$20,000,000* KENOSHA SCHOOL DISTRICT NO. 1 KENOSHA COUNTY, WISCONSIN TAX AND REVENUE ANTICIPATION PROMISSORY NOTES, SERIES 2018

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1 This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 6, 2018 SALE DATE AND TIME: September 13, :00 A.M. CDT NEW ISSUE BOOK-ENTRY ONLY RATING + : MOODY S Applied For In the opinion of Quarles & Brady LLP, Bond Counsel, assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended, under existing law interest on the Notes is excludable from gross income and is not an item of tax preference for federal income tax purposes. See "TAX EXEMPTION" herein for a more detailed discussion of some of the federal income tax consequences of owning the Notes. The Notes are not qualified tax-exempt obligations. The interest on the Notes is not exempt from present Wisconsin income or franchise taxes. $20,000,000* KENOSHA SCHOOL DISTRICT NO. 1 KENOSHA COUNTY, WISCONSIN TAX AND REVENUE ANTICIPATION PROMISSORY NOTES, SERIES 2018 Dated: Date of Issuance Due: As Shown Below The Tax and Revenue Anticipation Promissory Notes, Series 2018 (the Notes ), of Kenosha School District No. 1, Kenosha County, Wisconsin (the District ), are issued in fully registered form in denominations of $100,000 or any integral multiple of $5,000 in excess thereof and will mature on September 19, 2019 in a principal amount set forth below. Interest shall be payable on the maturity date. Proceeds of the Notes will be used for the public purpose of paying (i) the cost of the immediate expenses of operating and maintaining the public instruction in the District in the school year and (ii) certain costs associated with the issuance of the Notes. The Notes will be issued pursuant to Section 67.12(8)(a)1 of the Wisconsin Statutes and a resolution adopted by the School Board of the District authorizing the issuance of the Notes. The District has irrevocably pledged taxes levied for operation and maintenance purposes, state aids, and other revenues due but not yet paid, in an amount sufficient to pay the Notes, together with interest thereon, at maturity. The Notes are lawful and enforceable obligations of the District and do not constitute an indebtedness of the District for the purpose of determining the District s constitutional debt limitation. The Notes shall in no event be general obligations of the District. MATURITY SCHEDULE, AMOUNT, INTEREST RATE, PRICE OR YIELD AND CUSIP Maturity Amount ($)* Rate (%) September 19, ,000,000 The Notes are not subject to redemption prior to maturity. Price or Yield (%) CUSIP (1) (489836) The Notes are being offered at public sale, subject to the approval of Quarles & Brady LLP, Milwaukee, Wisconsin, Bond Counsel. Delivery of the Notes will be on or about October 11, AS FINANCIAL ADVISOR The date of this Official Statement is September, 2018 *Preliminary, subject to change. +See NOTE RATING herein. (1) CUSIP data herein is provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw-Hill Companies Financial. No representations are made as to the correctness of the CUSIP number. This CUSIP number is subject to change after the issuance of the Notes.

2 For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or amended by Kenosha School District No. 1, Kenosha County, Wisconsin (the District ), from time to time (collectively, the Official Statement ), may be treated as an Official Statement with respect to the Notes described herein that is deemed final by the District as of the date hereof (or of any such supplement or amendment). No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as statements of the District or the Underwriter. 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 Notes by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Unless otherwise indicated, the District is the source of all tables and statistical and financial information contained in this Official Statement. The information set forth herein relating to governmental bodies other than the District has been obtained from such governmental bodies or from other sources believed to be reliable. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date of this Official Statement. PMA Securities, Inc., Milwaukee, Wisconsin, is serving as financial advisor (the Financial Advisor ) to the District in connection with the issuance of the Notes. In preparing this Official Statement, the Financial Advisor has relied upon the District, and other sources, having access to relevant data to provide accurate information for this Official Statement. To the best of the Financial Advisor s knowledge, the information contained in this Official Statement is true and accurate. However, the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. Any statements made in this Official Statement, including the Appendices, involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of such estimate will be realized. This Official Statement contains certain forwardlooking statements and information that are based on the District's beliefs as well as assumptions made by and information currently available to the District. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. The Underwriter is required to review the information in this Official Statement in accordance with, and as part of its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. This Official Statement should be considered in its entirety and no one factor considered less important than any other by reason of its position in this Official Statement. Where statutes, resolutions, reports or other documents are referred to herein, reference should be made to such statutes, resolutions, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. Upon issuance, the Notes will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange and neither the Securities and Exchange Commission nor any other Federal, State, Municipal or other governmental entity, other than the District, shall have passed upon the accuracy or adequacy of this Official Statement. Certain persons participating in this offering may engage in transactions that maintain or otherwise affect the price of the Notes. Specifically, the Underwriter may overallot in connection with the offering, may bid for, and purchase, the Notes in the open market. The prices and other terms respecting the offering and sale of the Notes may be changed from time to time by the Underwriter after the Notes are released for sale, and the Notes may be offered and sold at prices other than the initial offering prices, including sales to dealers who may sell the Notes into investment accounts.

3 KENOSHA SCHOOL DISTRICT NO. 1 Kenosha County, Wisconsin nd Street Kenosha, Wisconsin (262) * * * * * * * * * * * * * * * * * School Board Daniel Wade, President Tony Garcia, Vice President Todd Battle, Clerk Gary Kunich, Treasurer Tom Duncan, Member Mary Modder, Member Rebecca Stevens, Member Superintendent Dr. Sue Savaglio-Jarvis Chief Financial Officer Tarik Hamdan * * * * * * * * * * * * * * * * * Paying Agent/Registrar (1) Kenosha School District No. 1 Independent Auditors Schenck S.C Riverside Drive P.O. Box Green Bay, Wisconsin Financial Advisor PMA Securities, Inc. 770 North Jefferson Street, Suite 200 Milwaukee, Wisconsin Bond Counsel Quarles & Brady LLP 411 East Wisconsin Avenue Milwaukee, Wisconsin (1) The contact for paying agent matters is Tarik Hamdan.

4 TABLE OF CONTENTS PAGE INTRODUCTION... 1 THE NOTES... 1 General Description... 1 Registration and Exchange... 1 Authority... 2 Purpose of Notes... 2 Security and Payment... 2 SOURCES AND USES... 2 CONSTITUTIONAL AND STATUTORY CONSIDERATIONS AND LIMITATIONS CONCERNING THE DISTRICT S POWER TO INCUR INDEBTEDNESS... 3 General Obligation Bonds... 3 Refunding Bonds... 3 Promissory Notes... 3 Bond Anticipation Notes... 3 Temporary Borrowing... 4 Debt Limit... 4 BOOK-ENTRY SYSTEM... 4 THE DISTRICT... 6 The School Board of the District... 7 Administration... 7 District Facilities Elementary, Middle and High Schools... 8 District Facilities Charter Schools, Other... 9 School Enrollments... 9 Employee Relations Pension Plan Other Post-Employment Benefits GENERAL INFORMATION Location Education Post-Secondary Education DEMOGRAPHIC AND ECONOMIC INFORMATION Education Population Per Return Adjusted Gross Income Income Housing Building Permits Unemployment Rate Larger Employers within the City Employment by Occupation Employment by Industry Largest Taxpayers TAX LEVIES, RATES AND COLLECTIONS PROPORTIONATE LEVY AMOUNTS EQUALIZED VALUATIONS TAX INCREMENT DISTRICTS INDEBTEDNESS OF THE DISTRICT Summary of Outstanding Debt Direct Long-Term Indebtedness Short Term Financings Future Financings Default Record Overlapping Indebtedness Debt Statement Debt Ratios FINANCIAL INFORMATION... 26

5 Budgeting Process General Fund Revenue Sources General Fund Summary Budget Summary FINANCIAL STATEMENTS TAX EXEMPTION ORIGINAL ISSUE DISCOUNT AND BOND PREMIUM Original Issue Discount Bond Premium LITIGATION NOTE RATING REVENUE LIMITS ON WISCONSIN SCHOOL DISTRICTS MUNICIPAL BANKRUPTCY CONTINUING DISCLOSURE CERTAIN LEGAL MATTERS UNDERWRITING FINANCIAL ADVISOR THE OFFICIAL STATEMENT Accuracy and Completeness of the Official Statement Appendices: A. Form of Legal Opinion of Bond Counsel B. Annual Financial Report for the Fiscal Year Ended June 30, 2017 C. Form of Note Resolution D. Cash Flow Projections for the School Year E. Official Notice of Sale and Bid Form

6 $20,000,000 * Kenosha School District No. 1 Kenosha County, Wisconsin Tax and Revenue Anticipation Promissory Notes, Series 2018 INTRODUCTION The purpose of this Official Statement is to set forth certain information concerning Kenosha School District No. 1, Kenosha County, Wisconsin (the District ), in connection with the offering and sale of $20,000,000* Tax and Revenue Anticipation Promissory Notes, Series 2018 (the Notes ). This Official Statement includes the cover page, the reverse thereof and the Appendices. Certain factors that may affect an investment decision concerning the Notes are described throughout this Official Statement. Persons considering a purchase of the Notes should read this Official Statement in its entirety. General Description THE NOTES The Notes will be issued in fully registered form, without coupons, in denominations of $100,000 or any integral multiple of $5,000 in excess thereof under a book-entry only system operated by The Depository Trust Company, New York, New York ( DTC ). Principal of and the interest on the Notes will be payable as described under the caption BOOK-ENTRY SYSTEM by the District as paying agent and registrar (the Registrar ). The Notes are not subject to redemption prior to maturity. The Notes will bear interest from their dated date and are computed on the basis of a 360-day year consisting of twelve 30-day months. Interest shall be payable on the maturity date. The principal of the Notes will be payable in lawful money of the United States of America upon presentation and surrender thereof at the principal office of the Note Registrar. Interest on the Notes will be paid by check or draft of the Note Registrar payable upon presentation in lawful money of the United States of America to the person in whose name such Note is registered at the close of business on the 15th calendar day preceding the interest payment date (each a Record Date ). Registration and Exchange The District as Registrar shall keep books for the registration and for the transfer of the Notes (the Note Register ). The District may treat and consider DTC or its nominee (the Depository ) as the absolute owner of the Notes for the purpose of receiving payment of, or on account of, the principal of and interest on the Notes and for all other purposes whatsoever. The Notes are transferable only through the Note Register upon surrender of a Note to the Registrar by the registered owner in person or his duly authorized attorney, only in the event that the Depository does not continue to act as securities depository for the Notes. The Registrar shall not be obliged to make any transfer of the Notes during the period after the close of business on a Record Date and before the opening of business on the related interest payment date. * Preliminary, subject to change. 1

7 Upon transfer, the Registrar shall execute and deliver in the name of the transferee or transferees a new Note or Notes of a like aggregate principal amount and maturity, upon the payment of a charge sufficient to reimburse the District for any tax, fee or other governmental charge required to be paid with respect to such registration. The Registrar shall record the name of each transferee in the Note Register. The Registrar shall cancel any Note surrendered for transfer. The District shall cooperate in such transfer, and the Registrar is authorized to execute any new Note or Notes necessary to affect any such transfer. Authority The Notes are being issued pursuant to Section 67.12(8)(a)1 of the Wisconsin Statutes and a resolution to be adopted by the School Board of the District (the Board ) on September 13, 2018 (the Note Resolution ). Reference is made to the Note Resolution for a complete recital of its terms. By way of the Note Resolution, the District will accept (or reject) the bid of the hereinafter defined Underwriter for the purchase of the Notes, provide the details and form of the Notes, and set out certain covenants with respect thereto. Purpose of Notes Proceeds of the Notes will be used for the public purpose of paying (i) the cost of the immediate expenses of operating and maintaining the public instruction in the District in the school year and (ii) certain costs associated with the issuance of the Notes. Security and Payment The District has irrevocably pledged taxes levied for operation and maintenance purposes, state aids, and other revenues due but not yet paid sufficient to pay the Notes, together with the interest thereon, at maturity. The Notes are lawful and enforceable obligations of the District and do not constitute an indebtedness of the District for the purpose of determining the District s constitutional debt limitation. The Notes shall in no event be general obligations of the District. SOURCES AND USES The sources and uses of funds with respect to the Notes are estimated as follows: Estimated Sources of Funds Par Amount of the Notes... [Net] Original Issue Premium/(Discount)... Total Sources... Estimated Uses of Funds Deposit into the General Fund... Costs of Issuance (1)... Total Uses... (1) Includes Underwriter s Discount, rating fee, Financial Advisor fee, Bond Counsel fee, and other costs of issuance. 2

8 CONSTITUTIONAL AND STATUTORY CONSIDERATIONS AND LIMITATIONS CONCERNING THE DISTRICT S POWER TO INCUR INDEBTEDNESS The Constitution and laws of the State of Wisconsin (the State ) limit the power of the District (and other municipalities of the State) to issue obligations and to contract indebtedness. The District may not borrow money or issue notes or bonds therefor for any purpose except those specified by statute, which include among others the purposes for which the Notes are being issued. Such constitutional and legislative limitations include the following, in summary form and as generally applicable to the District. General Obligation Bonds The principal amount (with interest) of every sum borrowed by the District and secured by an issue of bonds may be payable at one time in a single payment or at several times in two or more installments; however, no installment may be made payable later than the termination of 20 years immediately following the date of said bonds. The Board is required to levy a direct, annual, irrepealable tax sufficient in amount to pay the interest on such bonds as it falls due and also to pay and discharge the principal thereof at maturity. Refunding Bonds The District is authorized to borrow money using refunding bonds for refunding existing debt. Refunding bonds must be payable within a period not exceeding 20 years following the initial date of the debt to be refunded. Such refunding bonds constitute a general obligation of the District. Refunding bonds are not subject to referendum. Promissory Notes The District is also authorized to borrow money using promissory notes for any public purpose. Promissory notes must be payable within a period not exceeding 10 years following the date of said notes. Such notes constitute a general obligation of the District. Notes issued by the District to refinance or refund outstanding notes issued by the District may be payable no later than 20 years following the original date of such notes, or 10 years, whichever is less. Bond Anticipation Notes In anticipation of issuing general obligation bonds or notes, the District is authorized to borrow money using bond anticipation notes. The bond anticipation notes are not a general obligation of the District, and do not constitute an indebtedness of the District, nor a charge against its general credit or taxing power. The bond anticipation notes are payable only from (a) proceeds of the bond anticipation notes set aside for payment of interest on the bond anticipation notes as they become due, and (b) proceeds to be derived from the issuance and sale of general obligation bonds or promissory notes which proceeds constitute a special trust fund to be held and expended solely for the payment of the principal of and interest on the bond anticipation notes. The maximum term of any bond anticipation notes (including any refunding) is five years. 3

9 Temporary Borrowing The Board of the District may, on its own motion, borrow money in such sums as may be needed to meet the immediate expenses of maintaining the schools in the District during the then current school year (such as the Notes). No such loan or loans shall be made to extend beyond November 1 of the following year nor in any amount exceeding one-half of the estimated receipts for the operation and maintenance of the District for the current school year in which the loan is made. Debt Limit The District has the power to contract indebtedness for purposes specified by statute so long as the principal amount thereof does not exceed 10% of the equalized value of taxable property within the District. For information with respect to the District s percent of legal debt incurred, see INDEBTEDNESS OF THE DISTRICT Debt Statement herein. BOOK-ENTRY SYSTEM DTC will act as securities depository for the Notes. The Notes 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 Note certificate will be issued for the Notes, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the Exchange Act ). DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). S&P Global Ratings ( S&P ) has assigned DTC its rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission (the Commission ). More information about DTC can be found at 4

10 Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Notes, except in the event that use of the book-entry system for the Notes is discontinued. To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC s records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Notes may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Notes, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Notes within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detailed information from the District or Registrar, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of 5

11 such Participant and not of DTC, the Registrar, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to the District or the Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from DTC, and the District takes no responsibility for the accuracy thereof. The District will have no responsibility or obligation to any Securities Depository, any Participants in the Book-Entry System or the Beneficial Owners with respect to (i) the accuracy of any records maintained by the Securities Depository or any Participant; (ii) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount or redemption price of, or interest on, any Notes; (iii) the delivery of any notice by the Securities Depository or any Participant; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Notes; or (v) any other action taken by the Securities Depository or any Participant. THE DISTRICT The administration of the District is exercised by the Board. The Board consists of seven members who are elected at large for staggered three-year terms of office. The Board annually elects a President, Vice President, Clerk and Treasurer from among its members for one-year terms. Common school districts are required to formulate annual budgets and hold public hearings thereon. See FINANCIAL INFORMATION Budgeting Process below. The Board has the power and duty, among other things, to make rules for the organization, graduation, and government of the schools of the District, enter into agreements with other governmental units, tax for operation and maintenance, engage employees including a Superintendent and purchase school equipment. [Remainder of Page Intentionally Left Blank] 6

12 The School Board of the District The present members of the Board and the expiration of their respective terms of office are as follows: Title Name Occupation Current Term Expires President... Daniel Wade... Retired Chief of Police... April 2020 Vice President... Tony Garcia... Educator... April 2019 Treasurer... Gary Kunich... Public Relations Director... April 2020 Clerk... Todd Battle... President, Kenosha Area Business Alliance... April 2021 Member... Tom Duncan... Vice President and COO, Froedtert South... April 2021 Member... Mary Modder... Retired Educator, Co-Owner, Southeast WI Labor Times... April 2021 Member... Rebecca Stevens... Administrative Assistant... April 2019 Administration The Board is empowered to employ a Superintendent to conduct the affairs and programs of the District. The present Superintendent is Dr. Sue Savaglio-Jarvis, who has been with the District since Other members of the Central Office Administrative Staff are as follows: Name Title Year Started with District (1) Tarik Hamdan... Chief Financial Officer Julie Housaman... Chief Academic Officer Shannon Weyenberg... Chief Human Resource Officer Kristopher Keckler... Chief Information Officer Susan Valeri... Chief of School Leadership Tanya Ruder... Chief Communication Officer (1) Prior to serving as Chief Financial Officer, beginning July 1, 2012, Mr. Hamdan served as the District s Budget and Grant Manager. (2) Prior to serving as Chief Human Resource Officer, Ms. Weyenberg was Director of Human Resources at Milwaukee Area Technical College (MATC). [Remainder of Page Intentionally Left Blank] (2) 7

13 District Facilities Elementary, Middle and High Schools Current Enrollment ( ) (1) Projected Enrollment ( ) Capacity Constructed Years of Additions/Renovations Elementary Schools Edward Bain Creative Arts & Dual Language , N/A Bose Elementary School Brass Community School N/A Cesar Chavez Station (Head Start) Forest Park Elementary School , 2014 Frank Elementary School ,1911,1954,1965,1997 Grant Elementary School , 2014 Grewenow Elementary School , 2014, 2015 Harvey Elementary School (2) Jefferson Elementary , 2015 Jefferson Annex Elementary School , 2014 Jeffery Elementary School McKinley Elementary School Nash Elementary School N/A Pleasant Prairie Elementary School N/A Prairie Lane Elementary School , 1960, 2007 Roosevelt Elementary School Somers Elementary School , 1992 Southport Elementary School , 2000 Stocker Elementary School N/A Curtis Strange Elementary School , 2008 Vernon Elementary School Whittier Elementary School , 1959, 1965, 1991 Wilson Elementary School Middle Schools Bullen Middle School , 2018 Lance Middle School , , 2018 Lincoln Middle School , Mahone Middle School... 1,043 1,060 1, N/A Washington Middle School High Schools Bradford High School... 1,554 1,508 2, , 1980, 2007 Hillcrest School , 1959, 1961 Indian Trail High School and Academy... 2,282 2,258 2, Lakeview Technical Academy Leased Leased Reuther Central High School , , 1981, 1993 Tremper High School... 1,665 1,633 2, , 2007, 2018 (1) Official enrollment as of third Friday count, (2) Capacity is estimated using classrooms greater than 700 square feet. Jefferson Elementary utilizes several rooms smaller than that threshold. 8

14 District Facilities Charter Schools, Other Current Enrollment ( ) (1) Projected Enrollment ( ) Capacity Constructed Years of Additions/Renovations Charter Schools (1) Brompton School N/A N/A 2012, 2015 Dimensions of Learning Academy N/A (2) Harborside & Paideia Academy N/A N/A 2012 (3) Kenosha eschool N/A N/A 2014 Kenosha School of Technology East Leased Leased, 2008 West , 1974, 2014 Administrative Education Support Center... N/A N/A N/A , 2018 Other (4) 4 Yr Kindergarten (Community Sites) N/A N/A N/A (5) Phoenix Project N/A N/A N/A (1) Located in Vernon Elementary Building. (2) Located in Reuther Central High School Building. (3) Located in Jefferson Annex facility. (4) At various day care sites. (5) Incarcerated students. School Enrollments (1) Projected. Year PK Special Schools Total ,998 4,338 6,269 2,071 22, ,553 4,217 6,380 2,324 22, ,287 4,001 6,535 2,438 22, ,034 3,845 6,429 2,621 21, ,969 3,722 6,259 2,705 21, (1) 8,750 3,737 6,155 2,687 21, (1) 8,524 3,808 5,952 2,685 20, (1) 8,290 3,829 5,992 2,684 20,795 9

15 The following methods were used to calculate the enrollment projections: Kindergarten projected enrollments were calculated using a Birth-to-Kindergarten Survival Rate Method, based on historical frequency distributions and trending data from the prior three (3) years. Projections for grades 1 through 5, 7 and 8 were calculated by using the Grade Progression Ratio Method, which moves students diagonally from one grade level to the next. Adjustments were made to the projections by applying the Cohort Survival Rate Method, which uses trended grade progression ratios from one grade to the next that are attributed to migration trends, transfers to and from private schools, transfers between schools in the district, new residential developments, and dropout, graduation, and retention rates. Projections for grades 6 and 9 through 12 were calculated by applying the Cohort Survival Rate Method. At grade 6, enrollment is distributed based on the current and previous years ratios. High school enrollment is distributed based on trends from the past three school years. Source: The District Employee Relations Department Number of Employees Administration Teachers... 1, Secretarial and Clerical Educational Assistant Service Employees Interpreters Carpenters and Painters Other/Miscellaneous Total 2, (1) (1) Full time equivalents budgeted for Source: The District The District employees are represented by the following group: Organization Employee Groups Represented Contract Expiration Kenosha Education Association Teachers (2) 06/30/18 (1) Pursuant to the Act, defined below, unions can negotiate base wages only. An employee handbook replaced the prior collective bargaining agreement for all other matters. (2) The District plans to begin negotiating a new contract in September The District considers its relationship with the organizations to be in good standing. All eligible District personnel are covered by the Municipal Employment Relations Act ("MERA") of the Wisconsin Statutes. Pursuant to that law, employees have limited rights to organize and, after significant changes were made to the law in 2011, very limited rights to collectively bargain 10 (1)

16 with municipal employers. MERA was amended by 2011 Wisconsin Act 10 (the "Act") and by 2011 Wisconsin Act 32. As a result of the 2011 amendments to MERA, the District is prohibited from bargaining collectively with municipal employees with respect to any factor or condition of employment except total base wages. Even then, the District is limited to increasing total base wages beyond any increase in the consumer price index since 180 days before the expiration of the previous collective bargaining agreement (unless the District were to seek approval for a higher increase through a referendum). Ultimately, the District can unilaterally implement the wages for a collective bargaining unit. Under the changes to MERA, impasse resolution procedures were removed from the law for municipal employees of the type employed by the District, including binding interest arbitration. Strikes by any municipal employee or labor organization are expressly prohibited. As a practical matter, it is anticipated that strikes will be rare. Furthermore, if strikes do occur, they may be enjoined by the courts. Additionally, because the only legal subject of bargaining is the base wage rates, all bargaining over items such as just cause, benefits, and terms of conditions of employment are prohibited and cannot be included in a collective bargaining agreement. Due to the changes described above, the Board is free to unilaterally determine and promulgate policies, benefits and other terms and conditions of employment. Accordingly, the Board has approved an Employee Handbook for teachers and support staff. The Employee Handbook was most recently updated and is effective as of July 1, The Employee Handbook sets forth policies, procedures and benefits for employees of the nature that were previously set forth in labor contracts. The Employee Handbook's terms are subject to change at the sole discretion of the District and are not subject to grievance or arbitration by the unions. However, individual employees will be allowed to file a grievance if they are disciplined or terminated. However, under the changes to MERA, the Board, rather than an arbitrator, is the final decision-maker regarding any grievance, though the grievance must be heard by an impartial hearing officer before reaching the Board. Pension Plan All eligible employees in the District are covered under the Wisconsin Retirement System ( WRS ) established under Chapter 40 of the Wisconsin Statutes. The WRS is a cost-sharing multipleemployer defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes ("Chapter 40"). The Department of Employee Trust Funds ("ETF") administers the WRS. Required contributions to the WRS are determined by the ETF Board pursuant to an annual actuarial valuation in accordance with Chapter 40 and the ETF's funding policies. The ETF Board has stated that its funding policy is to (i) ensure funds are adequate to pay benefits; (ii) maintain stable and predictable contribution rates for employers and employees; and (iii) maintain inter-generational equity to ensure the cost of the benefits is paid for by the generation that receives the benefits. District employees are required to contribute half of the actuarially determined contributions, and the District may not pay the employees' required contribution. The total required retirement plan contributions (not including any employee contributions) for the fiscal years ended June 30, 2015 ("Fiscal Year 2015"), June 30, 2016 ( Fiscal Year 2016 ) and June 30, 2017 ( Fiscal Year 2017 ) totaled $9,911,151, $9,730,965 and $9,576,635, respectively. The District implemented Governmental Accounting Standards Board Statement No. 68 ("GASB 68") for Fiscal Year

17 GASB 68 requires calculation of a net pension liability for the pension plan. The net pension liability is calculated as the difference between the pension plan's total pension liability and the pension plan's fiduciary net position. The pension plan's total pension liability is the present value of the amounts needed to pay pension benefits earned by each participant in the pension plan based on the service provided as of the date of the actuarial valuation. In other words, it is a measure of the present value of benefits owed as of a particular date based on what has been earned only up to that date, without taking into account any benefits earned after that date. The pension plan's fiduciary net position is the market value of plan assets formally set aside in a trust and restricted to paying pension plan benefits. If the pension plan's total pension liability exceeds the pension plan's fiduciary net position, then a net pension liability results. If the pension plan's fiduciary net position exceeds the pension plan's total pension liability, then a net pension asset results. As of December 31, 2016, the total pension liability of the WRS was calculated as $93.4 billion and the fiduciary net position of the WRS was calculated as $92.6 billion, resulting in a net pension liability of $0.8 billion. Under GASB 68, each participating employer in a cost-sharing pension plan must report the employer's proportionate share of the net pension liability or net pension asset of the pension plan. Accordingly, for Fiscal Year 2017, the District reported a liability of $16,281,444 for its proportionate share of the net pension liability of the WRS. The net pension liability was measured as of December 31, 2016 based on the District's share of contributions to the pension plan relative to the contributions of all participating employers. The District's proportion was % of the aggregate WRS net pension liability as of December 31, The calculation of the total pension liability and fiduciary net position are subject to a number of actuarial assumptions, which may change in future actuarial valuations. Such changes may have a significant impact on the calculation of the net pension liability of the WRS, which may also cause the ETF Board to change the contribution requirements for employers and employees. See Note B6 to the District s Annual Financial Report for the Fiscal Year ended June 30, 2017, attached hereto as Appendix B, for a more complete discussion. Other Post-Employment Benefits The District provides "other post-employment benefits" ("OPEB") (i.e., post-employment benefits, other than pension benefits, owed to its employees and former employees) through a singleemployer defined benefit plan to employees who have terminated their employment with the District and have satisfied specified eligibility standards. Membership of the plan consisted of 361 retirees receiving benefits and 2,129 active plan members as of June OPEB calculations are required to be updated every two years. Prior to June 15, 2017, OPEB calculations were required to be prepared in accordance with Statement No. 45 of the Governmental Accounting Standards Board ( GASB 45 ) regarding retiree health and life insurance benefits and related standards. For fiscal years beginning after June 15, 2017, OPEB calculations are required to be prepared in accordance with Statements No. 74 and 75 of the Governmental Accounting Standards Board ( GASB 74/75 ). An actuarial study in accordance with GASB 45 for the plan was last completed by Milliman in August 2016 with an actuarial valuation date of July 1, The District had such study updated by Milliman in October 2017 for Fiscal Year 2017 to prepare the information required to be reported under GASB 75 in the District's financial statements for Fiscal Year 2017 (the "OPEB Report"). 12

18 Under GASB 74/75, the ADC is calculated as a target or recommended contribution to the plan for the reporting period, determined in conformity with actuarial standards based on the most recent measurement available. As shown in the District's audited financial statements for Fiscal Year 2017, the ADC for Fiscal Year 2017 was $10,952,469. For Fiscal Year 2017, contributions to the plan totaled $12,316,038, which was % of the ADC. The District's current funding practice is to fully fund the cost of retiree benefits in a given year on a pay-as-you-go basis with additional discretionary contributions to accumulate assets for payment of future benefits. Under GASB 74/75, a net OPEB liability (or asset) is calculated as the difference between the plan's total OPEB liability and the plan's fiduciary net position, which terms have similar meanings as under GASB 68 for pension plans. As shown in the District's audited financial statements, as of June 30, 2017, the plan's total OPEB liability was $97,907,074 and the plan fiduciary net position was $21,826,948, resulting in a net OPEB liability of $76,080,126. The calculation of the total OPEB liability and fiduciary net position are subject to a number of actuarial assumptions, which may change in future actuarial valuations. For more detailed information regarding such actuarial assumptions, see Note 12.C in Appendix B Financial Statements with Supplementary Financial Information for the Fiscal Year Ended June 30, Location GENERAL INFORMATION The District is located in the Southeastern portion of the State in Kenosha County (the County ), approximately 36 miles south of Milwaukee, 112 miles southeast of Madison and 55 miles north of Chicago. The District encompasses 85 square miles and serves a large portion of the City of Kenosha (the City ) and the Village of Pleasant Prairie (the Village ) and the entire Town of Somers (1) (the Town ). The area is easily accessible via Interstate 94 and State Highways 31 and 32. Education The District offers a diversified curriculum for preschool through twelfth grade. The curriculum is developed as a scope and sequence, which includes basic concepts and skills at each grade or course level and each step builds on the previous grade or course level. The District has 23 elementary schools, five middle schools, six high schools, five charter schools, one high school technology academy, one education support center and one head start child development center. Post-Secondary Education Gateway Technical College offers over 60 associate degree and vocational diploma programs to residents with campuses located in Kenosha, Racine and Elkhorn. Four-year degree programs are available at the University of Wisconsin-Parkside, Carthage College and Concordia University. Additional educational opportunities are available within commuting distance at the University of (1) A portion of the Town of Somers incorporated as a village in April The Village of Somers subsequently annexed a portion of the remaining Town of Somers as of December 31, The District serves both the village and the remaining remnant town. 13

19 Wisconsin-Milwaukee, Marquette University, Carroll University, Alverno College, Cardinal Stritch University and Mount Mary University. Education DEMOGRAPHIC AND ECONOMIC INFORMATION The educational background of the District as compared to the County and the State is illustrated in the following table: Educational Levels for Persons 25 years of Age and Older Education Level The District The County The State Less than 9th Grade % 3.1% 3.0% 9th to 12th grade, no diploma High school graduate Some college, no degree Associate degree Bachelor s degree Graduate or professional degree Total % 100.0% 100.0% Please note that totals may not equal 100.0% due to rounding. Source: American Community Survey, American Community Survey 5-year Estimates, Census Bureau Population The City The Village The Town 2010 Census... 99,218 19,719 9,597 Estimate, ,680 20,155 9,512 Estimate, ,623 20,370 9,514 Estimate, ,489 20,438 9,696 (1) Estimate, ,116 20,936 9,840 (1) Preliminary, ,263 21,166 10,082 (1) The County The District 2010 Census , ,931 Estimate, ,258 N/A Estimate, ,493 N/A Estimate, ,658 N/A Estimate, ,065 N/A Preliminary, ,700 N/A (1) Includes the Town and the Village of Somers. Source: Wisconsin Department of Administration, Demographic Services Center 14

20 Per Return Adjusted Gross Income Tax Year The City The Village The Town $42,730 $68,290 $64, ,420 70,250 65, ,750 73,950 66, ,827 73,746 73, ,455 78,458 68,263 Tax Year The County The State $47,340 $49, ,130 50, ,520 52, ,439 54, ,410 55,267 (1) Reflects the Town of Somers after its boundaries changed in April Source: Wisconsin Department of Revenue Income The following table sets forth the estimated household income by category derived for the District as compared with the County and the State. Household Income The District The County The State Under $10, % 6.3% 5.7% $10,000 to $14, $15,000 to $24, $25,000 to $34, $35,000 to $49, $50,000 to $74, $75,000 to $99, $100,000 to $149, $150,000 to $199, $200,000 or more Total % 100.0% 100.0% Median household income... $53,377 $56,086 $54,610 Please note that totals may not equal 100.0% due to rounding. Source: American Community Survey, American Community Survey 5-year Estimates, Census Bureau (1) (1) 15

21 Housing The following table sets forth the estimated distribution of home values for owner-occupied units as well as the median home value and percent of residences that were owner-occupied for the District, the County and the State. Value of Specified Owner-Occupied Units The District The County The State Less than $50, % 6.0% 5.6% $50,000 to $99, $100,000 to $149, $150,000 to $199, $200,000 to $299, $300,000 to $499, $500,000 to $999, $1,000,000 or more Total % 100.0% 100.0% Median value... % Owner Occupied... $152,700 $162,400 $167, % 65.6% 67.0% Please note that totals may not equal 100.0% due to rounding. Source: American Community Survey, American Community Survey 5-year Estimates, Census Bureau Building Permits New residential building permits for the City are listed below: (1) Through the month of May 2018, reported only. Source: U.S. Census Bureau Year Number of Permits Construction Cost $ 5,626, ,988, ,573, ,860, ,206,664 (1) ,236,099 16

22 Unemployment Rate The City The County The State Average, % 7.6% 6.7% Average, Average, Average, Average, June, June, Source: Worknet-Data Analyst-Labor Force Larger Employers within the City The largest employers in the City are listed below: Company Name Product or Service Approximate employees at location(1) Amazon... On-line distribution center... 3,000 The District... Education... 2,529 Aurora Medical Group, Inc... Health care facilities... 1,500 United Hospital System... Health care facilities... 1,310 The County... County government... 1,293 The City... City government Snap-On, Inc... Diagnostic equipment & hand tool manufcturer Carthage College... Education Birchwood Foods/Kenosha Beef... Food processing Kenall Manufacturing... LED lighting manufacturer (1) Full-time equivalent. (2) Full-time equivalent budgeted for Source: The District and The City s Official Statement dated April 9, 2018 for its General Obligation Promissory Notes, Series 2018A and General Obligation Promissory Notes, Series 2018B, dated April 18, (2) 17

23 Employment by Occupation The District has an employment base provided by a range of manufacturing, commercial and public enterprises. The following table categorizes occupations for District residents 16 years of age and older living in the District as compared with the County and the State. Occupational Category The District The County The State Management, business, science, and arts occupations % 33.0% 35.0% Service occupations Sales and office occupations Natural resources, construction, and maintenance occupations Production, transportation, and material moving occupations Total % 100.0% 100.0% Please note that totals may not equal 100.0% due to rounding. Source: American Community Survey, American Community Survey 5-year Estimates, Census Bureau Employment by Industry The following table categorizes employment by industry for residents 16 years of age and older living in the District compared with the County and the State. Industry Category The District The County The State Agriculture, forestry, fishing, hunting, and mining % 1.1% 2.4% Construction Manufacturing Wholesale trade Retail trade Transportation, warehousing, and utilities Information Finance, insurance, real estate, rental and leasing Professional, scientific, management, administrative and waste management services Educational services, health care and social assistance Arts, entertainment, recreation, accommodation and food services Other services, except public administration Public administration Total % 100.0% 100.0% Please note that totals may not equal 100.0% due to rounding. Source: American Community Survey, American Community Survey 5-year Estimates, Census Bureau 18

24 Largest Taxpayers The taxpayers listed below represent 9.42% of the $6,362,624, equalized valuation (TID IN) of the City and 5.94% of the $10,082,642, equalized valuation (TID IN) of the District. Reasonable efforts have been made to determine and report the largest taxpayers and to include all taxable property of those taxpayers listed. Many of the taxpayers listed, however, may own multiple parcels, and it is possible that some parcels and their valuations may not be included. Taxpayer Type of Property or Business 2017 Equalized Valuation KTR/Amazon... Retail... $ 224,696,485 Route 142 LLC/Uline... Shipping supplies... 68,615,944 Chicagoland DC 2008 LLC/Gordon Food Svc... Food distribution... 59,461,103 Associated Wholesale Grocers/Affiliated Foods Midwest... Food distribution... 59,315,608 Southport Plaza LLC... Commercial retail development... 39,541,243 Edward Rose Associates... Multi-Family housing... 36,570,151 FR-Kenosha LLC... Developer... 30,783,946 Petretti Properties LLC... Multi-Family housing... 27,229,055 Meijer Stores Limited Partnership... Retail... 27,057,564 Shagbark LLC... Apartments... 26,082,427 Total... $ 599,353,525 Source: The City s Official Statement dated April 9, 2018 for its General Obligation Promissory Notes, Series 2018A and General Obligation Promissory Notes, Series 2018B, dated April 18, TAX LEVIES, RATES AND COLLECTIONS Personal property taxes, special assessments, special charges and special taxes must be paid to the town, city or village treasurer in full by January 31. Real property taxes may be paid in full by January 31 or in two equal installments payable by January 31 and July 31. Municipalities also have the option of adopting payment plans which allow taxpayers to pay their real property taxes and special assessments in three or more installments, provided that the first installment is paid by January 31, onehalf of the taxes are paid by April 30 and the remainder is paid by July 31. Amounts paid on or before January 31 are paid to the town, city or village treasurer. Amounts paid after January 31 are paid to the county treasurer unless the municipality has authorized payment in three or more installments in which case payment is made to the town, city or village treasurer. Any amounts paid after July 31 are paid to the county treasurer. For municipalities which have not adopted an installment payment plan, the town, city or village treasurer settles with other taxing jurisdictions for collections through the preceding month on January 15 and February 20. For municipalities which have adopted an installment payment plan, the town, city or village treasurer settles with other taxing jurisdictions for collections through the preceding month on January 15, February 15 and the 15th day of each month following a month in which an installment payment is due. On or before August 20, the county treasurer must settle in full with the underlying taxing districts for all real property taxes and special taxes. The County Board may authorize its County Treasurer to also settle in full with the underlying taxing districts for all special assessments and special charges. The county may then recover any tax delinquencies by enforcing the lien on the property and retain any penalties or interest on the delinquencies for which it has settled. Since, in practice, all delinquent real estate taxes are withheld from the county's share of taxes; the District receives 100 percent of the real estate taxes it levies. 19

25 Set forth below are the taxes levied and the tax rate per $1,000 of equalized valuation on all taxable property within the District as well as a history of collections in levy years 2013 through School District Tax Rate Uncollected Taxes as of August 20 Each Year School District Levy Year Collection Year Levy $ $ 93,317, % ,307, % ,365, % ,255, % ,741, % Source: Wisconsin Department of Public Instruction, School Finance Reporting Portal PROPORTIONATE LEVY AMOUNTS Municipality Equalized Valuation (TID OUT) Percent of Levy Percent of Levy Collected Amount of Levy The City... $ 5,388,990, % $ 55,139,489 The Town... 93,166, % 953,268 Village of Somers ,470, % 7,167,126 The Village... 2,685,916, % 27,481,965 Total... $ 8,868,543, % $ 90,741,848 Please Note that totals may not equal 100.0% due to rounding. Source: Wisconsin Department of Revenue [Remainder of Page Intentionally Left Blank] 20

26 EQUALIZED VALUATIONS All equalized valuations of property in the State are determined by the State of Wisconsin, Department of Revenue and Supervisor of Assessments Office. Equalized valuations are the State s estimate of full market value. The State determines assessed valuations of all manufacturing property in the State. Assessed valuations of residential and commercial property are determined by local assessors. Set forth in the table below are equalized valuations of property located within the District for the years 2013 through The District s equalized valuation (including TIDs) has increased by percent since 2013 with an average annual increase of 4.73 percent. Source: Wisconsin Department of Revenue (1) TID IN Including TIDs. (2) TID OUT Excluding TIDs. Year Equalized Valuation(1) Equalized Valuation (2) 2013 $ 8,380,620,978 $ 7,693,298, ,686,548,624 7,956,343, ,152,482,521 8,212,853, ,668,513,259 8,580,130, ,082,642,867 8,868,543,467 [Remainder of Page Intentionally Left Blank] 21

27 TAX INCREMENT DISTRICTS The City and the Village have created Tax Increment Districts ( TIDs ) under Section of the Wisconsin Statutes. TID valuations totaling $1,214,099,400 have been excluded from the District s tax base for The City Creation Date Base Value 2017 Value Increment TID # $ 2,273,000 $ 69,524,400 $ 67,251,400 TID # ,173, ,591,300 84,418,000 TID # ,700 93,716,000 93,396,300 TID # ,716,200 16,811,200 13,095,000 TID # ,178,600 15,146,500 13,967,900 TID # ,900 50,140,600 49,894,700 TID # ,538,700 57,332,100 32,793,400 TID # ,297,700 13,889,500 1,591,800 TID # ,873,300 95,765,900 92,892,600 TID # ,700 4,000 1,300 TID # ,000 61,005,600 60,973,600 TID # , ,300 19,800 TID # ,571, ,578, ,006,400 TID # ,900 3,990,500 3,939,600 TID # , Subtotal... $ 743,241,800 The Village Creation Date Base Value 2017 Value Increment (2) TID # $ 78,108,000 $ 478,660,600 $ 400,552,600 TID # , , ,400 Subtotal... $ 400,722,000 Village of Somers Creation Date Base Value 2017 Value Increment TID # $ 476,300 $ 41,154,700 $ 40,678,400 TID # ,810,800 35,268,000 29,457,200 Subtotal... $ 70,135,600 Total... $ 1,214,099,400 (1) TID has zero or negative increment value. (2) TID is partially located within the District. Source: Wisconsin Department of Revenue (1) 22

28 Summary of Outstanding Debt INDEBTEDNESS OF THE DISTRICT Shown below is a summary of the outstanding debt of the District as of the closing of the Notes. Issue Description Dated Date Original Amount Of Issue Current Amount Outstanding Final Maturity Date G.O. Refunding Bonds, Series 2009A... 07/15/09 $ 20,425,000 $ 13,950,000 04/01/24 G.O. Refunding Bonds, Series 2009B... 07/15/09 1,280, ,000 04/01/20 Taxable G.O. School Building Bonds, Series 2009C (BABs-DP)... 07/15/09 20,000,000 20,000,000 04/01/29 Taxable Certificates of Indebtedness (QSCBs-DP)... 06/10/10 10,000,000 2,153,000 03/15/19 Taxable Certificates of Indebtedness (QZABs-DP)... 06/10/10 3,900,000 2,116,000 03/15/20 General Obligation Corporate Purpose Bonds, Series /17/13 23,100,000 14,225,000 04/01/33 General Obligation Corporate Purpose Bonds, Series /15/15 30,005,000 26,205,000 04/01/35 General Obligation School Improvement Bonds, Series /26/16 28,495,000 19,620,000 04/01/36 State Trust Fund Loan... 06/15/17 16,355,000 15,730,000 03/15/27 General Obligation Corporate Purpose Bonds, Series 2017A... 06/15/17 34,510,000 34,190,000 04/01/37 Taxable G.O. Refunding Bonds, Series 2017B... 06/15/17 1,895,000 1,895,000 04/01/20 Total... $ 150,444,000 [Remainder of Page Intentionally Left Blank] 23

29 Direct Long-Term Indebtedness Shown below is the maturity schedule for the long-term direct general obligation bonded debt of the District as of the closing of the Notes. The Notes are not general obligation debt of the District. Calendar Year Principal Due Total Principal Cumulative Amount Retirement Percent 2019 $ 8,795,000 $ 8,795,000 $ 8,795, % ,454,000 9,454,000 18,249, ,630,000 8,630,000 26,879, ,000,000 9,000,000 35,879, ,440,000 9,440,000 45,319, ,555,000 9,555,000 54,874, ,010,000 10,010,000 64,884, ,680,000 9,680,000 74,564, ,065,000 10,065,000 84,629, ,620,000 9,620,000 94,249, ,030,000 10,030, ,279, ,190,000 6,190, ,469, ,420,000 6,420, ,889, ,640,000 6,640, ,529, ,875,000 6,875, ,404, ,755,000 5,755, ,159, ,940,000 5,940, ,099, ,880,000 4,880, ,979, ,465,000 3,465, ,444, $ 150,444,000 $ 150,444,000 Short Term Financings In addition to the Notes, the District has borrowed annually in the past five years for short-term cash flow purposes as shown below: Amount Dated Due $ 39,300,000 September 25, ,500,000 October 14, ,000,000 October 14, ,000,000 October 13, ,000,000 October 12, 2017 February 24, 2014 & September 18, 2014 February 26, 2015 & September 24, 2015 February 25, 2016 & September 22, 2016 February 23, 2017 & September 21, 2017 February 22, 2018 & September 20,

30 Future Financings The District does not intend to issue any additional long-term debt in the next 12 months. Default Record The District has no record of default and has met its debt repayment obligations promptly. Overlapping Indebtedness Information relating to the outstanding overlapping indebtedness of the District is set forth in the table below: Name Amount of Debt Outstanding (Net of 2018 Sinking Funds) Percent Applicable to District Outstanding Debt Applicable to District The Town... $ (1) % $ - The Village ,355, % 99,044,236 The City ,059, % 170,649,495 Village of Somers... 27,438, % 27,438,001 The County ,780, % 96,168,640 Gateway Technical College.. 70,885, % 16,622,533 Total... $ 409,922,904 (1) All of the Town s debt was assumed by the Village of Somers. Source: The respective municipalities and the Wisconsin Department of Revenue Debt Statement Debt Ratios Net Direct Debt... $150,444,000 Overlapping Debt... $409,922,904 Net Direct Debt and Overlapping Debt... $560,366, Equalized Valuation (TID IN)... $10,082,642,867 Statutory Debt Limit (10.0% of Equalized Valuation)... $1,008,264,287 Statutory Debt Margin... $857,820, Equalized Valuation (TID IN)... $10,082,642, Estimated Population ,282 Net Direct Debt to Equalized Valuation (TID IN) % Net Direct Debt and Overlapping Debt to Equalized Valuation (TID IN) % Net Direct Debt Per Capita... $1, Net Direct Debt and Overlapping Debt Per Capita... $4,

31 FINANCIAL INFORMATION The financial operations of the District are conducted primarily through a series of state mandated funds. All revenues except those attributable to the building funds and other funds authorized by State law are accounted for in the general fund, and any lawful expenditure of the District must be made from the appropriate fund and recorded therein. As in other areas of the United States, the financing of public education in the State is subject to changing legislation, variations in public opinion, examination of financing methods through litigation and other matters. For these reasons the District cannot anticipate with certainty all of the factors which may influence the financing of its future activities. Budgeting Process The District is required by State law to annually formulate a budget and to hold a public hearing thereon prior to the determination of the amounts to be financed in whole or in part by general property taxes, funds on hand or estimated revenues from other sources. Such budget must list existing indebtedness of the District and all anticipated revenue from all sources during the ensuing year and must also list all proposed appropriations for each department, activity and reserve account of the District during the ensuing year. As part of the budgeting process, budget requests are submitted during the last half of the fiscal year by the teachers and departmental administrators of each school to their respective principals, who thereafter review and revise such requests and submit them, with their recommendations, to the Superintendent of the District. After review and adjustment by the administrative staff of the District, the proposed budget is presented to the full Board, at which time the proposed budget is reviewed with the District's administrative staff. After further review and adjustment, the proposed budget is again submitted to the full Board each year. The proposed budget is formally adopted by the Board after a public hearing preceded by at least 10 days prior notice which describes the time and place of the hearing, a summary of the proposed budget, and how to obtain the budget in detail for inspection. General Fund Revenue Sources (For Years Ended June 30) Unaudited Local Source % 29.40% 28.62% 28.11% 29.05% State Source Federal Source Total % % % % % Please note that totals may not amount to exactly % due to rounding. Source: Compiled from the District s Annual Financial Reports for Fiscal Years ended June 30, and preliminary, unaudited figures for the fiscal year ended June 30, 2018 provided by the District. 26

32 General Fund Summary (For Years Ending June 30) The figures below reflect the District's adoption of Statement No. 54 of the Governmental Accounting Standards Board, which includes what was previously separately identified as the special education fund within the general fund Unaudited 2018 Receipts... $ 259,361,135 $ 260,040,729 $ 260,596,394 $ 265,894,541 $ 268,501,019 Disbursements ,840, ,111, ,761, ,906, ,772,855 Net Surplus (Deficit)... 11,520,949 5,929,042 2,835,120 4,988,079 6,728,164 Other Financing Sources... (1,824,794) (512,480) (500,000) (500,000) (457,696) Beginning Fund Balance... Ending Fund Balance... 27,109,476 36,805,631 42,222,193 44,557,313 49,045,392 $ 36,805,631 $ 42,222,193 $ 44,557,313 $ 49,045,392 $ 55,315,860 Source: Compiled from the District s audited Annual Financial Reports for the Fiscal Years Ended June 30, and preliminary unaudited figures for the fiscal year ended June 30, 2018 provided by the District. Budget Summary Estimated Projected Fund Balances Estimated Estimated Fund Balances Fund June 30, 2018 Revenue Expenditures June 30, 2019 General Fund... $ 55,315,858 $ 257,322,784 $ 257,322,784 $ 55,315,858 Special Projects Fund... 70,387 51,204,004 51,204,004 70,387 Debt Service Fund... 4,158,036 15,382,116 15,622,413 3,917,739 Capital Projects Fund... 42,218, ,000 12,131,932 30,417,061 Food Service Fund... 3,353,903 8,774,371 8,774,371 3,353,903 Community Service Fund... 3,124,920 1,544,387 1,807,291 2,862,017 Total... $ 108,242,097 $ 334,557,662 $ 346,862,795 $ 95,936,964 Source: The District s Preliminary Budget FINANCIAL STATEMENTS The Annual Financial Report for Fiscal Year 2017 (the Audit ) of the District contained in Appendix B hereto has been approved by the School Board of the District and has been audited by Schenck S.C., Green Bay, Wisconsin (the Auditor ) to the extent and for the periods indicated in their report thereon. The inclusion of the Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the District since the date of the Audit. The District has not asked the Auditor to perform any additional examination, assessment or evaluation with respect to such financial statements since the dates indicated therein, nor has the District requested that the Auditor provide its consent with respect to the use of such financial statements in this Official Statement. The District represents and warrants that there has been no 27

33 material adverse change in its financial position or the results of its operations nor has it incurred any material liabilities, since the dates indicated in such financial statements, which would make the financial statements included in this Official Statement misleading in any material respect. Potential investors with specific questions regarding the Audit of the District should contact Tarik Hamdan, Chief Financial Officer of the District at (262) TAX EXEMPTION Quarles & Brady LLP, Milwaukee, Wisconsin, Bond Counsel, will deliver a legal opinion with respect to the federal income tax exemption applicable to the interest on the Notes under existing law substantially in the following form: "The interest on the Notes is excludable for federal income tax purposes from the gross income of the owners of the Notes. The interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Internal Revenue Code of 1986, as amended (the "Code") on corporations (as that term is defined for federal income tax purposes) and individuals. However, for purposes of computing the alternative minimum tax imposed on corporations, the interest on the Notes is included in adjusted current earnings. We note, however, that the 2017 tax act (Public Law ) enacted on December 22, 2017, repealed the alternative minimum tax on corporations for tax years beginning after December 31, Accordingly, any discussion herein regarding corporate alternative minimum tax is applicable only to a corporation s tax years beginning before January 1, The Code contains requirements that must be satisfied subsequent to the issuance of the Notes in order for interest on the Notes to be or continue to be excludable from gross income for federal income tax purposes. Failure to comply with certain of those requirements could cause the interest on the Notes to be included in gross income retroactively to the date of issuance of the Notes. The District has agreed to comply with all of those requirements. The opinion set forth in the first sentence of this paragraph is subject to the condition that the District comply with those requirements. We express no opinion regarding other federal tax consequences arising with respect to the Notes." The interest on the Notes is not exempt from present Wisconsin income or franchise taxes. Prospective purchasers of the Notes should be aware that ownership of the Notes may result in collateral federal income tax consequences to certain taxpayers. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Notes should consult their tax advisors as to collateral federal income tax consequences. From time to time legislation is proposed, and there are or may be legislative proposals pending in the Congress of the United States that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Notes. It cannot be predicted whether, or in what form, any proposal that could alter one or more of the federal tax matters referred to above or adversely affect the market value of the Notes may be enacted. Prospective purchasers of the Notes should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. 28

34 Original Issue Discount ORIGINAL ISSUE DISCOUNT AND BOND PREMIUM To the extent that the initial public offering price of certain of the Notes is less than the principal amount payable at maturity, such Notes ( Discounted Bonds ) will be considered to be issued with original issue discount. The original issue discount is the excess of the stated redemption price at maturity of a Discounted Bond over the initial offering price to the public, excluding underwriters or other intermediaries, at which price a substantial amount of such Discounted Bonds were sold (issue price). With respect to a taxpayer who purchases a Discounted Bond in the initial public offering at the issue price and who holds such Discounted Bond to maturity, the full amount of original issue discount will constitute interest that is not includible in the gross income of the owner of such Discounted Bond for federal income tax purposes and such owner will not, subject to the caveats and provisions herein described, realize taxable capital gain upon payment of such Discounted Bond upon maturity. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Discounted Bond, on days that are determined by reference to the maturity date of such Discounted Bond. The amount treated as original issue discount on a Discounted Bond for a particular semiannual accrual period is generally equal to (a) the product of (i) the yield to maturity for such Discounted Bond (determined by compounding at the close of each accrual period) and (ii) the amount that would have been the tax basis of such Discounted Bond at the beginning of the particular accrual period if held by the original purchaser; and less (b) the amount of any interest payable for such Discounted Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Discounted Bond the sum of the amounts that have been treated as original issue discount for such purposes during all prior periods. If a Discounted Bond is sold or exchanged between semiannual compounding dates, original issue discount that would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. For federal income tax purposes, the amount of original issue discount that is treated as having accrued with respect to such Discounted Bond is added to the cost basis of the owner in determining gain or loss upon disposition of a Discounted Bond (including its sale, exchange, redemption, or payment at maturity). Amounts received upon disposition of a Discounted Bond that are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain. The accrual or receipt of original issue discount on the Discounted Bonds may result in certain collateral federal income tax consequences for the owners of such Discounted Bonds. The extent of these collateral tax consequences will depend upon the owner s particular tax status and other items of income or deduction. In the case of corporate owners of Discounted Bonds, a portion of the original issue discount that is accrued in each year will be included in adjusted current earnings for purposes of calculating the corporation s alternative minimum tax liability. Corporate owners of any Discounted Bonds should be aware that such accrual of original issue discount may result in an alternative minimum tax liability although the owners of such Discounted Bonds will not receive a corresponding cash payment until a later year. We note, however, that the 2017 tax act (Public Law ) enacted on December 22, 2017, repealed the alternative minimum tax on corporations for tax years beginning after December 31, Accordingly, any discussion herein regarding corporate alternative minimum tax is applicable only to a corporation s tax years beginning before January 1, The Code contains additional provisions relating to the accrual of original issue discount. Owners who purchase Discounted Bonds at a price other than the issue price or who purchase such Discounted Bonds in the secondary market should consult their own tax advisors with respect to the tax 29

35 consequences of owning the Discounted Bonds. Under the applicable provisions governing the determination of state and local taxes, accrued interest on the Discounted Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment until a later year. Owners of Discounted Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Discounted Bonds. Bond Premium To the extent that the initial offering price of certain of the Notes is more than the principal amount payable at maturity, such Notes ( Premium Bonds ) will be considered to have bond premium. Any Premium Bond purchased in the initial offering at the issue price will have amortizable bond premium within the meaning of Section 171 of the Code. The amortizable bond premium of each Premium Bond is calculated on a daily basis from the issue date of such Premium Bond until its stated maturity date (or call date, if any) on the basis of a constant interest rate compounded at each accrual period (with straight line interpolation between the compounding dates). An owner of a Premium Bond that has amortizable bond premium is not allowed any deduction for the amortizable bond premium; rather the amortizable bond premium attributable to a taxable year is applied against (and operates to reduce) the amount of tax-exempt interest payments on the Premium Bonds. During each taxable year, such an owner must reduce his or her tax basis in such Premium Bond by the amount of the amortizable bond premium that is allocable to the portion of such taxable year during which the holder held such Premium Bond. The adjusted tax basis in a Premium Bond will be used to determine taxable gain or loss upon a disposition (including the sale, exchange, redemption, or payment at maturity) of such Premium Bond. Owners of Premium Bonds who did not purchase such Premium Bonds in the initial offering at the issue price should consult their own tax advisors with respect to the tax consequences of owning such Premium Bonds. Owners of Premium Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Premium Bonds. LITIGATION There is no controversy or litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Notes or in any way contesting or affecting the validity of the Notes or any proceedings of the District taken with respect to the issuance or sale thereof. NOTE RATING Moody s Investors Service, Inc. ( Moody s ) has assigned its municipal bond rating of to the Notes. This rating reflects only the view of Moody s and any explanation of the significance of such rating may only be obtained from Moody s. Certain information concerning the Notes and the District not included in this Official Statement was furnished to Moody s by the District. There is no assurance that the rating will be maintained for any given period of time or that it may not be changed by Moody s, if, in its judgment, circumstances so warrant. Any downward change in or withdrawal of the rating may have an adverse effect on the market price of the Notes. Except as may be required by the Undertaking described below under the heading CONTINUING DISCLOSURE, neither the District nor the Underwriter undertake responsibility to bring to the attention of the owners of the Notes any proposed change in or withdrawal of such rating or to oppose any such revision or withdrawal. 30

36 REVENUE LIMITS ON WISCONSIN SCHOOL DISTRICTS The Wisconsin Statutes impose revenue limits on Wisconsin school districts, including the District. The Wisconsin Statutes previously allowed for some annual per pupil increases without voter approval, but the current Wisconsin Statutes prohibit any increase without voter approval. Under the current Wisconsin Statutes, school districts cannot increase their average revenues per pupil for the school year or any school year thereafter unless they seek voter approval at referendum. These provisions of the Wisconsin Statutes may change in the future. The revenue limit is increased by funds needed for payment of debt service on general obligation debt authorized before the effective date of the revenue limit statutes (August 12, 1993) (the Effective Date ) and debt service on obligations issued to refund such debt. Debt authorized after the Effective Date is exempt from the revenue limits if approved at a referendum, as is debt service on obligations issued to refund such debt. The payment of debt service on the Notes is subject to the revenue limits. MUNICIPAL BANKRUPTCY Municipalities (including school districts such as the District) are prohibited from filing for bankruptcy under Chapter 11 (reorganization) or Chapter 7 (liquidation) of the U.S. Bankruptcy Code (11 U.S.C ) (the "Bankruptcy Code"). Instead, the Bankruptcy Code permits municipalities to file a petition under Chapter 9 of the Bankruptcy Code, but only if certain requirements are met. These requirements include that the municipality must be specifically authorized under State law to file for relief under Chapter 9. For these purposes, "State law" may include, without limitation, statutes of general applicability enacted by the State legislature, special legislation applicable to a particular municipality, and/or executive orders issued by an appropriate officer of the State's executive branch. As of the date hereof, Wisconsin law contains no express authority for municipalities to file for bankruptcy relief under Chapter 9 of the Bankruptcy Code. Nevertheless, there can be no assurance (a) that State law will not change in the future, while the Notes are outstanding, in a way that would allow the District to file for bankruptcy relief under Chapter 9 of the Bankruptcy Code; or (b) even absent such a change in State law, that an executive order or other executive action could not effectively authorize the District to file for relief under Chapter 9. If, in the future, the District were to file a bankruptcy case under Chapter 9, the relevant bankruptcy court would need to consider whether the District could properly do so, which would involve questions regarding State law authority as well as other questions such as whether the District is a municipality for bankruptcy purposes. If the relevant bankruptcy court concluded that the District could properly file a bankruptcy case, and that determination was not reversed, vacated, or otherwise substantially altered on appeal, then the rights of holders of the Notes could be modified in bankruptcy proceedings. Such modifications could be adverse to holders of the Notes, and there could ultimately be no assurance that holders of the Notes would be paid in full or in part on the Notes. Further, under such circumstances, there could be no assurance that the Notes would not be treated as general, unsecured debt by a bankruptcy court, meaning that claims of holders of the Notes could be viewed as having no priority (a) over claims of other creditors of the District; (b) to any particular assets of the District, or (c) to revenues otherwise designated for payment to holders of the Notes. 31

37 Moreover, if the District were determined not to be a municipality for the purposes of the Bankruptcy Code, no representations can be made regarding whether it would still be eligible for voluntary or involuntary relief under Chapters of the Bankruptcy Code other than Chapter 9 or under similar federal or state law or equitable proceeding regarding insolvency or providing for protection from creditors. In any such case, there can be no assurance that the consequences described above for the holders of the Notes would not occur. CONTINUING DISCLOSURE In order to assist the Underwriter in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the 1934 Act (the Rule ), the District shall covenant pursuant to the Note Resolution adopted by the Board to enter into an undertaking (the "Undertaking") for the benefit of holders including beneficial holders of the Notes to provide notices of the occurrence of certain events enumerated in the Rule electronically or in the manner otherwise prescribed by the Municipal Securities Rulemaking Board ( MSRB ) to the MSRB. The details and terms of the Undertaking, as well as the information to be contained in the notices of reportable events, are set forth in the Note Resolution to be executed and delivered by the District. Such Resolution will be in substantially the form attached hereto as Appendix C. The District failed to timely file notice of certain bond insurer rating changes in the last five years. Such bond insurer rating changes were posted to EMMA on June 18, 2014 and June 26, Notice of the late filings was filed on June 15, The District timely filed a notice of underlying rating change in May 2015, but inadvertently did not associate the notice with CUSIP numbers for two issues. Corrected filings were made on June 27, 2016 and May 22, Except to the extent the preceding is deemed to be material, the District has not failed to comply in the previous five years in all material respects with its previous undertakings under the Rule. The District has retained PMA Securities Inc., Milwaukee, Wisconsin to act as the District s Dissemination Agent for its continuing disclosure filings. A failure by the District to comply with the Undertaking will not constitute an event of default on the Notes (although holders will have the right to obtain specific performance of the obligations under the Undertaking). Nevertheless, such a failure 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 Notes in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Notes and their market price. The District will file its continuing disclosure information using the MSRB s Electronic Municipal Market Access System ( EMMA ). Investors will be able to access continuing disclosure information filed with MSRB at CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Notes are subject to the approving legal opinion of Quarles & Brady LLP, Milwaukee, Wisconsin ("Quarles & Brady"), Bond Counsel to the District. In its capacity as Bond Counsel, Quarles & Brady has supplied the information herein under the heading "TAX EXEMPTION" and has provided the form of Bond Counsel opinion included herein as Appendix A. 32

38 UNDERWRITING The Notes were offered for sale by the District at a public, competitive sale on September 13, The best bid submitted at the sale was submitted by,, (the Underwriter ). The District awarded the contract for sale of the Notes to the Underwriter at a price of $. The Underwriter has represented to the District that the Notes have been subsequently reoffered to the public at the approximate initial offering yield as set forth on the cover hereto. The Underwriter may offer and sell the Notes to certain dealers and others at yield different than the offering yield stated on the cover hereto. The offering yield may be changed from time to time by the Underwriter. The aggregate underwriting fee equals $. FINANCIAL ADVISOR PMA Securities, Inc. of Milwaukee, Wisconsin, has been retained as financial advisor (the Financial Advisor ) in connection with the issuance of the Notes. In preparing this Official Statement, the Financial Advisor has relied upon the District, and other sources, having access to relevant data to provide accurate information for this Official Statement. To the best of the Financial Advisor s knowledge, the information contained in this Official Statement is true and accurate. However, the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. PMA Securities, Inc. is a broker-dealer and municipal advisor registered with the Commission and MSRB and is a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. In these roles, PMA generally provides fixed income brokerage services and public finance services to institutional clients, including financial advisory services and advice with respect to the investment of proceeds of municipal securities. PMA is affiliated with PMA Financial Network, Inc., a financial services provider, and Prudent Man Advisors, Inc., an investment adviser registered with the Commission (the Advisory Affiliate ). These entities operate under common ownership with the Firm and are referred to in this disclosure as the PMA Affiliates. PMA is also affiliated with Forecast5 Analytics, Inc., a data analytics company which offers software and forecasting and consulting services to municipal entities, and PMA Leasing, Inc., an equipment leasing company. These entities and the PMA Affiliates are referred to in this disclosure collectively as the Affiliates. Each of these Affiliates also provides services to municipal entity clients. Unless otherwise stated, separate fees are charged for each of these products and services and referrals to its Affiliates result in an increase in revenue to the overall Affiliated companies. The Financial Advisor s duties, responsibilities, and fees in connection with this issuance arise solely from the services for which it is engaged to perform as financial advisor on the Notes and also from the investment of Bond proceeds related to the Project. PMA s compensation for serving as financial advisor on the Notes is conditional on the successful closing of the Notes. PMA receives additional fees for the services used by the District, if any, described in the paragraph above. The fees for these services arise from separate agreements with the District and with institutions of which the District may be a member. THE OFFICIAL STATEMENT This Official Statement includes the cover page, reverse thereof and the Appendices hereto. All references to material not purporting to be quoted in full are only summaries of certain provisions thereof and do not purport to summarize or describe all the provisions thereof. Reference is 33

39 hereby made to such instruments, documents and other materials for the complete provision thereof, copies of which will be furnished upon request to the District. Bond Counsel has not assumed responsibility for this Official Statement or participated in its preparation (except with respect to the section entitled TAX EXEMPTION ) and has not performed any investigation as to its accuracy, completeness or sufficiency. Accuracy and Completeness of the Official Statement Notes. The District has approved this Official Statement for distribution to the Underwriter of the The District s officials will provide at the time of delivery of the Notes, a certificate confirming that, to the best of their knowledge and belief, the Preliminary Official Statement and Official Statement, with respect to the Notes, at the time of the sale and delivery of the Notes, was true and correct in all material respects and did not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated, where necessary to make the statements, in light of the circumstances under which they were made, not misleading. /s/ Chief Financial Officer Kenosha School District No. 1 Kenosha County, Wisconsin September,

40 Form of Legal Opinion of Bond Counsel Appendix A

41 Quarles & Brady LLP 411 East Wisconsin Avenue Milwaukee, WI October 11, 2018 Re: Kenosha School District No. 1, Kenosha County, Wisconsin ("Issuer") $20,000,000 Tax and Revenue Anticipation Promissory Notes, Series 2018, dated October 11, 2018 ("Notes") We have acted as bond counsel to the Issuer in connection with the issuance of the Notes. In such capacity, we have examined such law and other certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion. Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The Notes are in the principal amount of $20,000,000, are dated October 11, 2018, bear interest at the rate of % per annum and mature on September 19, Interest is payable at maturity. The Notes are not subject to optional redemption. We further certify that we have examined a sample of the Notes and find the same to be in proper form. Based upon and subject to the foregoing, it is our opinion under existing law that: 1. The Notes are duly authorized and executed by the Issuer and are valid and special binding obligations of the Issuer. 2. The interest on the Notes is excludable for federal income tax purposes from the gross income of the owners of the Notes. The interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Internal Revenue Code of 1986, as amended (the "Code") on corporations (as that term is defined for federal income tax purposes) and individuals. However, for purposes of computing the alternative minimum tax imposed on corporations, the interest on the Notes is included in adjusted current earnings. We note, however, that the 2017 tax act (Public Law ) enacted on December 22, 2017, repealed the alternative minimum tax on corporations for tax years beginning after December 31, Accordingly, any discussion herein regarding corporate alternative minimum tax is applicable only to a corporation's tax years beginning before January 1, The Code contains requirements that must be satisfied subsequent to the issuance of the Notes in order for interest on the Notes to be or continue to be excludable from gross income for federal income tax purposes. Failure to comply with certain of those QB\

42 requirements could cause the interest on the Notes to be included in gross income retroactively to the date of issuance of the Notes. The Issuer has agreed to comply with all of those requirements. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Issuer comply with those requirements. We express no opinion regarding other federal tax consequences arising with respect to the Notes. We express no opinion regarding the accuracy, adequacy, or completeness of any offering material relating to the Notes. Further, we express no opinion regarding tax consequences arising with respect to the Notes other than as expressly set forth herein. The rights of the owners of the Notes and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and may be subject to the exercise of judicial discretion in accordance with general principles of equity, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. QUARLES & BRADY LLP QB\

43 Appendix B Annual Financial Report for the Fiscal Year Ended June 30, 2017 The Annual Financial Report (the Audit ) of the District contained in Appendix B hereto has been approved by the School Board of the District and have been audited by Schenck S.C., Green Bay Wisconsin (the Auditor ) to the extent and for the periods indicated in their report thereon. The inclusion of the Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the District since the date of the Audit. The District has not asked the Auditor to perform any additional examination, assessment or evaluation with respect to such financial statements since the dates indicated therein, nor has the District requested that the Auditor provide its consent with respect to the use of such financial statements in this Official Statement. The District represents and warrants that there has been no material adverse change in its financial position or the results of its operations nor has it incurred any material liabilities, since the dates indicated in such financial statements, which would make the financial statements included in this Official Statement misleading in any material respect. Potential investors with specific questions regarding the financial information of the District should contact Tarik Hamdan, Chief Financial Officer of the District at (262)

44 K \ 0 0 i 1 \ ra \ Kenosha Unified School District ANNUAL FINANCIAL REPORT for the fiscal year ended June 30, 2017 ACADEMICS. OPPORTUNITY. SUCCESS

45 KENOSHA UNIFIED SCHOOL DISTRICT SCHOOL BOARD AND ADMINISTRATION Our Vision: To be Wisconsin s top performing urban school district that is highly regarded for continuously exceeding all expectations. Our Mission: Provide excellent, challenging learning opportunities and experiences that prepare each student for success. MEMBERS OF THE BOARD OF EDUCATION Tamarra Coleman Mary Snyder Daniel Wade Mike Falkofske Gary Kunich Anthony Garcia Rebecca Stevens President Vice President Clerk Treasurer Member Member Member ADMINISTRATION Dr. Sue Savaglio-Jarvis Tarik Hamdan Julie Housaman Dr. Bethany Ormseth Annie Petering Kristopher Keckler Tanya Ruder Susan Valeri Superintendent of Schools Chief Financial Officer Chief Academic Officer Chief of School Leadership Chief Human Resource Officer Chief Information Officer Chief Communication Officer Chief of Special Education and Student Support ANNUAL FINANCIAL REPORT PREPARED BY Lisa M. Salo, CPA, Accounting Manager

46 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin June 30, 2017 Table of Contents Page No. INDEPENDENT AUDITORS' REPORT 1-3 MANAGEMENT S DISCUSSION AND ANALYSIS 4-15 BASIC FINANCIAL STATEMENTS District-wide Financial Statements Statement of Net Position 16 Statement of Activities 17 Fund Financial Statements Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Statement of Net Position - Fiduciary Fund 22 Statement of Changes in Net Position - Fiduciary Funds 23 Notes to Basic Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund - Budgetary Basis 51 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Special Education Special Revenue Fund - Budgetary Basis 52 Schedule of Changes in Net OPEB Liability and Related Ratios 53 Schedule of Employer Contributions - Other Postemployment Benefits 54 Schedule of Proportionate Share of the Net Pension Liability (Asset) - Wisconsin Retirement System 55 Schedule of Contributions - Wisconsin Retirement System 55 Notes to Required Supplementary Information SUPPLEMENTARY INFORMATION Combining Balance Sheet - Nonmajor Governmental Funds 58 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 59 Schedule of Changes in Assets and Liabilities - Pupil Activity Funds Schedule of Charter School Authorizer Operating Costs by Object Schedule of Charter School Operating Costs by Function

47 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin June 30, 2017 Table of Contents (Continued) Page No. ADDITIONAL INDEPENDENT AUDITORS' REPORT FOR BASIC FINANCIAL STATEMENTS Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Independent Auditors Report on Compliance for Each Major Federal and State Program and on Internal Control Over Compliance Required by the Uniform Guidance and the State Single Audit Guidelines Schedule of Expenditures of Federal Awards Schedule of State Financial Assistance 69 Notes to the Schedule of Expenditures of Federal Awards and the Schedule of State Financial Assistance 70 Schedule of Findings and Questioned Costs Schedule of Prior Year Audit Findings and Corrective Action Plan

48 Schenckÿ AOVISOOY TAX ASSURANCE INDEPENDENT AUDITORS REPORT To the Board of Education Kenosha Unified School District No. 1 Kenosha, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Kenosha Unified School District No. 1, Kenosha, Wisconsin ("the District ) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District as of June 30, 2017, and the respective changes in financial position thereof for the year then ended Ain conformity with accounting principles generally accepted in the United States of America. schencksc.com 1 Schenek SC

49 Change in Accounting Principle As discussed in Note C.1, the District also adopted new accounting guidance, GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans and No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 15 the budgetary comparison information and the schedules relating to pensions and other postemployment benefits on pages 51 through 55 be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The financial information listed in the table of contents as supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards and schedule of state financial assistance are presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and the State Single Audit Guidelines issued by the Wisconsin Department of Administration and are also not a required part of the basic financial statements. The supplementary information and schedules of expenditures of federal awards and state financial assistance are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information, the schedule of expenditures of federal awards and the schedule of state financial assistance are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 2

50 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2017, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 in considering the District s internal control over financial reporting and compliance. Certified Public Accountants Green Bay, Wisconsin November 28,

51 MANAGEMENT S DISCUSSION AND ANALYSIS

52 Management s Discussion and Analysis For the Year Ended June 30, 2017 The discussion and analysis of the Kenosha Unified School District s financial performance provide an overall review of financial activities for the fiscal year. The analysis focuses on school district financial performance as a whole. OVERVIEW OF THE FINANCIAL STATEMENTS The District s basic financial statements are comprised of 1) District-wide financial statements. 2) fund financial statements, and 3) notes to the financial statements. In addition, required supplementary information and supplementary information is provided in the annual financial report. District-wide Financial Statements The District-wide financial statements are the statement of net position and statement of activities. These statements present an aggregate view of the District s finances in a manner similar to private-sector business. Both statements distinguish functions that are supported principally by property taxes and intergovernmental revenues, called governmental activities. The statement of net position presents information on all of the District's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the District s net position changed during the year. This statement reports the cost of government functions and how those functions were financed in the fiscal year. Fund Financial Statements There are three kinds of fund types: governmental, proprietary, and fiduciary. The District has governmental funds and fiduciary funds. The District does not have any proprietary funds. A fund is a grouping of related accounts, which is used to maintain control over resources that have been segregated for specific activities. Fund statements report operations in more detail than the District-wide statements and provide information that may be useful in evaluating a district s near-term financing requirements. 1. Governmental Funds Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. In general, this means that the focus of the fund types is what revenues have come in and what expenditures have been paid out. Governmental funds include the general fund, special revenue funds (Head Start, Trust, Food Service and Community Service), debt service fund and capital projects fund. Under generally accepted accounting principles, the activities of the Special Education Fund (Fund 27) are reported with general fund activities because the excess expenditures within the Special Education Fund are financed by a transfer from the Fund 10 General Fund. The District produces fund financial statements for this fund type. There are two fund financial statements, the balance sheet and the statement of revenues, expenditures and changes in fund balances (operating statement). Financial information is presented separately on both the balance sheet and the statement of revenues, expenditures and changes in fund balances for the general fund and the capital projects fund as these are considered to be major funds. Data for the special 4

53 Management s Discussion and Analysis For the Year Ended June 30, 2017 revenue trust fund, Head Start fund, food service fund, community service fund, and debt service fund is combined into a single, aggregated column. Data for each of these individual non-major funds is provided separately as supplementary information. A reconciliation to facilitate the comparison of the Statement of Net Position to the Governmental Funds Balance Sheet is presented at the bottom of the governmental funds statement. A separate statement to reconcile the Statement of Activities to the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds is also presented. The District adopts an annual budget for its governmental funds. Budgetary comparison statements for the general fund and any major special revenue funds have been provided in the required supplementary information to demonstrate budget compliance as required by generally accepted accounting principles. 2. Proprietary Funds Proprietary funds operate similar to a business. These funds have exchange transactions where each party receives and gives up essentially equal value for the essential activity for that fund. This fund type uses the accrual basis of accounting. The District does not have any proprietary funds. 3. Fiduciary Funds The District also serves as a trustee, or fiduciary, for student organizations called the pupil activity fund, a retiree insurance fund used to provide for premiums the District has obligated itself related to prior service of retired employees, and a private benefit trust fund for scholarships. The assets of these organizations do not directly benefit the District. The District s responsibility is limited to ensuring the assets reported in these funds are used only for their intended purposes. Fiduciary activities are excluded from the District-wide financial statements because the District cannot use these assets to finance its operations. These funds follow the accrual basis of accounting that is described above in the District-wide Financial Statement section. There are two fiduciary financial statements, the statement of net position and the statement of changes in net position (operating statement). Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to the full understanding of the data provided in the District-wide and fund financial statements. The notes to the financial statements follow the basic financial statements. Required Supplementary Information The required supplementary information and related notes contain information that is required to be reported under generally accepted accounting principles (GAAP). This information is not audited and although not part of the basic financial statements, it is considered to be an essential part of financial reporting. The required supplementary information and related notes follow the notes to the financial statements. Supplementary Information The supplementary information is provided for additional analysis and is not part of the basic financial statements. It includes the combining fund statements which provide additional details for the non-major governmental funds. This information follows the required supplementary information section. 5

54 Management s Discussion and Analysis For the Year Ended June 30, 2017 FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the District exceeded the liabilities and deferred inflows at the close of the fiscal year by $97.3 million (net position), an increase of $10.6 million over the prior year. Of this amount, $93.7 million represents the net investment in capital assets and $9.4 million is restricted; $3.2 million for food service programs, $3.0 million for community service programs and $3.2 million for debt service. This results in an unrestricted net deficit balance of $5.8 million. The unrestricted net deficit balance occurred in 2017, because the state of Wisconsin Retirement System s (WRS) actuarial study performed with a measurement date of December 31, 2016, determined a net pension liability. Total capital assets increased by $17.1 million due to the continuation of athletic facility upgrades and the beginning of phase II energy efficiency projects. Other liabilities increased by $0.5 million. Long-term obligations increased by $62.1 million because the District issued $75 million in debt obligations to complete phase II of the energy efficiency projects. Accrued OPEB obligation decreased $0.5 million. Net pension liability decreased $7.9 million. In the governmental funds, total fund balance increased by $63.2 million. The net increase is comprised of the General Fund experiencing an increase from operations of $4.4 million, a Capital Projects Fund increase of $57.0 million of unspent bond proceeds and an increase in the other governmental funds of $1.7 million. At the end of the current fiscal year, unassigned fund balance for the General Fund was approximately $46.4 million dollars. Governmental Activities FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE As noted earlier, the District-wide financial statements are the statement of net position and statement of activities. These statements present an aggregate view of the District s finances in a manner similar to privatesector business. Both statements distinguish functions that are supported principally by property taxes and intergovernmental revenues, called governmental activities. Table 1, below, provides a summary of the District s statement of net position for the year ended June 30, 2017 compared to

55 Management s Discussion and Analysis For the Year Ended June 30, 2017 Table 1 Condensed Statement of Net Position (in thousands of dollars) Assets Current assets Capital assets Total Assets Deferred Outflows Loss on advance refunding Related to OPEB Related to pension Total Deferred Outflows Governmental Activities $ % Change Change $179,283 $115,680 $ 63, % 193, ,244 17, % 372, ,924 80, % (118) -16.3% 2, % 59,620 87,147 (27,527) -31.6% 62, (25,458) -29.0% Liabilities Other liabilities Long-term obligations Accrued OPEB obligation Net pension liability Total Liabilities 52,688 52, , ,268 76,080 76, , , , % 62, % (575) -0.8% (7,976) -49.0% % Deferred Inflows Related to OPEB Related to pension Total Deferred Inflows 4,054 26,284 34,264 30, , % (7,980) -23.3% (3,926) -11.5% Net Position Net investment in capital assets Restricted Unrestricted (deficit) Total Net Position 93,783 88,014 5, % 9,382 7,606 1, % (5,857) (3,481) (2,376) -68.3% $ 97,308 $ $ 5, % Note: may be rounding differences The largest portion of the District's net position is its net investment in capital assets (e. g. land, buildings, and equipment); less related outstanding debt used to acquire those assets. These assets are used to provide services to students and consequently are not available for future spending. Restricted net position accounts for 10% of total net position. The restricted net position is a result of restrictions imposed by external groups such as creditors, grantors or other governments or through enabling legislation. The District's restricted net position consists of $3.2 million for food service programs, $3.0 million for community service programs and $3.2 million for debt service. These restrictions have been imposed by bond 7

56 Management s Discussion and Analysis For the Year Ended June 30, 2017 issuance and through legislation from the state of Wisconsin. The remaining net position is called unrestricted net position which decreased $2.4 million to a $5.9 million deficit from a $3.5 million net deficit in the previous year. The unrestricted net deficit balance occurred in 2017, because the state of Wisconsin Retirement System's (WRS) actuarial study performed with a measurement date of December 31, 2016, determined a net pension liability. Table 2 provides summarized operating results and their impact on net position for the year ended June 30, 2017, compared to Table 2 Changes in Net Position from Operating Results (in thousands of dollars) Revenues Program Revenues Charges for services Operating grants and contributions General Revenues Property taxes State and Federal Aids Not restricted Interest and investment earnings Miscellaneous Total Revenues Governmental ActiMties $ % MQ Change Change $ 4,264 $ 4,195 $ % 40,402 36,880 3, % 87,432 89,548 (2,116) -2.4% 162, ,784 4, % % 3,977 1,399 2, % 298, , % Expenses Instruction Support services Interest and fiscal charges Community services Non-program transactions Total Expenses Change in Net Position 170, ,036 7,053 1,004 4, , , ,702 (2,002) -1.2% 2, % 1, % % % 288, , % $ 10,693 $ 4,403 $ 6, % Note: May be rounding differences. The District relies primarily on property taxes (29.25%), state and federal aids that are not restricted (54.33%) and operating grants and contributions (13.52%) to fund District activities. There were only minor variations between years within the sources of revenue, except for miscellaneous general revenues and interest and investment earnings. Miscellaneous general revenues include general donations and gifts to the District, and those sources may vary from year to year. In addition, the CDO lawsuit settlement of $2.9 million is included in miscellaneous general revenues. Interest and investment earnings are earnings on all cash sources. In , investment rates doubled from the prior year as a result of increased rates of return. 8

57 Management s Discussion and Analysis For the Year Ended June 30, 2017 Program revenues, in the form of charges for services and operating grants and contributions, increased $3.6 million for governmental activities due to receiving a $2 million E-Rate grant and other increased federal operating grant revenues. Overall, expenses increased $2.7 million or 1.0% compared to the prior year with the increases being in the interest and fiscal charges function related to the additional energy efficiency debt issued in the fiscal year 2017 and related to the non-program transactions function related to the private school voucher program increased costs. Table 3 presents the cost of the five major District activities. The table reports each activity's net cost (total cost less fees generated by the activities and intergovernmental aid provided for specific programs). The net cost reflects the financial burden that was placed on the District s taxpayers by each of these functions. Table 3 Total and Net Cost of Governmental Activities (in thousands of dollars) Instruction Support services Interest and fiscal charges Community services Non-program transactions Totals Total Cost of Services $ % Net Cost of Services $ % Change Change $ 170,633 $ 172,635 $ (2,002) -1.2% $ 146,499 S 149,680 $ (3,181) -2.1% 105, ,438 2, % 86,340 85, % 7,053 5, % 6,135 4, % 1, % % 4,522 3, % 3,742 3, % $ 288,248 $ 285,503 $ 2, % S 243,566 S 244,428 $ (862) -0.4% Change Change AW. May he rounding Ji/Jerences. The cost of all governmental activities this year was $288,248,652. Individuals who directly participated or benefited from a program offering paid $4,264,211 of the costs. Federal and state governments subsidized certain programs with grants and contributions of $40,402,479. The net cost of governmental activities totaling $243,581,962 was financed by general revenues of the District. The District relies primarily on property taxes and general state aid to fund governmental activities. School funding regulations restrict the amount by which these two revenue sources, in combination, may be increased. This restriction, called revenue limit, is intended to help hold down increases in property taxes throughout the state. The District equalized property value of $8,580,130,959 represents a 4.47% increase over the previous year and the total tax mill rate for is $10.17 and represents a 6.54% decrease over the previous year. General state aid is paid according to a complex formula taking into consideration district spending, pupil counts and property values as compared to spending and property values for the state as a whole. The District's general equalization state aid increased by $2,528,048 over the prior year due to increased spending. The aid is based on spending which increased in comparison to the spending and resulted in a higher shared cost per member. 9

58 Management s Discussion and Analysis For the Year Ended June 30, 2017 Governmental Funds The District uses fund accounting to provide information on inflows, outflows and balances of spendable resources. Fund statements report operations in more detail than the District-wide statements and provide information that may be useful in evaluating a district s near-term financing requirements. Total governmental fund revenues increased from the prior year in total by 2.7% due to an increase in state categorical aids, such as per pupil categorical aid. Table 4 Governmental Funds Revenue By Source (in thousands of dollars) Property taxes Other local sources Interdistrict sources Intermediate sources State sources Federal sources Other sources Total $ % Change Change $ 87,256 $ 89,366 $ 4,829 4, , ,794 24,206 23,847 6,305 2,004 (2,110) -2.36% % % 0.00% 4, % % 4, % $ 298,942 S $ 7, % Governmental Funds Revenue By Source Other sources Federal sources 2% 8% Other local sources 2% Interdistrict sources 0% Intermediate sources 0% Note: May be rounding differences. 10

59 Management s Discussion and Analysis For the Year Ended June 30, 2017 Total governmental expenditures experienced an overall increase by 5.6% from the prior year. The increase in expenditures was seen in the maintenance and operations, other support services, debt services, community service and non-program transaction functions. The increase in maintenance and operations of $9.7 million occurred because of phase II of the energy efficiency projects. The other support services function increased $2.5 million because of a one-time wireless project where $2 million was funded through an E-rate grant and the remaining half a million was matched by district funds. The debt services function increased due to the bond costs associated with the additional energy efficiency debt issuances that occurred in June The community service expenditures increased from the prior year due a full year of expenditures for the Kenosha Youth Performance Arts Center (KYPAC) Theater and Marching Band programs. Finally, Non-program expenditures increased as a result of the state program called the general voucher program. The general voucher program s participation increased from the prior year. Table 5 Governmental Funds Expenditures By Function (in thousands of dollars) ITS(ruction Pupil and instructional services Administrative and business Maintenance and Operations Pupil transportation Food services Other support services Debt service Community sen/ice Non-program transactions Total $ % Change Change $ 162,194 S 163,942 $ (1,74S) -1.1% 33,320 32, % 19,127 19, % 45,332 35,618 9, % 7,247 6, % 7,791 8,236 (445) -5.4% 10,456 7,952 2, % 22,726 18,304 4, % 1, % 4,522 3, % $ S S % GovernmentalFunds Expenditures By Function Other support 3% P*j«x<:rjmpo»T*» on. Food services rv Comniwty service Mon program 1% Administrate e and business 6% Note: May be rounding differences. 11

60 Management s Discussion and Analysis For the Year Ended June 30, 2017 Table 6 Comparison of Governmental Fund Balances (in thousands of dollars) Fund Balance % Fund 2017 l 2016~ $ Change Change General Fund S 49,045 $ 44,557 $ 4, % Head Start 0.0% Special Revenue Trust (109) 100.0% Food service 3,170 2, % Community service 3,012 2, % Debt sen/ice 4,644 3,378 1, % Capital projects 67,783 10,812 56, % $127,811 $ 64,621 $ 63, % Note: May be rounding differences. The District completed the year with a fund balance of $127,811,237 which increased from last year s ending fund balance of $64,621,300 due to the following: The general fund had an increase in fund balance of $4,488,079, of which was achieved as a result of conservative staffing practices, and an overall conservative spending approach. The general fund actual results are discussed further in the General Fund Budgetary Highlights below. The special revenue trust fund had a decrease in fund balance of $108,473. The special revenue trust fund is used to track the use of gifts and donations from private parties. As a result of the planned athletic facilities capital projects, Mary D. Bradford High School received approximately $170,000 in sponsorships from area businesses in fiscal year 2016 to purchase a new video scoreboard for the Mary D. Bradford Stadium. The scoreboard was purchased and installed during fiscal year The food service fund balance had an increase of $265,146. The food service department continued to replace various equipment and coolers at the individual schools in addition to providing students with nutritious meals. The debt sen/ice fund balance had an increase of $1,266,197. The fund balance of the debt service fund will fluctuate each year, based on bond activity and the timing of bond payments. The capital project fund had an increase in fund balance of $56,970,660. The capital projects fund balance will fluctuate depending on the status of the various projects and the corresponding unspent bond proceeds. The District issued $75 million in debt obligations to complete phase II of the energy efficiency projects. The energy efficiency expenditures for this fiscal year were $10 million. The District expects the energy efficiency projects to be completed by In addition, the district continued the athletic facility upgrades in fiscal year 2017 and spent $8.2 million on these projects. The District anticipates the athletic facilities upgrades to be completed by the end of fiscal year

61 Management s Discussion and Analysis For the Year Ended June 30, 2017 GENERAL FUND BUDGETARY HIGHLIGHTS The District authorizes expenditures prior to formal adoption of the budget in June for the subsequent fiscal year (beginning July 1st). Consistent with current state statutes and regulations an original budget is adopted in October, following a determination of the official enrollment, the certification of general state aids, and equalized property valuations. After the October budget adoption, the District then notifies its respective municipalities of their share of the tax levy no later than November 10th, in compliance with Wis. Stats (3)(a). For budgetary purposes, DPI requires the District to separate the special education revenues and expenditures from other general fund amounts. The budgetary schedules are displayed in the required supplementary information section. The general fund budgeted a net change in fund balance of ($147,173). The actual general fund net change in fund balance was $4,488,079. There are several reasons for the surplus. When final enrollments were determined at the start of the year, there were positions budgeted for that remained vacant. The District also saw a decrease in various insurance costs. In addition, contracted transportation costs were less than anticipated and an approved curriculum adoption of $800,000 was delayed. Lastly, the District benefited from another mild winter, and as a result, utility expenditures were less than budgeted. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of fiscal year 2017, the District had invested $323,724,446 in capital assets, including buildings, sites, and equipment (See Table 7). Total accumulated depreciation on these assets total $130,380,154. Capital Asset acquisitions for governmental activities totaled $23,328,220. The District recognized depreciation expense of $6,228,808 for governmental activities. The increase in the construction in progress is a result of the athletic facilities and energy efficiency capital projects. Detailed information about capital assets can be found in Note B(2) to the financial statements. Table 7 Capital Assets (in thousands of dollars) Land Construction in progress Land improvements Buildings and improvements Furniture and equipment Total Governmental Activities $ % 2017 l 2016 Change Change $ 8,830 $ 8,830 S 25,303 6, ,041 51,342 6,668 6, ,926 50, % 18, % 0.0% 4, % % $323,724 $ $ 23, % Note: May be rounding differences. 13

62 Management s Discussion and Analysis For the Year Ended June 30, 2017 OUTSTANDING LONG-TERM OBLIGATIONS Outstanding long-term obligations include general obligation debt and related premiums and/or discounts, compensated absences, other post-employment benefits liabilities and net pension liability. These liabilities are shown below in Table 8. At year-end, the District had $161,172,000 in general obligation bonds- an increase of 57.4% over last year, because the District issued the remaining debt needed to complete the energy efficiency projects needed at the various school locations. Premiums on long-term debt also increase due to the debt issuances. The net pension liability decreased by 49% from the prior year. The net pension obligation is the District s portion owed as a result of participating in the Wisconsin Retirement System. Table 8 Outstanding Long-term Obligations (in thousands of dollars) General obligation debt Bonds and notes payable Premium on long-term debt Other liabilities Compensated absences Other post-employment benefits liability Net pension liability Total Governmental Activities $ % ' Change Change $161,172 $102,380 $ 58, % 6,776 3,502 3, % 2,372 2,386 (14) -0.6% 76,080 76,655 (575) -0.8% 8,305 16,281 (7,976) -49.0% $254,705 $201,204 62, % Note: May be rounding differences. Debt of the District is secured by an irrepealable tax levy adopted by the School Board at the time of issuance. Wisconsin state statutes require that the first property tax receipts be segregated for annual debt service payments. On May 22, 2017, Moody s affirmed the District s general obligation bond rating Aa3. The Aa3 rating reflects the District s large tax base, healthy reserve levels that have strengthened in recent years, marked improvement in management practices, an average debt burden and payout and affordable pension liabilities. FACTORS BEARING ON THE DISTRICT S FUTURE Currently known circumstances that will impact the Districts financial status in the future are: The District is continuing to experience declining enrollment, which can be primarily attributed to a decrease of births in the community. This lower birthrate occurred most significantly during the years of 2008 to 2012, which first had an impact on kindergarten enrollments during the school year. The enrollment was 21,929. The projected enrollment is 21,

63 Management s Discussion and Analysis For the Year Ended June 30, 2017 The state budget did not include changes to the allowed per pupil amount for revenue limit calculation purposes; however additional revenues were allocated in the form of per pupil categorical aid that is outside of the revenue limit formula. Looking ahead to the state budget, the District is expecting an increase of $4.2 million in per pupil aid. On September 14, 2017, Moody's Investors Service affirmed a MIG 1 short-term rating to the District s short-term tax and revenue anticipation promissory notes. This is the highest rating for short-term debt obligations. The MIG 1 short-term rating incorporates the historical timeliness and predictability of pledged revenues, which include property tax receipts and state aid, the accuracy of the District's past cash flow projections, as well as the reasonableness of the District's future cash flow projections. On December 6, 2016, a global settlement between the parties involved in the CDO transactions became final and the case the District had been pursuing against the RBC Defendants since 2008 was dismissed with prejudice. Pursuant to that settlement, KUSD received an additional $3,272,500 in cash, and both it and its Post-employment Benefits Trust were fully and finally released from any and all remaining obligations under the Trust Notes, which have now been canceled. In addition, the District and its Trust were released of any claims by RBC, including the counterclaims alleged against them in 2012, without any payment being made by the District or Trust to resolve them. The RBC Defendants counterclaims have likewise been dismissed with prejudice. With the global settlement and dismissal of the District's case against RBC and the SEC's case against Stifel, all litigation relating to the 2006 Wisconsin Schools CDO transaction is now complete. There are no further proceedings or claims pending related to the transactions, at least to the District s knowledge. The District s tax base has experience modest growth given the recent recovery in property valuations and ongoing development in the local economy. The District is located in Kenosha County along the busy 1-94 transportation corridor and benefits from its position between the converging Milwaukee and Chicago metro areas. There has been significant development activity in within the District s boundaries, and Kenosha County is one of the fasted growing areas in the State of Wisconsin. The Village of Somers has created a new industrial park called First Park 94 which features 309 acres with frontage along the Canadian Pacific Railroad and potential railroad access. The Ariens Company is currently the key tenant in this park. Also, construction on the 500,000 square foot confectionary facility for the German-based company, Haribo, will begin sometime in 2018 in the Prairie Highlands Corporate Park located in the Village of Pleasant Prairie. Other companies such as Aldi, Amazon, Costco, Meijer, Uline, and Froedert/Medical College of Wisconsin have also invested in the Kenosha area. With this success, the Kenosha Area Business Alliance continues its efforts to recruit new businesses to Kenosha County. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District's finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Kenosha Unified School District Finance Department ( ), Kenosha Unified School District, nd Street, Kenosha, Wl

64 BASIC FINANCIAL STATEMENTS

65 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Net Position June 30, 2017 ASSETS Cash and investments Receivables Taxes Accounts Due from other governments Inventories Prepaid items Capital assets Land Construction in progress Land improvements Buildings and building improvements Furniture and equipment Less: Accumulated depreciation TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding Deferred outflows related to OPEB Deferred outflows related to pension TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Short-term notes payable Accounts payable Accrued payroll liabilities Accrued interest payable Unearned revenues Deposits payable Long-term obligations Due within one year Due in more than one year Other post-employment benefits liability Net pension liability TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Deferred inflows related to OPEB Deferred inflows related to pension TOTAL DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted for Food service programs Community services Debt service Unrestricted (deficit) TOTAL NET POSITION Governmental Activities $ 143,672,250 18,382,749 6,603,679 9,544, , ,081 8,830,458 25,303,241 6,208, ,040,599 51,341,805 (130,380,154) , ,719 2,187,671 59,620,260 62,411,650 15,000,000 18,384,610 17,301,775 1,651, , ,787 11,323, ,995,587 76,080,126 8,304, ,393,442 4,053,921 26,284,280 30,338,201 93,782,883 3,169,811 3,011,589 3,201,012 (5,857,546) $ The notes to the basic financial statements are an integral part of this statement. 16

66 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Activities For the Year Ended June 30, 2017 Functions/Programs Expenses Program Revenues Charges for Services Operating Grants and Contributions Net (Expense) Revenue and Changes in Net Position Governmental Activities Instruction Support services Interest and fiscal charges Community services Non-program transactions $ 170,632,985 $ 105,035,919 7,053,742 1,004,389 4,521,617 1,259,048 $ 22,846,028 $ (146,527,909) 2,226,486 16,469,705 (86,339,728) 167, , ,883 (6,134,859) (836,638) 167,863 (3,742,828) Total School District S 288,248,652 $ 4.264,211 S 40,402,479 (243,581,962) General revenues Property taxes, levied for general purposes Property taxes, levied for debt service Property taxes, levied for community service Other taxes State and federal aids not restricted to specific functions General Other Interest and investment earnings Miscellaneous Gifts and donations Other Total General Revenues 69,282,075 16,473,727 1,500, , ,034, , , ,788 3,697, ,275,014 Change in net position 10,693,052 Net position - July 1, as originally reported 92,138,609 Cumulative Effect of Change in Accounting Principle (5,523,912) Net position - July 1, as restated 86,614,697 Net position - June 30 $ 97,307,749 The notes to the basic financial statements are an integral part of this statement. 17

67 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Balance Sheet Governmental Funds June 30, 2017 ASSETS Cash and investments Receivables Taxes Accounts Due from other funds Due from other governments Inventories Prepaid items TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities Short-term notes payable Accounts payable Accrued payroll liabilities Accrued interest payable Due to other funds Unearned revenues Deposits payable Total Liabilities Fund Balances Nonspendable Inventories Prepaid items Restricted Retirement of long-term debt Capital expansion Food service Community service Committed Contracts Donations Assigned Charter schools Unassigned Total Fund Balances TOTAL LIABILITIES AND FUND BALANCES General Capital Projects Other Governmental Funds _ Total Governmental Funds $59,568,368 $73,264,417 $10,839,465 $ 143,672,250 18,382,749 6,384, ,989 9,088,731 2, , , , ,121 32,500 18,382,749 6,603, ,989 9,544, , ,081 $ S ,417 S S $15,000,000 $ 12,211,121 5,481,896 17,528, ,188 $ $ 15,000, ,593 18,384,610 17,528, , , , ,385 79, , , ,787 45,147, ,896 1,053, ,202 2, ,581 87,669 67,782, ,121 32,500 4,644,245 2,679,690 2,979, , , ,081 4,644,245 67,782,521 2,679,690 2,979,089 87, ,679 1,958,043 1,958,043 46,441,914 46,441,914 49,045,392 67, ,983, ,811,237 $94,192,797 $73,264,417 $12,037,225 $179,494,439 (Continued) 18

68 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Balance Sheet (Continued) Governmental Funds June Reconciliation to the Statement of Net Position Total Fund Balances from previous page Total Governmental Funds $ 127,811,237 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 193,344,292 Deferred outflow of resources is reported in the statement of net position for: Loss on advance refinancing 603,719 The District's proportionate share of Wisconsin Retirement System pension plan is not an available financial resource; therefore, it is not reported in the fund financial statements Deferred outflows of resources Net pension liability Deferred inflows of resources The District's other post-employment benefit liability is not an available resource; therefore, is not reported in the fund financial statements: Deferred outflows of resources Other post-employment benefit liability Deferred inflows of resources Some liabilities, including bonds and notes payable, are not due and payable in the current period and therefore are not reported in the funds. General obligation debt Premium on long-term debt Accrued interest on long-term obligations Compensated absences 59,620,260 (8,304,843) (26,284,280) 2,187,671 (76,080,126) (4,053,921) (161,172,000) (6,775,649) (1,443,233) (2, ) Net Position of Governmental Activities as Reported on the Statement of Net Position (see page 16) S 97,307,749 The notes to the basic financial statements are an integral part of this statement. 19

69 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2017 Revenues Property taxes Other local sources Interdistricl sources Intermediate sources State sources Federal sources Other sources Total Revenues General $ 69,282,075 $ 2,267, ,926 15, ,575,605 15,710,994 2,432, ,894,541 Capital Projects Other Governmental Funds Total Governmental Funds S 17,973,727 $ 87,255, ,966 2,344,610 4,828, , , ,719,763 24,205,925 6,305, ,158 B.494, , , ,704 Expenditures Instruction Regular instruction Vocational instruction Special education instruction Other instruction Total Instruction Support Services Pupil services Instructional staff services General administration services School administration services Business services Operation and maintenance of plant Pupil transportation Food services Central services Insurance Other support services Total Support Services Debt Service Principal Interest and fiscal charges Total Debt Service Community services Non-program transactions General tuition payments Special education tuition payments Adjustments and refunds Total Non-program transactions Total Expenditures Excess of Revenues Over (Under) Expenditures 111,660,748 4,604,077 36,553,010 8,186, ,004,219 17,379,406 15,334,239 1,200,057 14,942,865 2,294,418 26,397,483 7,177,656 18,236, , , , , ,791 4,212, , , ,906, , ,571 4,604, ,017 37,286, ,152 8,350, , , , , , , ,172 69, ,926 17,796,793 15,522, ,364 15,249,959 2,294,418 45,331,961 7,246,832 7,790,926 9,721, ,633 98, , ,643,000 6,885,419 22,528, ,992 15,643,000 7,083,210 22,726,210 1,005,992 4,212, , ,815 4,521, ,578, ,721,125 4,988,079 (18, ) (1,748,160) (14.779,421) Other Financing Sources (Uses) Long-term debt issued Premium on long-term debt issued Payment to current bondholder Payment to refunded bond escrow agent Transfers in Transfers out Total Other Financing Sources (Uses) 74,990,000 ( ) ( ) 74, ,265,000 3,622,941 (4,991,041) (1,917,542) 500, ,358 81,255,000 3,622,941 (4,991,041) (1,917,542) 500,000 (500,000) Net Change in Fund Balances 4,488,079 56,970,660 1,731,198 63,189,937 Fund Balances - July 1 44,557,313 10,811,861 9,252,126 64,621,300 Fund Balances - June S S S (Continued) 20

70 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Governmental Funds For the Year Ended June 30, 2017 Total Governmental Funds Reconciliation to the Statement of Activities Net Change in Fund Balances from previous page $ 63,189,937 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 the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay reported in governmental fund statements Depreciation expense reported in the statement of activities Amount in which depreciation is less than capital outlays $ 23,328,220 (6,228,808) 17,099,412 Certain employee benefits are reported in the governmental funds when amounts are paid. The statement of activities reports the value of benefits earned during the year. The accrual of these benefits (increased) decreased by: Accrued sick leave and vacation payable 38,339 The change in the net pension liability (asset) and related deferred inflows and outflows of resources as a result of employer contributions, changes in assumptions and proportionate share and the difference between the expected and actual experience of the pension plan (11,570,507) Change in the OPEB liability and related deferred inflows and outflows of resources as a result of employer contributions and related other post-employment costs of the plan 4,232,761 The loss on advance refunding is reported in the governmental funds as an expenditure when paid. In the statement of activities, this cost is deferred and amortized over the life of the bonds. The change reported related to these items on the statement of activities in the current year is: (118,274) Premiums are reported in the governmental funds as an other financing source while discounts are shown as expenditures. In the statement of activities, these items are deferred and amortized over the life of the bonds. The change reported related to these items on the statement of activities in the current year is: (3,273,002) The District issued bonds during the year to both refinance previous bond issues and for capital projects. The amount of the debt issue is reported in the governmental funds as a source of financing. In the statement of net position however, debt is not reported as a financing source, but rather constitutes a long-term liability. The amount of long-term debt reported as proceeds in the governmental funds statement is: (81,255,000) Repayment of principal on long-term debt is reported in the governmental funds as an expenditure, but is reported as a reduction in long-term debt in the statement of net position and does not affect the statement of activities. The amount of long-term debt principal payments in the current year is: General obligation debt 22,463,000 Accrued interest as presented in the governmental funds does not include an estimate of the interest expense incurred during the current period which relates to bonds and notes payable that were not recorded in the governmental funds. (113,614) Change in Net Position of Governmental Activities as Reported on the Statement of Activities (see page 17) S The notes to the basic financial statements are an integral part of this statement. 21

71 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Net Position Fiduciary Funds June 30, 2017 ASSETS Cash and investments Accounts receivable TOTAL ASSETS Retiree Flealth Insurance $ 17,963,040 $ 10,051,154 Private-Benefit Trust Agency Fund Pupil Activity Total Fiduciary Funds 251,019 $ 1,797,402 $ 20,011,461-10,051,154 $ ,194 $ S 1.797,402 S ,615 LIABILITIES Accounts payable Due to student organizations $ 6,187,246 $ $ 8,058 $ 6,195,304 1,789,344 1,789,344 TOTAL LIABILITIES 6,187,246 1,797,402 7,984,648 NET POSITION Restricted for: Retiree health insurance Scholarships 21,826, ,019 21,826, ,019 TOTAL NET POSITION 21,826, ,019 22,077,967 TOTAL LIABILITIES AND NET POSITION $ 28,014,194 $ $ ,062,615 The notes to the basic financial statements are an integral part of this statement. 22

72 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2017 ADDITIONS Employer contributions Employee contributions Earnings on investments Other income Total Additions DEDUCTIONS Trust fund disbursements Other expenditures Total Deductions Retiree Health Insurance $ 12,316,038 $ 386, , ,512 Private-Benefit Trust _ Total Fiduciary Funds $ 12,316, , , , ,050 13,207,506 13,007 13,220,513 8,699,457 12,451 8,711,908 27,655 27,655 8,727,112 12,451 8,739,563 Change in Net Position 4,480, ,480,950 Net Position - July 1 17,346, ,463 17,597,017 Net Position - June 30 $ 21, $ S 22,077,967 The notes to the basic financial statements are an integral part of this statement. 23

73 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the Kenosha Unified School District No. 1 ("the District"), Kenosha, Wisconsin, have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting principles and policies utilized by the District are described below: 1. Reporting Entity The Kenosha Unified School District No. 1 is organized as a common school district governed by an elected seven-member school board. The District operates grades pre-kindergarten through grade 12, Head Start, and several adult education and recreation programs. The District is comprised of four municipal taxing districts (City of Kenosha, Village of Pleasant Prairie, Village of Somers and Town of Somers). In accordance with GAAP, the basic financial statements are required to include the District (the primary government) and any separate component units that have a significant operational or financial relationship with the District. The District has not identified any component units that are required to be included in the basic financial statements in accordance with standards established by GASB Statement No District-wide and Fund Financial Statements The district-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the District. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The District reports no business-type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental and fiduciary funds, even though the latter are excluded from district-wide financial statements. Governmental funds include general, special revenue, debt service and capital projects funds. The District has no enterprise or internal service funds. Major individual governmental funds are reported as separate columns in the fund financial statements. MAJOR FUNDS The District reports the following major governmental funds: GENERAL FUND This is the District s primary operating fund. It accounts for all financial activity that is not accounted for in another fund. The District follows the regulatory requirements of the Wisconsin Department of Public Instruction, which requires educational programs for students with disabilities to be reported in a separate Special Education Fund (Fund 27) from other instructional activities reported in the General Fund (Fund 10). Under GAAP, the activities of the Special Education Fund are reported with General Fund activities because excess expenditures within the Special Education Fund are financed by a transfer from Fund 10. General fund sources include financial aid received from the state and federal government and payments from other school districts. 24

74 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) CAPITAL PROJECTS FUND This fund accounts for the resources restricted for the acquisition or construction of specific capital projects or items. NON-MAJOR FUNDS The District reports the following non-major governmental funds: HEAD START FUND This fund is used to account for the federal Head Start program. TRUST FUND This fund is used to account for trust funds that can be used for district operations. FOOD SERVICE FUND This fund accounts for the activities of the District s food service, generally school breakfast, lunch and snack programs. COMMUNITY SERVICE FUND This fund is used to account for activities such as adult education, community recreation programs such as sports leagues, and other programs which are not elementary and secondary educational programs but have the primary function of serving the community. DEBT SERVICE FUND This fund accounts for the resources accumulated and payments made for principal and interest on long term general obligation debt of governmental activities. Additionally, the District reports the following fund types: The District accounts for assets held as an agent for various student organizations in a fiduciary agency fund- pupil activity. The District accounts for assets that are accumulated to finance retiree health insurance benefits in the fiduciary fund- retiree health insurance trust. The District accounts for assets that are accumulated to finance scholarships in the fiduciary fund - private benefit trust. 3. Measurement Focus. Basis of Accounting, and Financial Statement Presentation The district-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. 25

75 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to employee benefit programs and claims and judgments, are recorded only when payment is due. Property taxes are recognized as revenue in the fiscal year for which taxes have been levied. Tuition, grants, fees and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when the cash is received by the District. As a general rule the effect of interfund activity has been eliminated from the district-wide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed. 4. Assets. Liabilities. Deferred Outflows/Inflows of Resources and Net Position or Fund Balance a. Cash and Investments Cash and investments are combined in the financial statements. Cash deposits consist of demand and time deposits with financial institutions and are carried at cost. Investments are stated at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. b. Accounts Receivable Accounts receivable are recorded at gross amount with uncollectible amounts recognized under the direct write-off method. No allowance for uncollectible accounts has been provided since it is believed that the amount of such allowance would not be material to the basic financial statements. c. Property Taxes The aggregate District tax levy is apportioned and certified in November of the current fiscal year for collection to comprising municipalities based on the immediate past October 1 full or "equalized1' taxable property values. As permitted by a collecting municipality s ordinance, taxes must be paid in full or in two or more installments with the first installment payable the subsequent December 31 and a final payment no later than the following July 31. On or before January 15, and by the 20th of each subsequent month thereafter, the District is paid by the collecting municipalities its proportionate share of tax collections received through the last day of the preceding month. On or before August 20, the county treasurer makes full settlement to the District for any remaining balance. 26

76 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property taxes are recognized as revenue in the fiscal year levied as they are considered due as of January 1, the date from which interest and penalties accrue for non-payment of a scheduled installment, and full receipt of the entire levy is assured within sixty days of fiscal year end, meeting the availability criteria necessary for property tax revenue recognition by accounting principles generally accepted in the United States of America. d. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as due from other funds" and "due to other funds" in the fund financial statements. e. Inventories Inventories are recorded at cost which approximates market, using the first-in/first-out (FIFO) method. Inventories consist of expendable supplies held for consumption. The cost is recorded as an expenditure at the time individual inventory items are consumed rather than when purchased. Inventories of governmental fund types in the fund financial statements are offset by nonspendable fund balance to indicate that they do not represent spendable available financial resources. f. Prepaid Items Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid items, and are accounted for on the consumption method. Prepaid items of governmental fund types in the fund financial statements are offset by nonspendable fund balance to indicate that they do not represent spendable available financial resources. g. Capital Assets Capital assets are reported at actual cost or estimated historical costs, based on appraisals conducted by an independent third-party professional appraisal firm. Donated assets are reported at estimated acquisition value at the time received. Capitalization thresholds (the dollar valued above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the district-wide statements are as follows: Assets Buildings Building improvements Site improvements Furniture & equipment Computer & related technology Governmental Activities Capitalization Depreciation Estimated Threshold Method Useful Life $ 5,000 5,000 5,000 5,000 5,000 Straight-line Straight-line Straight-line Straight-line Straight-line 50 years 20 to 25 years 10 to 20 years 4 to 15 years 4 to 10 years 27

77 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h. Unearned Revenues The District reports unearned revenues on its balance sheet. Unearned revenues arise when potential revenue does not meet the "measurable" criteria for recognition in the current period. i. Compensated Absences Vacation benefits are accrued as a liability as the benefits are earned if the employees rights to receive compensation are attributable to services already rendered and it is probable that the School District will compensate the employees for the benefits through paid time off or some other means. The School District records a liability for accumulated unused vacation time when earned for all employees with more than one year of service. Generally, sick leave can be accumulated up to a maximum of 90 to 120 days depending on the employment agreement. Accumulated sick time may not be taken in compensation but, upon retirement for certain collective bargaining groups, the employee is granted a payout equal to 50% of cumulative sick days times their daily rate. The District accrues that sick leave which it deems probable of payout for employee retirement. Only sick leave relating to employees qualifying for retirement is accrued. The entire compensated absence liability is reported on the district-wide financial statements. The estimated liabilities include required salary-related payments. For governmental fund financial statements only, the matured compensated absences payable to currently terminating employees are reported as a liability. j. Pensions District employees participate in the Wisconsin Retirement System (WRS). For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the WRS and additions to/deductions from WRS fiduciary net position have been determined on the same basis as they are reported by WRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. k. Other Postemplovment Benefits Other Than Pensions (OPEB) The District provides varying amounts of health insurance to eligible retired employees until age 65, based on the employment agreement in existence at the date of their retirement. The benefit is offered to all employees who retire from the District on or after attaining age 55 (age 58 under a certain employment agreement) with at least fifteen years of service. The District will cover the cost of a single premium or a family premium based on the applicable employment agreement. For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Kenosha Unified School District No. 1 s Other Postemployment Benefit Plan (the uplan ) and additions to/deductions from the Plan's fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the Plan recognizes benefit payments when due and payable in accordance with the benefit terms. 28

78 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30,2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has three items that qualify for reporting in this category. One is the deferred charge on refunding reported in the district-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The second item is related to the District s proportionate share of the Wisconsin Retirement System pension plan. The item includes District contributions to the pension plan subsequent to the measurement date which are recognized as expenditures in the subsequent year. The remaining portion is deferred and amortized over the expected remaining service lives of the plan participants. The third item is related to the District s other post-employment benefits plan and is amortized over the expected remaining service lives of the plan participants. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The District currently has two items that qualify for reporting in this category. The first item is related to the District s proportionate share of the Wisconsin Retirement System pension plan and is deferred and amortized over the expected remaining service lives of the plan participants. The second item is related to the District's other post employment benefits plan and is amortized over the expected remaining service lives of the plan participants. m. Long-term Obligations In the district-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. For the district-wide statements, bond issuance costs are reported as expenses while bond discounts and premiums are included with long-term obligations. Bond premiums and discounts are amortized over the life of the issue using the straightline method. In the fund financial statements, governmental funds recognize bond issuance costs, bond premium and discounts during the current period. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures while bond premiums and discounts are recorded as other financing sources or uses. 29

79 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES (Continued) n. Fund Equity GOVERNMENTAL FUND FINANCIAL STATEMENTS Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: Nonspendable fund balance - Amounts that are not in spendable form (such as inventory, prepaid items, or long-term receivables) or are legally or contractually required to remain intact. Restricted fund balance - Amounts that are constrained for specific purposes by external parties (such as grantor or bondholders), through constitutional provisions, or by enabling legislation. Committed fund balance - Amounts that are constrained for specific purposes by action of the Board of Education. These constraints can only be removed or changed by the Board of Education using the same action that was used to create them. Assigned fund balance - Amounts that are constrained for specific purposes by action of District management. The Board of Education has authorized the Chief Financial Officer to assign fund balance. Residual amounts in any governmental fund, other than the General Fund, are also reported as assigned. Unassigned fund balance - Amounts that are available for any purpose. amounts are only reported in the General Fund. Positive unassigned The District has adopted a fund balance spend down policy regarding the order in which fund balance will be utilized. Where applicable, the policy requires restricted funds to be spent first, followed by committed funds, and then assigned funds. Unassigned funds would be spent last. DISTRICT-WIDE STATEMENTS Equity is classified as net position and displayed in three components: Net investment in capital assets - Amount of capital assets, net of accumulated depreciation, and capital related deferred outflows of resources less outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets and any capital related deferred inflows of resources. Restricted net position - Amount of net position that is subject to restrictions that are imposed by 1) external groups, such as creditors, grantors, contributors or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. Unrestricted net position - Net position that is neither classified as restricted nor as net investment in capital assets. 5. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 30

80 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS 1. Cash and Investments The District maintains various cash and investment accounts, including pooled funds that are available for use by all funds. Each fund s portion of these accounts is displayed in the financial statements as "Cash and investments." Invested cash consists of deposits and investments that are restricted by Wisconsin Statutes to the following: Time deposits; repurchase agreements; securities issued by federal, state and local governmental entities; statutorily authorized commercial paper and corporate securities; and the Wisconsin local government investment pool. Investments in the private-purpose trust fund and employee benefit trust fund may be invested in other types of investments as authorized under Wisconsin Statute , Uniform Prudent Investor Act. The carrying amount of the District's cash and investments totaled $163,683,711 on June 30, 2017 as summarized below: Petty cash funds Deposits with financial institutions Investments $ 13,935 20,347, ,322,616 $ 163,683,711 Reconciliation to the basic financial statements: District-wide Statement of Net Position Cash and investments Fiduciary funds Statement of Net Position Retiree Health Insurance Trust Fund Private-Purpose Trust Fund Agency Fund - Pupil Activity Fund $ 143,672,250 17,963, ,019 1,797,402 $ 163,683,711 Fair Value Measurements The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant observable inputs; Level 3 inputs are significant unobservable inputs. The District had the following fair value measurements as of June 30, 2017: Fair Value Measurements Using: Level 1 Level 2 Level 3 Investments WISC Investments Limited Term Duration Series $ $ 10,001,985 $ 31

81 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Deposits and investments of the District are subject to various risks. Presented below is a discussion of the specific risks and the District s policy related to the risk. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. Wisconsin statutes require repurchase agreements to be fully collateralized by bonds or securities issued or guaranteed by the federal government or its instrumentalities. The District does not have an additional custodial credit risk policy. Deposits with financial institutions within the State of Wisconsin are insured by the Federal Deposit Insurance Corporation (FDIC) in the amount of $250,000 for the combined amount of all time and savings accounts and $250,000 for the combined amount of all interest-bearing and noninterest-bearing demand deposit accounts per official custodian per insured depository institution. Deposits with financial institutions located outside the State of Wisconsin are insured by the FDIC in the amount of $250,000 for the combined amount of all deposit accounts per official custodian per depository institution. Also, the State of Wisconsin has a State Guarantee Fund which provides a maximum of $400,000 per public depository above the amount provided by an agency of the U.S. Government. However, due to the relatively small size of the State Guarantee Fund in relation to the Fund's total coverage, total recovery of insured losses may not be available. As of June 30, 2017, $14,374,210 of the District s deposits with financial institutions were in excess of federal and state depository insurance limits and were collateralized. Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Wisconsin statutes limit investments in securities to the top two ratings assigned by nationally recognized statistical rating organizations. The District does not have an additional credit risk policy. Presented below is the actual rating as of year-end for each investment type. Investment Type Wisconsin local government investment pool WISC investments Cash management series Investment series Limited term duration series Repurchase agreements Totals $ Amount Exempt From Disclosure AAA Rating as of Year End AA Not Rated 1,154 $ $ $ $ 1, , ,912, , ,912,369 10,001,985 10,001,985 4,000,000 4,000,000 $ ,616 $ 4,000,000 $ 129,319,477 $ $ 1,154 On June 30, 2017, the District held repurchase agreement investment of $4,000,000 of which the underlying securities are held by the investment s counterparty, not in the name of the District. 32

82 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) On June 30, 2017, the District held Wisconsin Investment Series Cooperative Cash Management Series of $407,108 of which the underlying investments are held by the investment s counterparty, not in the name of the District. On June 30, 2017, the District held Wisconsin Investment Series Limited Term Duration Series of $10,001,985 of which the underlying investments are held by the investment s counterparty, not in the name of the District. On June 30, 2017, the District held Wisconsin Investment Series Cooperative Investment Series of $128,912,369 of which the underlying certificates of deposit were covered by FDIC insurance. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the District s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the District s investments by maturity: Remaining Maturity (in Months) 12 Months 13 to to 60 More Than Investment Type Amount or Less Months Months 60 Months Wisconsin local government investment pool $ 1,154 $ 1,154 $ $ $ WISC investments Cash management series Investment series Limited term duration series Repurchase agreements 407, ,912,369 10,001,985 4,000, , ,912,369 10,001,985 4,000,000 Totals $143,322,616 $143,322,616 $ $ $ Investments with Fair Values Highly Sensitive to Interest Rate Fluctuation The District s investments do not include investments that are highly sensitive to interest rate fluctuations. Investment in Wisconsin Local Government Investment Pool The District has investments in the Wisconsin local government investment pool of $1,154 at year-end. The Wisconsin local government investment pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underiying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day s notice. At June 30, 2017, the fair value of the District s share of the LGIP s assets was substantially equal to the carrying value. 33

83 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Investment in Wisconsin Investment Series Cooperative The District has investments in the Wisconsin Investment Series Cooperative (WISC) of $154,437,961 at year end consisting of $407,108 invested in the Cash Management Series, $128,912,369 invested in the Investment Series, $10,001,985 in the Limited Term Duration Series, $9,368,199 in savings deposit accounts, and $5,748,300 in certificates of deposit. The Cash Management Series has no minimum investment period, allows check writing privileges, and the average dollar weighted maturity is ninety (90) days or less. The Investment Series requires a 14 day minimum investment period and one business day withdrawal notice, and the average dollar weighted maturity is one hundred twenty (120) days or less. The Limited Term Duration series requires a 30 day advance notice for quarterly withdrawals, and the average dollar weighted maturity does not exceed two years. WISC is organized by and operated exclusively for Wisconsin public schools, technical colleges, and municipal entities. WISC is not registered with the Securities and Exchange Commission, but operates under Wisconsin intergovernmental Cooperation Statute, Wisconsin Statutes, Section WISC is governed by the Wisconsin Investment Series Cooperative Commission in accordance with the terms of the Intergovernmental Cooperation Agreement. WISC invests District funds in accordance with Wisconsin law. WISC investments are valued at amortized cost, which approximates market value. At June 30, 2017, the fair value of the District s share of the WISC assets was substantially equal to the carrying value. 2. Capital Assets Capital asset activity for the year ended June 30, 2017 was as follows: Governmental activities: Capital assets, not being depreciated: Sites (land) Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Land improvements Buildings & building improvements Furniture and equipment Total capital assets being depreciated Less accumulated depreciation for: Land improvements Buildings & building improvements Furniture and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Less: Related long-term outstanding debt Less: premium on related long term outstanding debt Plus: deferred amount on advance refunding Net investment in capital assets Beginning Balance Increases $ 8,830,458 $ 6,667,422 19,336,160 15,497,880 19,336,160 6,208, ,926,174 50,763, ,898,346 5,380,387 72,837,675 45,933, ,151,346 4,114, ,976 4,692, ,982 4,942,260 1,077,566 6,228, ,747,000 (1,536,407) $ Decreases Ending Balance $ 8,830, ,341 25,303, ,341 34,133,699 6,208, ,040,599 51,341, ,590,747 5,589,369 77,779,935 47,010, ,380, ,210,593 $ 176,244,880 $ 17,799,753 $ 700, ,344,292 (93,389,479) (6,775,649) 603,719 $ 93,782,883 34

84 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Depreciation expense was charged to the following functions of the District as follows: Governmental activities Instruction Regular instruction Vocational instruction Special education instruction Other instruction Total instruction Support Services Pupil services Instructional staff services General administration services School administration services Business services Operation and maintenance of plant Pupil transportation services Central services Community services Food service Total support services $ 3,492,216 45,456 3,588 58,794 3,600,054 10,030 39, ,805 1,203 2,313,834 1,929 97,100 1, ,229 2,628,754 Total depreciation expense - governmental activities $ 6,228, Interfund Receivable, Payables, and Transfers The balances result from the time lag between the dates that 1) interfund goods and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the accounting system, and 3) payments between funds are made. Interfund receivables and payables at June 30, 2017 were as follows: Governmental Activities General Fund Head Start Fund Total Governmental Activities Interfund Receivables Interfund Payables $ 210,989 $ 210,989 S 210,989 $ 210,989 Transfers within the reporting entity are substantially for the purposes of subsidizing operating functions, funding capital acquisitions or maintaining debt service on a routine basis. Resources are accumulated in a fund to support and simplify the administration of various projects. 35

85 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Interfund transfers for the year ended June 30, 2017 were as follows: Transfer to: Debt Service Transfers from: General Fund $ 500, Short-term Debt The District issues tax anticipation notes in advance of property tax collections. The notes are necessary because payments for the year begin in July whereas the tax collections are received from the municipalities beginning in January. Short-term debt activity for the year ended June 30, 2017 was as follows: Outstanding 7/1/16 Issued Retired Outstanding 6/30/17 Tax anticipation notes $ 15, $ ,000 S 25, S 15,000,000 Interest paid on short-term debt for the year ended June 30, 2017, was $265, Long-term Obligations The following is a summary of changes in long-term obligations of the District for the year ended June : Governmental activities: General Obligation Debt Bonds and notes payable Premium on long term debt Total Compensated absences Governmental activities Long-term obligations Outstanding 7/1/16 Issued Retired Outstanding 6/30/17 Due Within One Year $ 102,380,000 $ 81,255,000 $ 22,463,000 $ 161,172,000 S 10,728, , ,939 6,775, , ,882,647 84,877,941 22,812, ,947,649 11,097,440 2,384,935 _ - 13,089 2,371, ,468 $ 108,267,582 $ 84,877,941 $ 22,826,028 $ 170,319,495 $ 11,323,908 Total interest paid during the year on long-term debt totaled $5,963,

86 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B DETAILED NOTES ON ALL FUNDS (Continued) General Obligation Debt The full faith, credit, and taxing powers of the District secure all general obligation debt. notes payable is comprised of the following individual issues: Bonds and General Obligation Bonds and Notes Bond - Mahone Bond - ITA Refinancing Bond - ITA BAB State Trust Fund Loan - Reuther QSCB State Trust Fund Loan - ITA QSCB State Trust Fund Loan - Reuther QZAB Bond - Refinancing Bond - Refinancing & Energy Efficiency Project Bond - Refinancing & Athletic Building Bond - Energy Efficiency Project Bond - Refunding Bond - Refunding & Energy Efficiency Project State Trust Fund Loan - Energy Efficiency Project Issue Date 07/15/09 07/15/09 07/15/09 06/10/10 06/10/10 06/10/10 02/15/12 09/17/13 07/15/15 07/26/16 06/15/17 Average Interest Rates (%) 4.50% - 5.0% 5.00% % 8.00% 4.25% 4.25% 4.25% 2.00%-2.50% 3.00% 3.00% % 2.50% % 3.00% Dates of Maturity 04/01/20 $ 04/01/24 04/01/29 03/15/18 03/15/19 03/15/20 04/01/18 04/01/33 04/01/35 04/01/36 04/01/20 Outstanding 6/30/17 530,000 13,950,000 20,000, ,000 4,278,000 2,439,000 1,855,000 15,135,000 26,205,000 23,470,000 1,895,000 06/15/ % -5.00% 04/01/37 34,510,000 06/15/ % 03/15/27 16,355,000 Total General Obligation Bonds and Notes $ 161,172,000 Aggregate cash flow requirements for retirement of long-term principal and interest on notes and bonds (including State Trust Loans) as of June 30, 2017 as follows: Year Ended Governmental Activities June 30. Principal Interest Total 2018 $ 10,728,000 $ 6,861,833 $ 17,589, ,795,000 6,827,411 15,622, ,454,000 8,630,000 9,000,000 48,750,000 38,900,000 26,915,000 6,445,362 6,012,591 5,611,716 21,142,368 8,696,881 2,276,520 15,899,362 14,642,591 14,611,716 69,892,368 47,596,881 29,191,520 $ ,000 S $225,046,

87 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Advance Refunding During fiscal year 2017 the District advance refunded a portion of a general obligation bond issue from The District issued $1,895,000 of general obligation refunding bonds to provide resources to purchase U.S. Government and Local Government Series securities that were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments of the refunded debt. As a result, the refunded bonds are considered to be defeased and the liability has been removed from the financial statements. The advance refunding increased total debt service payments over the next four years by $75,325 and resulted in an economic loss (difference between the present value of the debt service payments of the refunded and refunding bonds) of $14,794. At June 30, 2017, $1,880,000 of outstanding general obligation bonds and notes are considered defeased. Current Refunding During 2017, the District currently refunded a general obligation bond issue from The District issued $4,605,000 of general obligation refunding bonds to call the refunded debt. This current refunding was undertaken to reduce total debt service payments over the next ten years by $551,222 and to obtain an economic gain (difference between the present value of the debt service payments of the refunded and refunding bonds) of $487,103. Legal Margin for New Debt The District's legal margin for creation of additional general obligation debt on June 30, 2017 was $700,042,108 as follows: Equalized valuation of the District Statutory limitation percentage General obligation debt limitation, per Section of the Wisconsin Statutes Total outstanding general obligation debt Less: Amounts available for financing general obligation debt Debt service fund (1) Net outstanding general obligation debt applicable to debt limitation Legal Margin for New Debt $ 161,172,000 3,201,012 $8,580,130,959 _(x) 10% 858,013, ,970,988 $ 700,042,108 (1) Less accrued interest Operating Leases The District leases buildings and other equipment under non-cancelable operating leases. Total costs for such leases were $491,143 for facility leases, $253,266 for vehicle leases, $187,996 for copier leases, and $14,816 for musical instrument leases for the year ended June 30, The future minimum lease payments totaling $2,513,706 for these leases are as follows: 38

88 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) 6. Pension Plan a. Plan Description The WRS is a cost-sharing, multiple-employer, defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds (ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1200 hours a year (880 hours for teachers and school district educational support employees) and expected to be employed for at least one year from employee s date of hire are eligible to participate in the WRS. ETF issues a standalone Comprehensive Annual Financial Report (CAFR), which can be found at For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and State executive participants) are entitled to receive an unreduced retirement benefit. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service, and (3) a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. Employees may retire at age 55 (50 for protective occupation employees) and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. b. Post-Retirement Adjustments The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance with s , Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses), together with other actuarial experience factors, create a surplus (shortfall) in the reserves, as determined by the system's consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law. Core annuities cannot be reduced to an amount below the original, guaranteed amount (the floor ) set at retirement. The Core and Variable annuity adjustments granted during recent years are as follows: 39

89 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) c. Contributions Year Core Fund Adjustment Variable Fund Adjustment % 10% (2.1) (42) 2010 (1.3) (1.2) (7.0) (7) 2013 (9.6) (5) Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for general category employees, including teachers, and Executives and Elected Officials. Starting on January 1, 2016, the Executives and Elected Officials category was merged into the General Employee category. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. During the reporting period, the WRS recognized $9,576,635 in contributions from the District. Contribution rates as of June 30, 2017 are: Employee Category Employee Employer General (including teachers) Protective with Social Security Protective without Social Security 6.6% 6.6% 6.6% 6.6% 9.4% 13.2% d. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the District reported a liability of $8,304,843 for its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015 rolled forward to December 31, No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The District s proportion of the net pension liability was based on the District s share of contributions to the pension plan relative to the contributions of all participating employers. At December 31, 2016, the District s proportion was %, which was an increase of % from its proportion measured as of December 31, For the year ended June 30, 2017, the District recognized pension expense of $21,486,

90 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes in assumptions Net differences between projected and actual earnings on pension plan investments Changes in proportion and differences between employer contributions and proportionate share of contributions Employer contributions subsequent to the measurement date Total Deferred Outflows Deferred Inflows of Resources of Resources $ 3,166,637 $ 26,118,012 8,683,035 41,338, , ,268 6,019,494 $ 59,620,260 $ 26,284,280 $6,019,494 reported as deferred outflows related to pension resulting from the District s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year ended June Total Deferred Outflows Deferred Inflows of Resources of Resources $ 19,509,291 $ 8,379,625 19,509,291 8,379,625 15,941,985 8,379,625 (1,374,236) 1,143,429 _14, S 53,600,766 S 26, e. Actuarial Assumptions The total pension liability in the December 31, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: Measurement Date of Net Pension Liability (Asset): Actuarial Cost Method: Asset Valuation Method: Long-Term Expected Rate of Return: Discount Rate: Salary Increases: Inflation Seniority/Merit Mortality: Post-retirement Adjustments* December 31, 2015 December 31, 2016 Entry Age Fair Value 7.2% 7.2% 3.2% 0.2% - 5.6% Wisconsin 2012 Mortality Table 2.1% * No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors. 2.1% is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. 41

91 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Actuarial assumptions are based upon an experience study conducted in 2015 using experience from The total pension liability for December 31, 2016 is based upon a roll-forward of the liability calculated from the December 31, 2015 actuarial valuation. Long-term expected Return on Plan Assets. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Core Fund Asset Class Global Equities Fixed Income Inflation Sensitive Assets Real Estate Private Equity/Debt Multi-Asset Total Core Fund Variable Fund Asset Class U.S. Equities International Equities Total Variable Fund Current Asset Allocation % Destination Target Asset Allocation % Long-Term Expected Nominal Rate of Return % 50% 45% 8.3% 24.5% 15.5% 37% 20% 4.2% 4.3% 8% 7% 6.5% 8% 7% 9.4% 4% 4% 6.6% 110% 120% 7.4% 70% 70% 7.6% 30% 30% 8.5% 100% 100% 7.9% Long-Term Expected Real Rate of Return % 5.4% 1.4% 1.5% 3.6% 6.5% 3.7% 4.5% 4.7% 5.6% 5% New England Pension Consultants Long Term US CPI (Inflation) Forecast: 2.75% Asset Allocations are managed within established ranges, target percentages may differ from actual monthly allocations Single Discount rate. A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20% and a long term bond rate of 3.78%. Because of the unique structure of WRS, the 7.20% expected rate of return implies that a dividend of approximately 2.1% will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan s fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 42

92 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE B - DETAILED NOTES ON ALL FUNDS (Continued) Sensitivity of the District s proportionate share of the net pension liability (asset) to changes in the discount rate. The following presents the District s proportionate share of the net pension liability calculated using the discount rate of 7.20 percent, as well as what the District s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent) or 1-percentage-point higher (8.20 percent) than the current rate: 1% Decrease to Discount Rate (6.2%) Current Discount Rate (7,2%) 1% Increase to Discount Rate (8.2%) District's proportionate share of the the net pension liability (asset) $ 109,255,529 $ 8,304,843 $(69,431,759) Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position is available in separately issued financial statements available at f. Payable to the WRS At June 30, 2017, the District reported a payable of $3,772,109 for the outstanding amount of contributions to the pension plan for the year ended June 30, Minimum Fund Balance Policy The Board of Education has adopted a policy that unassigned fund balance in the general fund will be equal to a minimum of 15% and a maximum of 20% of the ensuing year s budgeted general fund expenditures be maintained for cash flow and working capital purposes. The minimum fund balance amount is calculated as follows: Budgeted General Fund Expenditures Minimum Fund Balance % Minimum Fund Balance Amount $251,442,491 (x) 15% - 20% $37,716,374 to $50,288,498 The District s general fund balance is in compliance with this policy. NOTE C - OTHER INFORMATION 1. Other Postemployment Benefits Other Than Pension Benefits (OPEB) The District has adopted GASB Statements No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the year ended June 30, These statements revised and established new financial reporting requirements for governments that provide their employees with postemployment benefits. Financial statements for the year ended June 30, 2016 have not been restated. 43

93 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) The cumulative effect of this change was to decrease the June 30, 2016 net position by $5,523,912 as follows: Other postemployment liability Balance previously reported Actuarially determined balance Change in other postemployment liability a. Plan Description $ (76,655,225) (82,179,137) $ 5,523,912 The Plan is a single-employer defined benefit postemployment health plan that covers retired employees of the District. Eligible retired employees have access to group medical coverage through the District s group plan. District paid medical benefits are paid for as indicated below. All employees of the District are eligible for the Plan if they meet the following age and service requirements below. b. Benefits Provided The District provides medical (including prescription drugs) and dental coverage for retired employees through the district s group plans. c. At June 30, 2017, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments Active employees 361 2,129 2,490 d. Contributions Certified Teachers Eligibility: Retiree Health Benefits: Retiree Dental Benefits: Dental Benefits - Any retiree who was working more than half-time and has attained age 62 and 15 years of service All other benefits - Any retiree who was working more than half-time and has attained age 55 and 15 years of service District pays 100% of the health insurance premium for single or family coverage for employees retiring at age 62 or older buy before age 65. District pays 100% of the health insurance premium for single coverage for employees retiring prior to age 62. District portion is 88% for retirements after September 1, The health benefits coverage will terminate when the retiree attains age 65. District pays 90% of the dental insurance premiums for family coverage. "The dental benefits coverage will terminate when the retiree attains age

94 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) Service Employees Eligibility: Any retiree who was working full-time and has attained age 55 and 15 years of service. Retiree Health Benefits: District pays 98.3% of the health insurance premium for single coverage. District portion is 88% for retirements after September 1, The health benefits coverage will terminate when the retiree attains age 65. Carpenters and Painters Eligibility: Any retiree who was working full-time and has attained age 57 and 15 years of service. Retiree Health Benefits: District pays 98% of the health insurance premium for single coverage. District portion is 88% for retirements after September 1, The health benefits coverage will terminate when the retiree attains age 65. Secretaries Eligibility Any retiree who was working full-time and has attained age 57 and 15 years of service. Retiree Health Benefits: District pays 98.3% of the health insurance premium for single coverage. District portion is 90% for retirements after September 1, The health benefits coverage will terminate when the retiree attains age 65. Educational Assistants Eligibility: Any retiree who was working full-time and has attained age 57 and 15 years of service. Retiree Health Benefits: District pays 100% of the health insurance premium for single coverage. The health benefits coverage will terminate when the retiree attains age

95 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) Administrators, Supervisors, and Technical Employees Eligibility: Any retiree who was working full-time and has attained 55 and 15 years of service Retiree Health Benefits: Retiree Dental Benefits: Retiree Life Insurance Benefits: District pays 100% of the health insurance premium. District portion is 88% for retirements after September 1, District pays 90% of the dental insurance premium for family coverage. The heath benefits coverage will terminate at age 65 for employees retiring with less than 20 years of service, at age 66 for employees retiring with 20 or more years of service but less than 225 years of service, and at age 67 for employees retiring with more than 25 years of service. No coverage for retirees after July 1, District pays a life insurance amount of 200% of the employee's compensation in Ihe year before retirement if less than 66 years old, 150% of their salary if 66 years old, and 100% of their salary if 67 years old or older. No coverage for retirees after July 1, 2011 Miscellaneous and interpreters Eligibility: Any Retiree who was working full-time and has attained age 55 Retiree Health Benefits: Retiree pays 100% of the health insurance premium. The health benefits coverage will terminate when the retiree attains age 65 e. Net OPEB Liability The District s net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of July 1, Actuarial Assumptions. The total OPEB liability in the July 1, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation: Salary Increases: Investment Rate of Return: Healthcare cost trend rates: 2.3% N/A 2.8% Medical - 7.1% for , then 7.3% decreasing to an ultimate rate of 4.1% in 2074 Dental - 5% decreasing to an ultimate rate of 4.1% in 2074 Mortality rates are the same as those used in the December 31, 2012 Wisconsin Retirement System's annual report. The actuarial assumptions used in the July 1, 2016 valuation were based on the results of an actuarial experience study for the period for the Wisconsin Retirement System. 46

96 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) The long-term expected rate of return on OPEB plan investments was valued at 2.80%. The 20 year tax-exempt AA Municipal bond rate as of the measurement date was used for all years of benefit payments. Discount rate. The discount rate used to measure the total OPEB liability was 3.57%. The projection of cash flows used to determine the discount rate assumed that District contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan s fiduciary net position was not projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the discount rate for calculating the total OPEB liability is equal to the single equivalent rate that results in the same actuarial present value as the long-term expected rate of return applied to benefit payments, to the extent that the plan s fiduciary net position is projected to be sufficient to make projected benefit payments and then municipal bond rate applied to benefit payments, to the extent that the plans fiduciary net position is not projected to be sufficient. e. Changes in the Net OPEB Liability Balance at July 1, 2016 Changes for the year: Service cost Interest Differences between expected and actual experience Changes in assumptions Contributions - employer Contributions - employee Net investment income Benefit payments Administrative expense Net changes Balance at June 30, 2017 Increase (Decrease) Total OPEB Liability M Plan Fiduciary Net Position (b) Net OPEB Liability (a) - (b) $ 99,525,691 $ 17,346,554 $ 82,179,137 6,651,090 2,902,942 2,052,664 (4,525,856) (8,699,457) 12,316, , ,661 (8,699,457) 372,857 6,651,090 2,902,942 2,052,664 (4,525,856) (12,316,038) (386,295) (104,661) (372,857) (1,618,617) 4,480,394 (6,099,011) $ 97,907,074 $ 21,826,948 $ 76,080,126 Sensitivity of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the District, as well as what the District s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.57%) or 1-percentage-point higher (4.57%) than the current rate: 1% Decrease to Discount Rate (2.57%) Current Discount Rate (3.57%) 1% Increase to Discount Rate (4.57%) Net OPEB Liability $ 82,653,329 $ 76,080,126 $ 69,812,396 47

97 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the District, as well as what the District s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (6.1% decreasing to 3.1%) or 1-percentage-point higher (8.1% decreasing to 5.1%) than the current healthcare cost trend rates: Net OPEB liability 1% Decrease Healthcare Cost Trend Rates 1% Increase (6.1% decreasing (7.1% decreasing (8.1% decreasing to 3.1%) to 4.1%) to 5.1%) $ 69,584,628 $ 76,080,126 $ 82,386,623 OPEB plan fiduciary net position. Information about the OPEB plan s fiduciary net position is presented in the Employee Benefit Trust Fund in these financial statements. f. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2017, the District recognized OPEB expense of $8,083,277. At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on OPEB plan investments Total Deferred Outflows Deferred Inflows of Resources of Resources $ 1,838,622 $ 4,053, ,049 $ 2,187,671 $ 4,053,921 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: g. Payable to the OPEB Plan Year ended June 30 Balance Thereafter Total $ (170,631) (170,631) (170,631) (170,630) (257,893) (925,834) (1,866,250) At June 30, 2017, the District reported a payable of $10,051,156 for the outstanding amount of contributions to the Plan required for the year ended June 30,

98 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) 2. Risk Management The District is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; employee health and accident claims; and natural disasters. For all risks of loss, the District's policy is to purchase commercial insurance. Settled claims have not exceeded commercial coverage in any of the past three years and there have been no significant reductions in insurance coverage from coverage in the prior year. SELF-FUNDED INSURANCE PROGRAM The District has a self-insured workman's compensation benefit plan for its employees. The Plan administrators, Aegis Corporation (administrator) is responsible for the approval, processing, and payment of claims, after which they bill the District for reimbursement. The District is also responsible for a monthly administrative fee. The Plan reports on a fiscal year ending June 30, Accounting and budgeting requirements for the Plan are established by the Wisconsin Department of Public Instruction. Currently, the Plan is accounted for in the General Fund of the District. As part of the workman s compensation coverage of the Plan, the District purchases stop-loss coverage, which pays claims in excess of $1 million per individual. At June 30, 2017, the District has reported a liability of $1,284,136 which represents reported and unreported claims which were incurred on or before June 30, 2017, but were not paid by the District as of that date. The amounts not reported to the District were determined by the Plan administrator. Changes in the claims liability for the years ended June 30, 2016 and June 30, 2017 are as follows: Year Ended June Beginning Ending Balance Incurred Payments Balance $ 754,482 $ 1,511,079 $ 1,273,053 $ 992, ,508 1,837,387 1,545,759 1,284, Contingencies a. The District participates in a number of federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Accordingly, the District's compliance with applicable grant requirements will be established at some future date. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the District expects such amounts, if any, to be immaterial. b. From time to time, the District is party to other various pending claims and legal proceedings. Although the outcome of such matters cannot be forecast with certainty, it is the opinion of management and legal counsel that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the District's financial position or results of operations. 49

99 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Basic Financial Statements June 30, 2017 NOTE C - OTHER INFORMATION (Continued) 4. Limitation on School District Revenues Wisconsin Statutes limit the amount of revenues a school district may derive from general school aids and property taxes unless a higher amount is approved by a referendum. This limitation does not apply to revenue needed for payment of any general obligation debt service (including refinanced debt) authorized by either of the following: a. A resolution of the school board or by referendum prior to August 12, b. A referendum on or after August 12, Commitments The District has active construction projects as of June 30, Work that has been completed but not yet paid for (including contract retainages) is reflected as account payable and expenditures. Estimated future costs to complete the construction projects is approximately $48,400, Upcoming Accounting Pronouncements In January, 2017, the GASB issued GASB Statement No. 84, Fiduciary Activities. The Statement establishes criteria for identifying fiduciary activities and addresses financial reporting for these activities. This statement is effective for reporting periods beginning after June 15, The District is currently evaluating the impact this standard will have on the financial statements when adopted. In June 2017, the GASB issued GASB Statement No. 87, Leases. The Statement establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. This statement is effective for reporting periods beginning after December 15, The District is currently evaluating the impact this standard will have on the financial statements when adopted. 50

100 REQUIRED SUPPLEMENTARY INFORMATION

101 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund - Budgetary Basis For the Year Ended June 30, 2017 Revenues Property taxes Other local sources Interdistrict sources Intermediate sources State sources Federal sources Other sources Total Revenues Expenditures Instruction Regular instruction Vocational instruction Other instruction Total Instruction Support Services Pupil services Instructional staff services General administration services School administration services Business services Operation and maintenance of plant Pupil transportation services Central services Insurance Other support services Total Support Services Debt service Non-program transactions General tuition payments Adjustments and refunds Total Non-program transactions Total Expenditures Budgeted Amounts Original Final $ 69,282,075 $ 1.892, ,000 Actual Amounts 69,282,075 $ 69,282,075 $ 1,985, ,000 15, ,322,493 12,850, ,595 2,253, ,926 15, ,279,892 10,808,138 2, Variance with Final Budget - Positive (Negative) 268, , ,270,620 11,432, , ,944, ,531, ,682,548 (42,601) (2,042,486) 1,842, , ,825,689 4,919, , , ,095,894 4,928,042 8, , ,660,748 4,604,077 8,099, ,364,025 2,435, , ,936,071 11,265,242 14,340,968 1,140,584 14,620,505 2,364,328 26,378,926 4,512,660 8,643, ,584 74, , ,390 11,586,003 14,996,557 1,154,320 14,855,767 2,415,260 26,669,184 4,523,386 8,468, , ,556, ,328,864 14,108,604 1,200,057 14,942,865 2,294,418 26,371,230 4,716,558 9,677, ,633 98, , ,953 (45,737) (87,098) 120, ,954 (193,172) (1,209,066) , , , ,791 (47,401) 4,051,582 4,051,582 4,212,617 (161,035) 140,852 (140,852) 4.051,582 4,051,582 4,353,469 (301,887) , ,058, ,290,861 2,767,566 Excess of Revenues Over Expenditures 31,770,648 32,473,018 35,391,687 2,918,669 Other Financing Sources (Uses) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance 110, ,461 (31.770,648) (32, ) (31.014,069) 1,606,122 (31 770,648) (32, ) (30 903,608) 1,716,583 (147,173) 4,488,079 4,635,252 Fund Balance - July 1 44,557,313 44,557,313 44,557,313 Fund Balance - June 30 $ ,313 $ 44, $ $ 4,635,252 The notes to the required supplementary information are an integral part of this schedule. 51

102 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Special Education Special Revenue Fund - Budgetary Basis For the Year Ended June 30, 2017 Revenues Other local sources Intermediate sources State sources Federal sources Total Revenues Expenditures Instruction Vocational instruction Special education instruction Other instruction Total Instruction Support Services Pupil services Instructional staff services Operation and maintenance of plant Pupil transportation services Central services Total Support Services Non-program transactions Special education tuition payments Adjustments and refunds Total Non-program transactions Total Expenditures Budgeted Amounts Original Final I Actual Amounts Variance with Final Budget - Positive (Negative) $ 11,000 $ 11,000 $ 13,324 $ 2, ,860,000 8,456,363 10,860,000 9,175,460 11,295,713 4,902, ,713 (4,272,604) 19,327,363 20,046,460 16,211,993 (3,834,467) 35,600 38,279,344 86,106 39,241,565 87,631 36,553,010 87,184 2,688, ,401,050 39,329,196 36,640,194 2,689,002 6,524,497 2,189, ,731 3,329,703 6,602,433 2,586,172 86,819 3,444,614 50,197 6,050,542 1,225,635 26,253 2,461,098 43,731 12,151,961 12,770,235 9,807, ,891 1,360,537 60, ,516 6,466 2,962,976 45,000 45,000 67,220 67, ,185 18, ,148 (81,965) (18,963) (100,928) 50,598,011 52,166,651 46,615,601 5,551,050 Excess of Revenues Under Expenditures (31,270,648) (32,120,191) (30,403,608) 1,716,583 Other Financing Sources (Uses) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance - July 1 31,270,648 32,120,191 30,514,069 -_ ; _(110,461) 31, ,120,191 30,403,608 (1,606,122) (110,461) (1,716,583) Fund Balance - June 30 i. 1 S. The notes to the required supplementary information are an integral part of this schedule. 52

103 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Schedule of Changes in Net OPEB Liability and Related Ratios Last 10 Fiscal Years Total OPEB Liability Service cost Interest Benefit payments Changes of benefit terms Differences between expected and actual experience Changes of assumptions Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net investment income Benefit payments Administrative income (expenses) Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) District's net OPEB liability - ending (a) - (b) Plan fiduciary net position as a percentage of the total OPEB liability Covered-employee payroll District's net OPEB liability as a percentage of covered-employee payroll 2017 $ 6,651,090 2,902,942 (8,699,457) J 2,052,664 (4,525,856) (1,618,617) 99,525,691 $ 97,907,074 $ 12,316, , ,661 (8,699,457) 372,857 4,480,394 17,346,554 $ 21,826,948 $ 76,080, % $ 133,952, % * The amounts presented for each fiscal year were determined as of the prior fiscal year end. Amounts for prior years were not available. The notes to the required supplementary information are an integral part of this schedule. 53

104 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Schedule of Employer Contributions Other Postemployment Benefits Last 10 Fiscal Years Actuarially determined contribution (ADC) Contributions in relation to the ADC Contribution deficiency (excess) Covered-employee payroll 2017 S 10,952,469 12,316,038 _$ (1, ) $ 133,952,782 Contributions as a percentage of covered-employee payroll 9.19% Key Methods and Assumption Used to Calculate ADC Actuarial cost method Asset valuation method Amortization method Discount rate Inflation Entry Age Normal Market Value 30 year Level Dollar 2.85% 2.30% * The amounts presented for each fiscal year were determined as of the prior fiscal year end. Amounts for prior years were not available. The notes to the required supplementary information are an integral part of this schedule. 54

105 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Schedule of Proportionate Share of the Net Pension Liability (Asset) Wisconsin Retirement System Last 10 Fiscal Years* Fiscal Year Ending Proportion of the Net Pension Liability (Asset) Proportionate Share of the Net Pension Liability (Asset) Covered- Employee Payroll Proportionate Share of the Net Pension Liability (Asset) as a Percentage of Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (Asset) 6/30/15 6/30/16 6/30/ % % % $ (24,739,006) $ 141,510,815 16,281, ,092,222 8,304, ,464, % 11.38% 5.75% % 98.20% 99.12% Schedule of Contributions Wisconsin Retirement System Last 10 Fiscal Years Fiscal Year Ending Contractually Required Contributions Contributions in Relation to the Contractually Required Contributions Contribution Deficiency (Excess) Covered- Employee Payroll Contributions as Percentage of Covered-Employee Payroll 6/30/15 6/30/16 6/30/17 $ 9,911,151 $ 9,730,965 9,576,635 9,911,151 $ 9,730,965 9,576,635 $ 141,510, ,092, ,464, % 6.80% 6.63% * The amounts reported for each fiscal year were determined as of the calendar year-end that occurred within the fiscal year. The District is required to present the last ten fiscal years of data; however accounting standards allow the presentation of as many years as are available until ten fiscal years are presented. The notes to the required supplementary information are an integral part of these schedules. 55

106 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Required Supplementary Information For the Year Ended June 30, 2017 NOTE A - GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENT NOS. 74 AND 75 The District implemented GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the fiscal year ended June 30, Information for prior years is not available. NOTE B - BUDGETS AND BUDGETARY ACCOUNTING Operating budgets are adopted each fiscal year for all governmental funds in accordance with Section of the Wisconsin Statutes using the budgetary accounting procedures prescribed by the Wisconsin Department of Public Instruction (DPI). The DPI requires the District to separate special education revenues and expenditures from other general fund amounts. Budgetary expenditure control is exercised at the on digit function level for the general fund and at the fund level for all other funds. Reported budget amounts are as originally adopted or as amended by Board of Education resolution. The District follows these procedures in establishing the budgetary data reflected in the basic financial statements. Based upon requests from District staff, District administration recommends budget proposals to the Board of Education. The Board of Education prepares a proposed budget including proposed expenditures and the means of financing them for the July 1 through June 30 fiscal year. A public notice is published containing a summary of the budget and identifying the time and place where a public hearing will be held on the proposed budget. Pursuant to the public budget hearing, the Board of Education may make alterations to the proposed budget. Once the Board of Education (following the public hearing) adopts the budget, no changes may be made in the amount of tax to be levied or in the amount of the various appropriations and the purposes of such appropriations unless authorized by a 2/3 vote of the entire Board of Education. Appropriations lapse at year end unless authorized as a carryover by the Board of Education. The portion of fund balance representing carryover appropriations is reported as a committed or assigned fund balance in the fund financial statements. Encumbrance accounting is used by the District as an extension of formal budgetary control during the year. Encumbrances outstanding at year-end (e.g., purchase orders, contracts) are reported as reservations of fund balances. There were no encumbrances at the end of The DPI requires the District to separate special education revenues and expenditures from other general fund amounts. The District did not have any material violation of legal or contractual provisions for the fiscal year ended June 30,

107 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to Required Supplementary Information For the Year Ended June 30, 2017 NOTE C - BUDGETARY INFORMATION Budgetary information is derived from the annual operating budget and is presented in accordance with generally accepted accounting principles, except, the District adopts a separate budget for the special education special revenue fund. An explanation of the differences between Revenues, Expenditures, and Other Financing Sources (Uses) for budgetary funds on budgetary fund basis and a GAAP general fund basis is summarized below: Revenues Actual amounts (budgetary basis) Reclassification of special education Total Revenues Expenditures Actual amounts (budgetary basis) Reclassification of special education Total Expenditures Excess of Revenues Over (Under) Expenditures Actual amounts (budgetary basis) Reclassification of special education Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Actual amounts (budgetary basis) Reclassification of special education Total Other Financing Sources (Uses) General Fund Special Education Fund $249,682,548 $ 16,211, ,993 (16,211,993) , ,290,861 46,615,601 46,615,601 (46, ) 260,906,462 35,391,687 (30,403,608) (30,403,608) 30,403,608 4,988,079 (30,903,608) 30,403,608 30,403,608 (30,403,608) (500,000) Net Change in Fund Balance Actual amounts (budgetary basis) 4,488,079 Fund Balance - July 1 Actual amounts (budgetary basis) 44,557,313 Fund Balance - June 30 Actual amounts (budgetary basis) $ 49, $ NOTE D - PENSION Changes in benefit terms: There were no changes of benefit terms for any participating employer in WRS. Changes of assumptions: There were no changes in the assumptions. 57

108 SUPPLEMENTARY INFORMATION

109 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2017 ASSETS Cash and investments Receivables Accounts Due from other governments Inventories Prepaid items $ Head Start 26, ,666 Special Revenue Funds Food Trust Sen/ice Community Service Debt Service Total Nonmajor Governmental Funds $ 68,707 $ 3,135,402 $2,991,111 $ 4,644,245 $ 10,839,465 97,000 62, , ,121 32,893 32, , , ,121 32,500 TOTAL ASSETS $ 252,381 S $ 3, S 3, $ 4,644,245 S ,225 LIABILITIES AND FUND BALANCES Liabilities Accounts payable Due to other funds Deposits payable Total Liabilities $ 41,392 $ 8,028 $ 597,258 $ 44,915 $ 210, , ,381 8, ,915 $ 691, , , ,901 Fund Balances Nonspendable Inventories Prepaid items Restricted Retirement of long-term debt Food service Community service Committed Donations Total Fund Balances 490,121 2,679,690 32,500 2,979,089 4,644, ,121 32,500 4,644,245 2,679,690 2,979, , , ,679 3,169,811 3,011,589 4,644,245 10,983,324 TOTAL LIABILITIES AND FUND BALANCES $ 252,381 $ 165,707 $ 3,918,388 $ 3,056,504 $ 4,644,245 $ 12,037,225 58

110 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2017 Revenues Property taxes Other local sources State sources Federal sources Other sources Total Revenues Expenditures Instruction Regular instruction Special education instruction Other instruction Total Instruction Support Services Pupil services Instructional staff services General administration services Building administration services Operation and maintenance of plant Pupil transportation Food services Total Support Services Debt Service Principal Interest and fiscal charges Total Debt Service Community services Total Expenditures Head Start Special Revenue Funds Food Trust Service Community Service Debt Service Total Nonmajor Governmental Funds $ $ $ S 1,500,000 $ 16,473,727 S 17,973, ,802 1,928, , ,544 50,660 2,344, ,158 1,892,509 6,602,422 8,494,931 75,000 6,900 3,790,871 3,872,771 1,892, ,802 8,682,084 1,712,544 20,315,258 32,830, , , , , , ,152 1,025, ,152 1,189, , ,640 43, , , , , , ,172 69,176 7,790,926 2, ,012 11,014 14,917 7,790, , ,123 8,416, ,224 9,853,954 15,643,000 6,885,419 15,643,000 6,885,419 22,528,419 22,528,419 1,005,992 1,005,992 1,892, ,275 8,416,938 1,404,216 22,528,419 34,578,357 Excess of Revenues Over (Under) Expenditures (108,473) 265, ,328 (2,213,161) (1,748,160) Other Financing Sources (Uses) Long-term debt issued Premium on long-term debt issued Payment to current bondholder Payment to refunded bond escrow agent Transfers in Total Other Financing Sources (Uses) 6,265,000 3,622,941 (4,991,041) 6,265,000 3,622,941 (4,991,041) (1,917,542) (1,917,542) 500, ,000 3,479,358 3,479,358 Net Change in Fund Balances (108,473) 265, ,328 1,266,197 1,731,198 Fund Balances - July 1 266,152 2,904,665 2,703,261 3,378, Fund Balances - June 30 $ $ 157,679 $ 3,169,811 $ 3,011,589 $ 4,644,245 S 10,983,324 59

111 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Pupil Activity Funds Schedule of Changes in Assets and Liabilities For the Year Ended June 30, 2017 fupil Activity Funds Balance 7/1/16 Additions Deletions Balance 6/30/17 ASSETS Cash and investments S $ S $ LIABILITIES Accounts payable Due to student organizations $ 8,515 $ 1,600,701 8,058 $ 8,515 $ 8,058 3,988,302 3,799,659 1,789,344 TOTAL LIABILITIES $ S S

112 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Charter School Authorizer Operating Costs by Object For the Year Ended June 30, 2017 Cost Operating Activity WUFAR Object Code The Brampton School Dimensions of Learning Kenosha School of Technology Enhanced Curriculum Kenosha E- School Harborside Academy Salaries Benefits Purchased sen/ices Non-capital objects Capital objects Short-term debt Insurance and judgements Other 100 $ 177,521 $ 179,987 $ 920,478 $ 176,699 S 484, , ,651 44, ,764 6, , ,395 44, ,816 6, , , ,391 2,147 19,515 32,384 3,973 92, ,068 40, ,746 6, , , ,635 1,129 10,263 17,030 2ÿ089 $ 484,662 $ 457,935 $ 2,341,953 $ 446,362 $ 1,231,617 61

113 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Charter School Operating Costs by Function For the Year Ended June 30, 2017 Cost Function WUFAR Function The Brompton School Dimensions of Learning Kenosha School of Technology Enhanced Curriculum Kenosha E- School Harborside Academy Undifferentiated curriculum Regular instruction Vocational instruction Physical instruction Special education Co-curricular instruction Pupil services Instructional staff services General administration Building administration Business services $ 862,532 $ 391,266 32,659 71,133 1,222,604 $ 164,261 59,542 49,388 32, ,128 6,544,047 $ 56,995 87, , , ,235 1,317,265 S 6, , ,024 3,820,741 21,662 8,315 1, ,598 11, , , ,312 55,256 12, , , , , ,849 5, , ,659 S 1,735,306 S 2.006,171 S 9,313,175 S 1,858,338 S 5,132,780 62

114 ADDITIONAL INDEPENDENT AUDITORS REPORT FOR BASIC FINANCIAL STATEMENTS

115 Schenckÿ ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Education Kenosha Unified School District No. 1 Kenosha, Wisconsin We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Kenosha Unified School District No. 1, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Kenosha Unified School District No. 1 s basic financial statements, and have issued our report thereon which included an emphasis of matter paragraph as indicated on page 2 dated November 28, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Kenosha Unified School District No. 1's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Kenosha Unified School District No. 1's internal control. Accordingly, we do not express an opinion on the effectiveness of the Kenosha Unified School District No. 1 s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Kenosha Unified School District No. 1 s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on complian' ' those provisions was not an objective of our audit, and accordingly, we do not express such an opinioi results of our tests disclosed no instances of noncompliance or other matters that are required to be n under Government Auditing Standards. schencksc.com SchtnckSC 63

116 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Kenosha Unified School District No. 1 s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Kenosha Unified School District No. 1's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. -dohrita. 'de certified Public Accountants Green Bay, Wisconsin November 28,

117 FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

118 Schenckÿ ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL AND STATE PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE AND THE STATE SINGLE AUDIT GUIDELINES To the Board of Education Kenosha Unified School District No. 1 Kenosha, Wisconsin Report on Compliance for Each Major Federal and State Program We have audited the Kenosha Unified School District No. 1 s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement and the State Single Audit Guidelines issued by the Wisconsin Department of Administration that could have a direct and material effect on each of the Kenosha Unified School District No. 1s major federal and state programs for the year ended June 30, The Kenosha Unified School District No. 1 s major federal and state programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal and state statutes, regulations, and the terms and conditions of its federal and state awards applicable to its federal and state programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the Kenosha Unified School District No. 1's major federal and state programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and the State Single Audit Guidelines issued by the Wisconsin Department of Administration. Those standards, the Uniform Guidance and the State Single Audit Guidelines require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal or state program occurred. An audit includes examining, on a test basis, evidence about the Kenosha Unified School District No. 1's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal and state program. However, our audit does not provide a legal determination of the Kenosha Unified School District No. 1 s compliance. Opinion on Each Major Federal and State Program In our opinion, the Kenosha Unified School District No. 1 complied, in all material respects, with ithe types of compliance requirements referred to above that could have a direct and material effect on each of it: federal and state programs for the year ended June 30, schencksc.com kthiktsc

119 Report on Internal Control Over Compliance Management of the Kenosha Unified School District No. 1 is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Kenosha Unified School District No. 1 s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal or state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal or state program and to test and report on internal control over compliance in accordance with the Uniform Guidance and the State Single Audit Guidelines, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Kenosha Unified School District No. 1 s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal or state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal or state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal or state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and the State Single Audit Guidelines. Accordingly, this report is not suitable for any other purpose. '-k- Certified Public Accountants Green Bay, Wisconsin November 28,

120 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2017 Grantor Agency/Federal Program Title CFDA Number Pass-Through Agency Pass-Through Entity Identifying Number (Accrued) Deferred Revenue 7/1/2016 Revenues Cash Received (Refunded) Accrued (Deferred) Revenue 6/30/2017 Total Expenditures Subrecipient Payment U.S. DEPARTMENT OF AGRICULTURE Child Nutrition Cluster School Breakfast Program Wl DPI SB-546 $ (42,347) $ 1,188,813 $ 43,660 $ 1,190,126 $ National School Lunch Program Wl DPI NSL-547 (128,838) 5,111, , ,505 National School Lunch Program Wl DPI NSL-Snacks-566 (265) , Total National School Lunch Program 1129,103) 5 120, , ,895 Summer Food Service Program for Children Wl DPI SFSP ,533) ,860 Total Child Nutrition Cluster (201,983) , Fresh Fruit and Vegetable Program Wl DPI FF&V-376 (33,927) 205,495 19, ,046 Fresh Fruit and Vegetable Program Wl DPI FF&VP ,493 Total Fresh Fruit and Vegetable Program (33,927) , ,539 Total U.S. Department of Agriculture ( ) 6,608, , ,420 U.S. DEPARTMENT OF EDUCATION Title I Grants to Local Educational Agencies Wl DPI Title (853,768) 1,998,132 5,193,871 6,338,235 Title I Grants to Local Educational Agencies Wl DPI Focus-145 (16,288) 86,180 11,783 81,675 Title I Grants to Local Educational Agencies Wl DPI TI-Delinquent-140 (8,816) 33,425 10,586 35,195 Title I Grants to Local Educational Agencies Wl DPI Cohort (7,009) ,270 Total Title I Grants to Local Educational Agencies (885,881) 2, , Special Education Cluster (IDEA) Special Education Grants to States Special Education Grants to States Total Special Education Grants to States Wl DPI Wl DPI IDEA IDEA-342 (1,019,952) 4,734,696 -_ (1, ) 4.693,WiT 206,013 3,920,757 -_158, , Special Education Preschool Grants Total Special Education Cluster (IDEA) Wl DPI Pre-S-347 (160,357 (1, ,561 22, , , ,257 Career and Technical Education -- Basic Grants to States Education for Homeless Children and Youth Twenty-First Century Community Learning Centers English Language Acquisition State Grants Supporting Effective Instruction State Grant Wl DPI Wl DPI Wl DPI Wl DPI Wl DPI CP-CTE Homeless CLC Title III A Title II-365 (21,857) (13,112) (25,330) (36,142) (301,454) 217,044 54, , ,704 1,002,484 42,714 7,870 8, , , ,901 49, , , ,022 Total U.S. Department of Education (2.464,085) ,974 12,444,643 67

121 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Expenditures of Federal Awards (continued) For the Year Ended June 30, 2017 Grantor Agency/Federal Program Title CFDA Number Pass-Through Agency Pass-Through Entity Identifying Number (Accrued) Deferred Revenue 7/1/2016 Revenues Cash Received (Refunded) Accrued (Deferred) Revenue 6/30/2017 Total Expenditures Subrecipient Payment U.S. DEPARTMENT OF I IEALTH AND IIUMAN SERVICES Head Start Direct Program N/A (307,130) 2,036, ,666 1,954,583 Medicaid Cluster Medical Assistance Program Total Medicaid Cluster Wl DHS ( ) 3,277,119 67,166 3,132,985 ( ) 3, , Total U.S. Department of Health and Human Services ( ) , TOTAL EXPENDITURES OF FEDERAL AWARDS $ ( ) $ 20,881,462 $ 6.4n.814 $ $ The notes to the schedule of expenditures of federal awards are an integral part of this schedule. 68

122 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of State Financial Assistance For the Year Ended June 30, 2017 State I.D Grantor Agencv/State Program Title Number Pass-through Agency State Identifying Number (Accrued) Deferred Revenue 7/1/2016 Revenues Cash Received (Refunded) Accrued (Deferred) Revenue 6/30/2017 Total Expenditures Subreoipient Payments DEPARTMENT OF PUBLIC INSTRUCIION Special Education and School Age Parents State School Lunch Aid Common School Fund Library Aid Bilingual Bicultural Aid General Transportation Aid Wl Morning Milk Aid Equalization Aids High Cost Special Education Aid Alcohol and Other Drug Abuse Head Start Supplement State School Breakfast Aid Tuition Payments by State Aid for High Poverty School District Educator Effective Evaluation System Per Pupil Aid Career and Technical Education Incentive Grants Assessments of Reading Readiness Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program Direct Program $ $ 10,742,962 $ 85, ,169 35, ,707 7,951 (2,678,012) 155,076,078 (3,832) (62,377) (92,066) (3,331,950) 552,751 20, ,433 50, ,518 1,488, ,179 8,835,450 34,601 37,298 2,644,384 4,253 36,745 12,479 $ 10,742,962 $ 85, ,169 35, ,707 7, ,042, , ,801 50, ,518 1,488, ,592 5,503,500 34, Total Department of Public Instruction TOTAL STATE PROGRAMS ( ) 178, ,697, $(6,168,2371 $ 178,774,925 $ $ ,549 $ The notes to the schedule of state financial assistance are an integral part of this schedule. 69

123 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Notes to the Schedule of Expenditures of Federal Awards and Schedule of State Financial Assistance For the Year Ended June 30, 2017 NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards and schedule of state financial assistance include the federal and state grant activity of the Kenosha Unified School District No. 1 and are presented on the modified accrual basis of accounting. The information in these schedules is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and the State Single Audit Guidelines. Therefore, some amounts presented in these schedules may differ from amounts presented in, or used in the preparation of, the basic financial statements. The District has not elected to charge a de minimis indirect rate of 10% of modified total direct costs. NOTE B - SPECIAL EDUCATION AND SCHOOL AGE PARENTS PROGRAM The eligible costs under the State Special Education Program as reported by the District are $40,804,762. NOTE C - OVERSIGHT AGENCIES The U.S. Department of Health and Human Services is the federal oversight agency and the Wisconsin Department of Public Instruction is the state oversight agency for the District. NOTE D - DONATED SERVICES The District receives an undeterminable amount of donated services from a variety of unpaid volunteers assisting the Head Start program. Therefore, no amounts have been recorded in the Schedule of Expenditures of Federal Awards. NOTE E - RECONCILIATION OF EXPENDITURES TO BASIC FINANCIAL STATEMENTS The following is a reconciliation of federal and state expenditures per the schedule of expenditures of federal and state financial assistance to the federal and state revenues per the District s basic financial statements. Expenditures per schedule of expenditures of federal and state awards Programs not subject to single audit Expenditures per basic financial statements Federal State ] $ 24,134,831 $175,304,549 71,094_415,214 $ 24,205,925 $175,719,763 Revenues per basic financial statements: Governmental funds Federal and state sources $24,205,925 $175,719,763 NOTE F - PASS THROUGH ENTITIES Federal awards have been passed through the following entries: Wl DHS - Wisconsin Department of Health Services Wl DPI - Wisconsin Department of Public Instruction 70

124 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Findings and Questioned Costs For the Year Ended June 30, 2017 Section I - Summary of Auditors' Results Basic Financial Statements Type of auditors' report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? Noncompliance material to basic financial statements noted? Federal Awards and State Financial Assistance Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified? Type of auditors' report issued on compliance for major programs Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? Any audit findings disclosed that are required to be reported in accordance with the State Single Audit Guidelines? Unmodified No None Reported No No None Reported Unmodified No No Identification of major federal and state programs: CFDA Number Name of Federal Programs Child Nutrition Cluster School Breakfast Program National School Lunch Program Summer Food Service Program for Children Supporting Effective Instruction State Grant State ID Number Name of State Programs Special Education and School Age Parents Common School Fund Library Aid General Equalization Aids High Cost Special Education Aid Aid for High Poverty District Per Pupil Aid Audit threshold used to determine between Type A and Type B federal programs: Audit threshold used to determine between Type A and Type B state programs: Auditee qualified as low-risk auditee $750,000 $250,000 Yes 71

125 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2017 Section II - Financial Statement Findings There are no findings related to the basic financial statements required to be reported under governmental auditing standards generally accepted in the United States of America for the year ended June 30, Section III - Federal Award and State Financial Assistance Findings and Questioned Costs There are no audit findings and questioned costs required to be reported under the Uniform Guidance and the State Single Audit Guidelines issued by the Wisconsin Department of Administration for the year ended June 30,

126 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2017 Section IV - Other Issues Does the auditors report or the notes to the financial statement include disclosure with regard to substantial doubt as to the auditee's ability to continue as a going concern? Yes X_ No Does the audit report show audit issues (i.e., material non-compliance, non material non-compliance, questioned costs, material weakness, significant deficiency, management letter comment, excess revenue or excess reserve) related to grants/contracts with funding agencies that require audits to be in accordance with the State Single Audit Guidelines: Department of Health Services Department of Public Instruction Yes Yes X _ No X No Was a Management Letter or other document conveying audit comments issued as a result of this audit? X Yes No Name and signature of shareholder David L. Maccoux, CPA Date of report November 28,

127 KENOSHA UNIFIED SCHOOL DISTRICT NO. 1 Kenosha, Wisconsin Schedule of Prior Year Audit Findings and Corrective Action Plan For the Year Ended June 30, 2017 Status of Prior Year Audit Finding The findings noted in the 2016 Schedule of Findings and Questioned Costs have been reported to the proper federal agency. The current status of the prior year audit findings, as provided my management, follows: Finding No. Prior Year Audit Finding Special Education Aid Allowable Costs This finding was resolved in fiscal year Corrective Action Plan No Corrective action plan is required. 74

128 Elementary schools Bose Elementary School th St., Kenosha, Wl Phone: Fax: Web: bose.kusd.edu Brass Community School th Ave., Kenosha, Wl Phone: Fax: Web: brass.kusd.edu Curtis Strange Elementary School th Ave., Kenosha, Wl Phone: Fax: Web: strange.kusd.edu EBSOLA Creative Arts th St., Kenosha, Wl Phone: Fax: Web: ebsola.kusd.edu/ca EBSOLA Dual Language th St., Kenosha. Wl Phone: Fax: Web: ebsola.kusd.edu/dl Forest Park Elementary School th Ave. Kenosha, Wl Phone: Fax: Web: forestpark.kusd.edu Frank Elementary School th St.T Kenosha, Wl Phone: Fax: Web: frank.kusa.edu Grant Elementary School th St., Kenosha, Wl Phone: Fax: Web: grant.kusd.edu Middle schools- Bullen Middle School th Ave.; Kenosha, Wl Phone: Fax: Web: bullen.kusd.edl Lance Middle School th St., Kenosha. Wl Phone: Fax: 359-2*84 Web: lance.kusd.edu High schools_ Bradford High School 3700 Washington Rd.. Kenosha, Wl Phone: Fax: Web: bradford.kusd.edu Choice schools_ LakeView Technology Academy (Grades 9-12) th Ave. Pleasant Prair e, Wl Phone: Fax: Web: lakeview.kusd.edu Charter schools_ Harborside Academy (Grades 6-12) th St.. Kenosha Wl Phone: Fax: Web: harborside.kusd.edu Kenosha School of Technology Enhanced Curriculum (KTEC) (Grades K-8) KTEC East: th Ave., Kenosha, Wl Phone: Fax: KTEC West: nd Ave., Kenosha, Wl Phone: Fax: Web: ktec.kusd.edu Prepared by the Finance Office Grewenow Elementary School th Ave., Kenosha, Wl Phone: Fax: Web: grewenow.kusd.edu Harvey Elementary School th Ave., Kenosha, Wl Phone: Fax: Web: harvey.kusd.edu Jefferson Elementary School rd St., Kenosha, Wl Phone: Fax: Web: jefferson.kjsd.edu Jeffery Elementary School th St., Kenosha. Wl Phone: Fax: Web: jeffeny kjsd.edu McKinley Elementary School nd Ave., Kenosha, Wl 53i44 Phone: Fax: Web: mckinley.kusd.edu Nash Elementary School th Ave., Kenosha, Wl Phone: Fax: Web: nash.kusd.edu Pleasant Prairie Elementary School 9208 Wilmot Road. Pleasant Prairie. Wl Phone: ÿ Fax: Web: pleasantprairie.kusd.edu Prairie Lane Elementary School th Ave., Pleasant Prairie, Wl Phone: Fax: Web: pra rielane.kusd.edu Lincoln Middle School th Ave., Kenosha Wl Phone: Fax: Web: lincoln.kusd.edu Mahone Middle School th St., Kenosha Wl Phone: Fax: Web: mahone.kusd.eou Indian Trail High School & Academy th St.. Kenosha. Wl Phone: Fax: Web: indiantrail kusd.edu Reuther Central High School (Grades 9-12) th St., Kenosha Wl Phone: Fax: Neb: reuther.kusd.edu The Brompton School (Grades K-8) nd Ave., Kenosha, Wl Phone: * Fax: Web: brompton.kusd.edu Dimensions of Learning Academy (Grades K-8) th Ave.. Kenosha, Wl Phone: Fax: Web: dol.kusd.edu Educational Support Center Roosevelt Elementary School 3322 Roosevelt Road, Kenosha, Wl Phone: Fax: Web: roosevelt.kusd.edu Somers Elementary School nd Ave., Kenosha, Wl Phone Fax: Web: somers.kusd.edu Southport Elementary School th St., Kenosha, Wl Phone: Fax: Web: southport.kusd.edu Stocker Elementary School th St., Kenosha, Wl Phone: Fax: Web: stocxer.kusd.edu Vernon Elementary School nd Ave., Kenosha, Wl Phone: Fax: Web: vernon.kusd.edu Whittier Elementary School 8542 Cooper Road Pleasant Prairie, Wl Phone: Fax: Web: whittier.kusd.edu Wilson Elementary School rd Ave., Kenosha, Wl Phone: Fax: Web: wilson.kusd.edu Washington Middle School 811 Washington Road Kenosna Wl Phone: Fax: Web: washington.kusd.edu Tremper High School th Ave., Kenosha, Wl Phone Fax: Web tremper.kusd.edu Kenosha eschool (Online school, grades K-12) st Place Kenosha, Wl Phone: Fax: Web: eschool.kusd.edu Specialty schools_ Cesar E. Chavez Learning Station (Head Start Center) th Ave., Kenosha. Wl Phone: Fax: Web: headstart.kusd.edu Hillcrest School (Bridges Center/T.I.M.E. Program, grades 9-12) th St., Kenosha, Wl Phone: Fax: Web: hillcrest.kusd.edu Kenosha Unified YY School District nd St., Kenosha, Wl Phone: