185,256 21,831, ,780,737 3,050,250 6,338,278 4,382, ,182,657 21,734, ,784,800 3,039,750 6,251,080 4,385, ,186,256 21,647, ,609,363 2,221,625 6,158,110 4,383, ,185,656 21,558, ,056,625 6,054,950 4,384, ,183,306 16,679, ,948,438 4,383, ,183,556 13,515, ,383, ,181,256 7,565, ,181,406 3,181,406 Total $ 2,756,250 $ 8,775,000 $ 38,799,850 $ 18,040,050 $ 40,989,626 $ 67,050,688 $ 77,484,050 $ 50,921,875 $ 105,608,020 $ 71,061,424 $ 7,210,400 $ 38,632,300 $ 52,147,860 $ 579,477,393 80

148 DAVIS SCHOOL DISTRICT Demographic and Economic Statistics For the years School District Year Ended County Personal Per Capita Unemployment October 1 December 31 Population (1) Income (2) Income (2) Births (2) Deaths (2) Rate (3) Enrollment ,806 (4) (4) 5,704 1, % 67, ,479 10,145,680,816 33,104 5,799 1, % 66, ,656 9,880,372,440 32,115 6,069 1, % 65, ,915 9,635,617,225 31,915 6,203 1, % 65, ,029 9,330,242,022 31,518 6,148 1, % 64, ,547 8,765,472,730 30,590 6,037 1, % 62, ,278 8,100,394,302 29,109 5,665 1, % 62, ,916 7,430,686,912 27,632 5,591 1, % 60, ,038 6,920,947,656 26,412 5,444 1, % 60, ,099 6,619,053,753 25,947 5,099 1, % 59,536 Percentage Increase from 2002 to 2011: 20.7% (4) (4) 11.9% 24.9% 2.0% 13.8% (1) Davis County Department of Community & Economic Development. (2) Davis County Vital Statistics (3) Utah Department of Workforce Services (4) Personal income data was not available at time of printing this report 81

149 DAVIS SCHOOL DISTRICT Labor Market Data Davis County Years Ended June 30, 2003 to (1) Total civilian work force 146, , , , , , , , , ,938 Employed 137, , , , , , , , , ,368 Unemployed 8,427 7,090 10,275 8,614 4,783 3,690 3,990 5,370 6,174 6,570 Unemployment rate 5.8% 5.1% 7.1% 5.9% 3.3% 2.6% 2.9% 4.0% 4.7% 5.1% Total non-agricultural employment 105, , ,376 99, , , ,547 95,963 93,284 89,722 Mining Contract construction 6,810 6,331 6,742 7,285 9,053 10,658 9,447 8,287 7,492 6,861 Manufacturing 10,474 9,289 8,989 8,894 9,703 10,164 10,632 10,591 10,461 10,363 Trade, transportation and utilities 19,568 18,777 19,234 19,663 20,768 20,494 19,458 19,063 19,450 18,383 Information 1,435 1,297 1,103 1,041 1, Financial services 3,363 3,499 2,567 2,797 4,024 4,089 4,078 3,906 3,832 3,556 Professional and business services 12,732 12,096 12,949 12,605 12,107 11,880 10,534 9,221 8,220 7,739 Education and health services 12,089 11,496 11,070 10,500 10,128 9,377 9,004 8,637 8,319 8,003 Leisure and hospitality 9,150 8,840 9,732 9,472 9,905 9,744 8,948 8,503 8,304 8,013 Other services 2,828 2,790 2,780 2,869 3,035 3,122 3,033 2,734 2,771 2,673 Government 26,784 26,685 25,073 24,625 23,779 23,989 24,338 24,002 23,434 23,162 (1) Preliminary data through June (Source: Utah Department of Workforce Services.) 82

150 DAVIS SCHOOL DISTRICT Principal Employers Prior Year and Nine Years Ago Percent Percent of County of County Employment Employment Business Employees Rank (135,679) Employees Rank (118,331) Hill Air Force Base 10,000-14, % 20,000-25, % Davis School District 7,000-9, % 5,000-7, % Smith's Distribution Center 1,000-1, % 700-1, % Walmart 1,000-1, % % Lagoon Inc. 1,000-1, % 700-1, % Lifetime Products, Inc. 1,000-1, % 1,000-2, % Davis County 1,000-1, % 700-1, % ATK Space Systems / Alliant % % Davis Hospital and Medical Center % % State of Utah (In Davis County) % % Utility Trailer & Manufacturing % 700-1, % Fresh Market / Albertson's % % Amusement Services n/a n/a 0.0% % Associates Commerce Solutions n/a n/a 0.0% % Totals 24,250-39, % 31,550-42, % * Source: Davis County Clerk / Auditor's Office 83

151 DAVIS SCHOOL DISTRICT District Facilities and Personnel Positions Years Ended June 30, 2005 to Facilities Operated: Elementary Schools Junior High Schools High Schools Special Purpose Schools Total Number of School Buildings Full-Time Equivalent Positions of the District: Administrators, Managers School Principals School Assistant Principals / Interns Elementary Classroom Teachers 1, , , , , , , ,332.0 Secondary Classroom Teachers 1, , , , , , , ,072.0 Guidance Personnel Special Education Librarians / Media Specialists Supervisors of Instruction Other Professional Staff Teacher Assistants Secretarial Office Assistants Custodial Maintenance Nutrition Services Transportation Warehouse Total number of District positions FTE 5, , , , , , , ,577.2 Note: Statistics relating to district facilities and personnel positions were not available until * Source: Davis School District records 84

152 DAVIS SCHOOL DISTRICT Average Daily Membership and October Enrollment Years Ended June 30, 2003 to 2012 Fiscal Year Average Annual Annual Ending Daily Increase/ October 1st Increase/ June 30, Membership (Decrease) Enrollment (Decrease) ,044 1,339 67,778 1, , , , , , , ,004 1,366 64,551 1, , , ,729 1,700 62,349 1, , , , , , , Average Daily Membership equals total aggregate days of membership of all students divided by 180 days of school. Enrollment is taken each October 1st for that school year, and is a headcount of all students, including all kindergarten even though they are in membership for only half days. * Source: Davis School District records 85

153 DAVIS SCHOOL DISTRICT Expenditures by Function - General Fund Last Ten Fiscal Years Fiscal Year Ended June 30, Function Instruction $ 267,146,874 $ 265,400,085 $261,618,511 $271,071,924 $262,946,407 $228,285,305 $212,571,844 $203,302,250 $193,971,439 $189,170,366 Supporting services: 68.61% 69.02% 68.71% 69.10% 68.78% 67.83% 67.62% 68.38% 68.34% 69.54% Students 14,514,691 14,254,114 14,954,793 14,352,317 13,312,679 11,782,588 11,362,816 10,782,609 10,253,567 9,986, % 3.71% 3.93% 3.66% 3.48% 3.50% 3.62% 3.63% 3.61% 3.67% Instructional staff 16,651,193 17,104,002 17,440,418 18,677,876 17,574,702 15,202,804 14,165,716 13,826,643 13,606,938 12,437, % 4.45% 4.58% 4.76% 4.60% 4.52% 4.51% 4.65% 4.79% 4.57% District administration 2,550,252 2,553,577 2,518,401 2,362,001 3,204,530 3,253,753 2,851,311 2,758,154 2,555,220 2,564, % 0.66% 0.66% 0.60% 0.84% 0.97% 0.91% 0.93% 0.90% 0.94% School administration 24,860,824 24,543,982 24,238,662 23,421,684 22,712,165 20,512,554 19,052,775 18,186,049 17,458,085 16,166, % 6.38% 6.37% 5.97% 5.94% 6.10% 6.06% 6.12% 6.15% 5.94% Central 11,754,227 10,739,697 10,536,906 10,896,515 10,946,328 9,428,097 8,584,891 8,059,917 7,704,925 7,501, % 2.79% 2.77% 2.78% 2.86% 2.80% 2.73% 2.71% 2.71% 2.76% Operation & maintenance 39,348,007 38,414,026 38,155,323 38,766,895 38,100,173 35,542,521 33,694,624 30,770,797 29,447,103 25,739,092 of facilities 10.11% 9.99% 10.02% 9.88% 9.97% 10.56% 10.72% 10.35% 10.37% 9.46% Student transportation 11,823,524 10,863,058 10,460,090 11,809,938 12,138,708 11,153,436 11,033,880 8,790,782 8,457,092 7,751, % 2.83% 2.75% 3.01% 3.18% 3.31% 3.51% 2.96% 2.98% 2.85% Tax anticipation note 622, , , ,904 1,345,800 1,373, , , , ,250 interest 0.16% 0.17% 0.21% 0.24% 0.35% 0.41% 0.32% 0.27% 0.15% 0.27% Total Expenditures $389,272,140 $384,527,729 $380,708,537 $392,304,054 $382,281,492 $336,534,941 $314,312,468 $297,269,716 $283,873,424 $272,048,051 86

154 DAVIS SCHOOL DISTRICT Expenditures Per ADM by Function - General Fund Last Ten Fiscal Years Fiscal Year Ended June 30, Function Instruction $ 4,237 $ 4,301 $ 4,288 $ 4,464 $ 4,382 $ 3,893 $ 3,682 $ 3,629 $ 3,485 $ 3,408 Supporting services: Students Instructional staff District administration School administration Central Operation & maintenance of facilities Student transportation Tax anticipation note interest Total expenditures per ADM $ 6,175 $ 6,232 $ 6,240 $ 6,461 $ 6,371 $ 5,739 $ 5,445 $ 5,306 $ 5,101 $ 4,950 87

155 DAVIS SCHOOL DISTRICT Weighted Pupil Units (WPU'S) Regular WPU'S and Other WPU's by Formula Years Ended June 30, 2003 to 2012 WPU TYPE Regular Grades K-12 55,909 55,792 56,204 57,774 58,201 60,225 60,424 61,148 61,390 63,300 Other WPU's by Formula Professional staff 5,190 5,285 5,339 5,546 5,587 5,782 5,801 5,809 4,914 6,267 Administrative Cost Foreign Exch Students Special Education 7,037 7,767 8,022 7,994 8,127 8,568 8,689 8,934 8,894 9,302 Career and Technical Ed 2,672 2,532 2,682 2,731 2,923 3,297 2,971 2,996 2,928 2,890 Class-Size Reduction 3,624 3,618 3,649 3,737 3,647 3,925 4,011 4,042 4,132 4,205 Total other WPU's 18,539 19,218 19,708 20,023 20,300 21,592 21,512 21,810 20,902 22,698 Total All WPU's 74,448 75,010 75,912 77,797 78,501 81,817 81,936 82,958 82,292 85,998 * Source: Utah State Office of Education final recipient report Weighted Pupil Units 90,000 80,000 70,000 60,000 50,000 Other WPU's Regular WPU's 40,

156 DAVIS SCHOOL DISTRICT Student Enrollment Projections 90,000 80,000 Total Projected Enrollment 70,000 60,000 50,000 Elementary Enrollment 40,000 30,000 20,000 Junior High High School 10, These projections are based upon the State of Utah's Economic and Demographic Projections, from the Governor's Office of Planning and Budget. Information pertaining to Davis County is extracted, then adjusted for local birth rates and "in" and "out" migration factors to arrive at the final estimate. 89

157 DAVIS SCHOOL DISTRICT American College Test (ACT) Results Years Ended June 30, 2003 to 2012 AVERAGE SCORES on a 36 point scale Science Composite Composite Composite Year English Math Reading Reasoning District State Nation ** ** Beginning in 2012, Davis District as well as 50% of other districts in Utah participated in a pilot program where all students took the ACT. In the past this test was optional and mostly taken by college bound students who were high performing. Comparison by Subject Area - Davis District ** see note above English Math Reading Science Composite Score Comparison ** see note above Davis State Nation * Source: Davis School District and Utah State Office of Education records 90