OFFICIAL STATEMENT. $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 Voted November 3, 2015

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1 NEW ISSUES BOOK-ENTRY FORM ONLY Rating: Standard & Poor s: AASee RATING herein. In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law, (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code of 1986, as amended (the Code ), and (ii) interest on and any profit made on the sale, exchange or other disposition of the Bonds is exempt from certain taxes levied by the State of Ohio and its political subdivisions. The School District has not designated the Bonds as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. Interest on the Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Bonds. For a more complete discussion of the tax aspects, see TAX MATTERS. OFFICIAL STATEMENT Buckeye Valley Local School District Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 Voted November 3, 2015 Dated: Date of Delivery Due: December 1, as shown on the inside cover The School Facilities Construction and Improvement Bonds, Series 2016A (the Series 2016A Bonds ) and the Refunding Bonds, Series 2016B (the Series 2016B Bonds, and together with the Series 2016A Bonds, the Bonds ) are voted general obligation debt of the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio (the School District ), and the full faith, credit and revenue of the School District are irrevocably pledged for the prompt payment of the principal of and interest on the Bonds. (See SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT S GENERAL OBLIGATION DEBT. ) Terms used herein with initial capitalization where the rules of grammar would not otherwise so require and not defined have the meanings given to them under DEFINITIONS. Interest on the Bonds will be payable at the respective rates shown on the inside cover herein on June 1 and December 1 of each year beginning June 1, 2016, to the Bondholders of record as of the record dates described in the Bond Resolution (as defined herein). Principal of the Bonds will be payable at the designated corporate trust office of U.S. Bank National Association, Columbus, Ohio, as registrar, paying agent and transfer agent for the Bonds. The Bonds will be issuable as fully registered bonds without coupons in the denominations set forth herein. The Bonds will be issuable under a book-entry only method and registered in the name of The Depository Trust Company ( DTC ) or its nominee. There will be no physical delivery of the Bonds to the ultimate purchasers. Fifth Third Securities, Inc. (the Underwriter ) has satisfied the requirements of DTC for the Bonds to be eligible for its book-entry services. (See BOOK-ENTRY ONLY SYSTEM. ) The 2016A Bonds maturing on or after December 1, 2026 will be subject to optional redemption prior to stated maturity, as set forth herein. The 2016A Bonds maturing December 1, 2031, December 1, 2033, December 1, 2035, December 1, 2040 and December 1, 2045 will be subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. The 2016B Bonds maturing on or after December 1, 2026 will be subject to optional redemption prior to sated maturity, as set forth herein. The 2016B Bonds maturing December 1, 2036 will be subject to mandatory sinking fund redemption prior to stated maturity as set forth herein. (See THE BONDS Redemption Provisions ). The Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale and to withdrawal or modification of the offer without notice. Certain legal matters relating to the issuance of the Bonds are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel, Columbus, Ohio. (See LEGAL MATTERS and TAX MATTERS. ) This cover page contains certain information for general reference only. It is not a summary of the provisions of the Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. This Official Statement has been prepared by the School District in connection with the original offering for sale by it of the Bonds. It is expected that delivery of the Bonds in definitive form will be made through DTC on or about March 1, The date of this Official Statement is February 4, 2016, and the information herein speaks only as of that date.

2 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) Voted November 3, 2015 $10,710,000 SERIAL BONDS Year Principal Maturing Interest Rate Price CUSIP $890, % CN , CP , CQ , CR , CS , CT , CU , CV , CW , CX , CY , CZ , DA , DB7 $1,905, % TERM BONDS MATURING DECEMBER 1, 2031, PRICE %, CUSIP DC5 $2,060, % TERM BONDS MATURING DECEMBER 1, 2033, PRICE %, CUSIP DD3 $2,215, % TERM BONDS MATURING DECEMBER 1, 2035, PRICE %, CUSIP DE1 $6,415, % TERM BONDS MATURING DECEMBER 1, 2040, PRICE %, CUSIP DF8 $7,945, % TERM BONDS MATURING DECEMBER 1, 2045, PRICE %, CUSIP DG6 1 The School District is not responsible for the use of the CUSIP numbers referenced herein nor is any representation made by the School District as to their correctness; such CUSIP numbers are included solely for the convenience of the readers of the Official Statement.

3 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 $10,520,000 SERIAL BONDS Year Principal Maturing Interest Rate Price CUSIP $120, % DH , DJ , DK , DL , DM , DN , DP , DQ , DR , DS , DT , DU , DV , DW , DX , DY , DZ , EA , EB6 $1,860, % TERM BONDS MATURING DECEMBER 1, 2036, PRICE %, CUSIP ED2 1 The School District is not responsible for the use of the CUSIP numbers referenced herein nor is any representation made by the School District as to their correctness; such CUSIP numbers are included solely for the convenience of the readers of the Official Statement.

4 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) Voted November 3, 2015 $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 BOARD OF EDUCATION Justine M. Santschi President Vic Whitney Vice President Justin Osborn Member Amy B. Dutt Member Jeffrey D. White Member SCHOOL DISTRICT ADMINISTRATION Andrew Miller Superintendent Kelly Ziegler Treasurer PROFESSIONAL SERVICES Fifth Third Securities, Inc. Underwriter Bricker & Eckler LLP Bond Counsel U.S. Bank National Association Paying Agent/Bond Registrar/Escrow Trustee Causey Demgen & Moore P.C. Verification Agent

5 REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the School Construction and Improvement Bonds, Series 2016A (the Series 2016A Bonds ) and the Refunding Bonds, Series 2016B (the Series 2016B Bonds, and together with the Series 2016A Bonds, the Bonds ) of the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio (the School District ) identified on the Cover. No person has been authorized by the School District to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by the School District. Statements contained in this Official Statement that involve estimates, forecasts, or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the School District and other sources that are believed to be reliable for purposes of this Official Statement. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions or that they will be realized. The information and expressions of opinions 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 School District since the date hereof. Certain information located at websites referred to herein has been prepared by the respective entities responsible for maintaining such websites. The School District takes no responsibility for the continued accuracy of any internet address or the accuracy, completeness, or timeliness of any information posted at any such address. In the absence of an express statement to the contrary, none of such information is incorporated herein by reference. Certain information in this Official Statement is attributed to the Ohio Municipal Advisory Council ( OMAC ). OMAC compiles information from official and other sources. OMAC believes the information it compiles is accurate and reliable, but OMAC does not independently confirm or verify the information and does not guarantee its accuracy. OMAC has not reviewed this Official Statement to confirm that the information attributed to it is information provided by OMAC or for any other purpose. Fifth Third Securities, Inc. (the Underwriter ) has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under 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. UPON ISSUANCE, THE BONDS WILL NOT BE REGISTERED BY THE SCHOOL DISTRICT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS ANY OTHER FEDERAL, STATE, MUNICIPAL OR OTHER GOVERNMENTAL ENTITY OR AGENCY, EXCEPT THE BOARD OF EDUCATION OF THE SCHOOL DISTRICT, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE BONDS FOR SALE. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, AND THERE SHALL NOT BE ANY SALE OF, THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE. i

6 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. General INVESTMENT CONSIDERATIONS The Bonds, like all obligations of state and local governments, are subject to changes in value due to changes in the condition of the market for tax-exempt obligations or changes in the financial position of the School District. It is possible under certain market conditions, or if the financial condition of the School District should change, that the market price of the Bonds could be adversely affected. With regard to the risk involved in a downward revision or withdrawal of the rating on the Bonds shown on the Cover, see RATING. With regard to the risk involved in a loss of the exclusion from gross income for purposes of federal income taxation of interest payable on the Bonds, see TAX MATTERS. Prospective purchasers of the Bonds should consult their own tax advisors prior to any purchase of the Bonds as to the impact of the Code, upon their acquisition, holding or disposition of the Bonds. Investment Suitability of Tax-Exempt Bonds A primary test of the suitability of a tax-exempt obligation for an individual investor is a comparison of the yield the investor would have to earn on a taxable obligation to equal a tax-exempt yield in his or her income tax bracket. Individuals should consult with brokers or qualified financial or tax advisors to determine the taxable equivalent yield they could expect given their particular tax circumstances. Prepayments of Principal The School District may prepay certain maturities of the principal of the Bonds without penalty. (See THE BONDS Redemption Provisions Optional Redemption. ) If such Bonds were to be prepaid before scheduled maturity, the investor would not receive the anticipated yield through the scheduled maturity date. In such a prepayment situation there is no guarantee that the investor could reinvest the proceeds and receive a comparable yield for the period remaining until the scheduled maturity of such Bonds. The investor, therefore, may receive a lower total return for the period beginning on the date of purchase through the scheduled date of maturity than anticipated. ii

7 BOND ISSUES SUMMARY The information contained in this Bond Issues Summary is qualified in its entirety by the entire Official Statement, which should be reviewed in its entirety by potential investors. Issuer: Issues: Dated Date: Interest Payment Dates: Principal Payment Dates: Redemption: Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (the Series 2016A Bonds ) $12,380,000 Refunding Bonds, Series 2016B (the Series 2016B Bonds, and together with the Series 2016A Bonds, the Bonds ) Date of Delivery Interest on the Bonds will be paid each June 1 and December 1, beginning June 1, Series 2016A Serial Bonds: December 1, 2016 through December 1, 2029, inclusive; Series 2016A Term Bonds: December 1, 2031, December 1, 2033, December 1, 2035, December 1, 2040, and December 1, 2045; Series 2016B Serial Bonds: December 1, 2016 and December 1, 2034, inclusive. Series 2016B Term Bonds: December 1, The Series 2016A Bonds maturing on or after December 1, 2026 are subject to redemption at the option of the School District, either in whole or in part, in such order of maturity as the School District shall determine, on any date on or after December 1, 2025, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. See THE BONDS Redemption Provisions Optional Redemption. The Series 2016A Term Bonds maturing on December 1, 2031, December 1, 2033, December 1, 2035, December 1, 2040, and December 1, 2045 are subject to mandatory sinking fund redemption prior to stated maturity. See THE BONDS Redemption Provisions Mandatory Sinking Fund Redemption. The Series 2016B Bonds maturing on or after December 1, 2026 are subject to redemption at the option of the School District, either in whole or in part, in such order of maturity as the School District shall determine, on any date on or after December 1, 2025, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. See THE BONDS Redemption Provisions Optional Redemption. The Series 2016B Term Bonds maturing on December 1, 2036 are subject to mandatory sinking fund redemption prior to stated maturity. See THE BONDS Redemption Provisions Mandatory Sinking Fund Redemption. Purpose: The Series 2016A Bonds are being issued for the purpose of constructing, renovating and improving school facilities; furnishing and equipping the same; improving the sites thereof; and acquiring land and interests in land related thereto. The Series 2016B Bonds are being issued to advance refund a portion of the School District s $15,999,994 School Facilities Construction and Improvement Bonds, Series 2009, dated April 20, (See THE BONDS Authorization and Purpose. ) iii

8 Security: Credit Rating: Tax Matters: Bank Qualification: Legal Opinion: Underwriter: Bond Registrar, Paying Agent and Escrow Trustee: Verification Agent: Book-Entry Only System: Delivery and Payment: School District Official: The Bonds will be voted general obligations of the School District and will contain a pledge of the full faith and credit of the School District for the payment of the principal of and interest on the Bonds when due. (See SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT S GENERAL OBLIGATION DEBT. ) The School District has received a rating on the Bonds of AA- from Standard & Poor s Ratings Services ( Standard & Poor s ), a division of The McGraw Hill Companies, Inc. (See RATING. ) In the opinion of Bond Counsel, under existing law and assuming compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes, is not treated as an item of tax preference for purposes of the alternative minimum income tax imposed on individuals and corporations under the Internal Revenue Code of 1986, as amended (the Code ), and is exempt from certain taxes imposed by the State and its political subdivisions. Interest on the Bonds may be subject to certain federal income taxes imposed on certain corporations, and certain taxpayers may have certain other adverse federal income tax consequences as a result of owning the Bonds. (See TAX MATTERS. ) The School District has not designated the Bonds as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. Bricker & Eckler LLP, Columbus, Ohio. Fifth Third Securities, Inc., Columbus, Ohio. U.S. Bank National Association, Columbus, Ohio. Causey Demgen & Moore P.C. The Bonds are being issued as fully registered Bonds in book-entry form only and bookentry interests therein will be available for purchase in amounts of $5,000 and integral multiples thereof. Owners of book-entry interests will not receive physical delivery of bond certificates. DTC or its nominee will receive all payments with respect to the Bonds from the Bond Registrar. DTC is required by its rules and procedures to remit such payments to its participants for subsequent disbursement to owners of the book-entry interests. It is expected that delivery of the Bonds in definitive form will be made through DTC on or about March 1, The Bonds will be released to the Underwriter against payment in federal funds. Questions concerning the Official Statement should be directed to Kelly Ziegler, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio Telephone: (740) iv

9 TABLE OF CONTENTS REGARDING THIS OFFICIAL STATEMENT... i INVESTMENT CONSIDERATIONS... ii General... ii Investment Suitability of Tax-Exempt Bonds... ii Prepayments of Principal... ii BOND ISSUES SUMMARY... iii TABLE OF CONTENTS... v INTRODUCTORY STATEMENT... 1 DEFINITIONS... 2 THE BONDS... 3 Authorization and Purpose... 3 Form and Terms... 4 Redemption Provisions... 4 ESTIMATED SOURCES AND USES OF FUNDS... 7 SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT S GENERAL OBLIGATION DEBT... 7 Security for the Bonds... 7 School District Bankruptcy... 8 RATING... 8 UNDERWRITING... 9 LITIGATION... 9 Litigation Generally... 9 School Funding Litigation LEGAL MATTERS TAX MATTERS General Original Issue Discount Amortizable Bond Premium VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS BOOK-ENTRY ONLY SYSTEM Revision of Book-Entry Only System Replacement Bonds TRANSCRIPT AND CLOSING DOCUMENTS CONTINUING DISCLOSURE CONCLUDING STATEMENT APPENDIX A BUCKEYE VALLEY LOCAL SCHOOL DISTRICT... A-1 GENERAL INFORMATION... A-1 Introduction... A-1 Map of Geographic Area... A-3 School District Officials... A-4 School District Employees... A-4 Pension Obligations... A-5 School District Facilities... A-5 Enrollment... A-6 Community School... A-7 Scholarship... A-7 STEM School... A-7 Open Enrollment... A-7 Advanced Standing Programs... A-7 Educational Program... A-8 v

10 State Performance Standards... A-8 National Standardized Test Scores... A-13 Comparative Position of the School District... A-14 ECONOMY AND EMPLOYMENT... A-15 Economic Development... A-15 Labor Force Statistics... A-16 Largest Employers... A-17 SCHOOL DISTRICT PROPERTY TAX BASE... A-18 Ad Valorem Taxes and Assessed Valuation... A-18 Tax Abatements and Economic Development Incentives... A-18 Assessed Valuation... A-19 Largest Taxpayers... A-21 History of Voted Taxes... A-22 Property Tax Rates and Collections... A-23 Property Tax Rate Calculations... A-23 Ad Valorem Tax Levies... A-25 Repeal of Property Tax Levies... A-25 Total Property Tax Burden... A-26 State Reimbursement of Property Tax Revenues... A-27 OTHER SOURCES OF SCHOOL DISTRICT FUNDING... A-28 School Foundation Program... A-28 State Classroom Facilities Assistance... A-29 School District Income Tax... A-29 Gross Casino Revenue Tax... A-30 SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS... A-30 Statutory Debt Limitations Generally... A-30 Bond Anticipation Notes... A-32 School District Debt Currently Outstanding... A-33 Debt Service Requirements... A-34 Overlapping Subdivision Indebtedness... A-35 Debt Capacity Analysis... A-36 Lease Obligations... A-37 Leases... A-37 Future Financings... A-37 FINANCES OF THE SCHOOL DISTRICT... A-37 Budgeting, Tax Levy and Appropriations Procedures... A-37 Financial Reports and Audits... A-38 Five-Year Projection... A-39 Fiscal Oversight System... A-39 General Fund Operations... A-39 General Fund Set-Aside... A-40 Investment of Funds... A-40 School District Insurance... A-41 APPENDIX B Financial Statements for the Fiscal Year Ended June 30, B-1 APPENDIX C Five-Year Projection of Operational Revenues and Expenditures... C-1 APPENDIX D Form of Approving Legal Opinion of Bricker & Eckler LLP... D-1 APPENDIX E Form of Closing Certificate... E-1 APPENDIX F Form of Continuing Disclosure Certificate... F-1 vi

11 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) Voted November 3, 2015 $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 INTRODUCTORY STATEMENT This Official Statement has been prepared by the Board of Education (the Board ) of the School District in connection with the original issuance and sale by the School District of the Bonds identified on the Cover. All financial and other information presented herein has been provided by the School District from its records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the School District. No representation is made that past experience, as might be shown by such financial and other information, will necessarily continue or be repeated in the future. Certain statements contained in this Official Statement, including, without limitation, statements containing the words believes, anticipates, expects and words of similar import, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the School District to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, general economic conditions, demographic changes, and existing government regulations and changes in, or the failure to comply with, government regulations. Certain of these factors are discussed in more detail elsewhere in this Official Statement. Given these uncertainties, readers of this Official Statement and investors are cautioned not to place undue reliance on such forward-looking statements. This Official Statement should be considered in its entirety and no subject discussed should be considered less important than any other subject by reason of its location in the text. Reference should be made to laws, reports or documents referred to for more complete information regarding their contents. References herein to provisions of Ohio law (whether codified in the Ohio Revised Code or uncodified, the Ohio Constitution, or federal law) are references to such provisions as they presently exist. Provisions of Ohio law, the Ohio Constitution and federal law may in the future, and from time to time, be amended, repealed or supplemented. Additional information relating to the financial condition of the School District may be obtained by contacting Kelly Ziegler, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio 43015, telephone (740) , and from the Ohio Department of Education s website: The School District makes no representation as to the accuracy of the information appearing at such website. 1

12 DEFINITIONS The following capitalized terms, as used in this Official Statement and the Appendices attached hereto, have the following meanings unless otherwise indicated: Annual Report means any annual report provided by the School District referred to in this Official Statement and any appendix hereto. Bankruptcy Code means Title 11 of the United States Code. Board means the Board of Education of the School District. Bond Counsel means Bricker & Eckler LLP, Columbus, Ohio. Bond Registrar means U.S. Bank National Association, Columbus, Ohio. Bonds means the School District s Series 2016A Bonds and the Series 2016B Bonds. Code means the Internal Revenue Code of 1986, as amended. County means Delaware County, the dominant county of the School District, as defined by the Revised Code. County Auditor means the County Auditor of the County. County Treasurer means the County Treasurer of the County. Cover means the cover page and the inside cover of this Official Statement. Department means the State Department of Education. Fiscal Year means the 12-month period ending June 30, and reference to a particular Fiscal Year (such as Fiscal Year 2016 ) means the Fiscal Year ending on June 30 in that year. MSA or Columbus MSA means the Columbus Metropolitan Statistical Area, as defined by the United States Office of Management and Budget, including Delaware, Fairfield, Franklin, Hocking, Licking, Madison, Morrow, Perry, Pickaway, and Union Counties. OMAC means the Ohio Municipal Advisory Council. Outstanding Bonds means the School District s $15,999,994 School Facilities Construction and Improvement Bonds, Series 2009, dated April 20, Project means constructing, renovating and improving school facilities; furnishing and equipping the same; improving the sites thereof; and acquiring land and interests in land related thereto. Refunded Bonds means $12,410,000 in aggregate principal amount of the School District s Outstanding Bonds including serial bonds maturing December 1, 2019 through December 1, 2030, inclusive and the term bonds maturing on December 1, Revised Code means the Ohio Revised Code, as amended. 2

13 School District means the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio. Series 2016A Bonds means the School District s $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A, dated March 1, Series 2016B Bonds means the School District s $12,380,000 Refunding Bonds, Series 2016B, dated March 1, State or Ohio means the State of Ohio. State Auditor means the Auditor of the State. State Superintendent means the State Superintendent of Public Instruction. Tax Commissioner means the Tax Commissioner of the State. Treasurer means the Treasurer of the School District. Underwriter means Fifth Third Securities, Inc., Columbus, Ohio. Authorization and Purpose THE BONDS The Bonds are authorized by resolutions of the Board passed on December 15, 2015 (collectively, the Bond Resolutions ). The Series 2016A Bonds are unlimited tax general obligation bonds issued for the purpose of funding the Project. The electors of the School District approved the issuance of bonds in the amount of $31,250,000 at the election held on November 3, 2015, and the Series 2016A Bonds are issued pursuant to such voted authority. The Series 2016B Bonds are unlimited tax general obligation bonds issued for the purpose of advance refunding the Refunded Bonds, which were issued for the purpose of (i) retiring a portion the School District s $15,000,000 School Facilities Construction and Improvement Notes, Series 2008, dated December 23, 2008, previously issued for the purpose of constructing school facilities; renovating, improving and constructing additions to existing school facilities, including improvements to school technology; furnishing and equipping the same; and improving the sites thereof, and (ii) paying $1,000,000 in additional costs associated with the above improvements (pursuant to voted authority from the November 4, 2008 election). The Bonds are issued in conformity with Revised Code Chapter 133, and are, therefore, lawful investments for banks, savings and loan associations, credit union share guaranty corporations, trust companies, trustees, fiduciaries, insurance companies, including domestic for life and domestic not for life, trustees or other officers having charge of sinking and bond retirement or other funds of the State, subdivisions and taxing districts, the Commissioners of the Sinking Fund of the State, the Administrator of Workers Compensation, the State teachers, public employees, and school employees retirement systems, and the police and firemen s disability and pension fund, and are eligible as security for the repayment of the deposit of public moneys. A portion of the proceeds of the sale of the Bonds will be deposited in the Escrow Fund within the School District s Bond Retirement Fund and will be used to advance refund the Refunded Bonds. 3

14 The Escrow Fund will be held by U.S. Bank National Association Columbus, Ohio, as escrow trustee (the Escrow Trustee ). Monies in the Escrow Fund will be invested in direct obligations of or obligations guaranteed as to payment by the United States of America and applied, by the Escrow Trustee, to pay debt service on the Refunded Bonds and to redeem the Refunded Bonds on their earliest optional redemption date. Under Ohio law, the maximum maturity of the Series 2016A Bonds is 30 years, and the final maturity of the Series 2016B bonds cannot be later than the final maturity of the Refunded Bonds (December 1, 2036). Form and Terms The Bonds will be issued in fully registered form and the Bonds (as shown on the Cover) will bear interest from their dated date until maturity or earlier redemption, at the rates per annum as set forth on the Cover, payable on June 1 and December 1 of each year, and will mature on December 1 in the years as indicated on the Cover. The Bonds will be issued in denominations of $5,000 or any integral multiple thereof, provided that, so long as the Bonds shall be in book-entry form and held by a depository, each Bond will be of a single maturity, and will be numbered as determined by the Treasurer. Principal of the Bonds (as shown on the Cover) will be payable at maturity, in lawful money of the United States of America, at the designated corporate trust office of U.S. Bank National Association, which has been designated by the Board as the bond registrar, paying agent, and transfer agent for the Bonds (the Bond Registrar ). Interest on the Bonds will be payable to the person whose name appears as the registered holder thereof on the registration records maintained by the Bond Registrar, on the respective Record Date (15 th day next preceding an interest payment date) by check mailed to such registered holder at the address of such registered holder as it appears on the registration records. No deduction shall be made for exchange, collection, or service charges. Redemption Provisions Mandatory Sinking Fund Redemption The Series 2016A Term Bonds maturing on December 1, 2031 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the year and in the principal amount as follows: Principal Amount Year to be Redeemed 2030 $935,000 The remaining principal amount of such Term Bonds ($970,000) will be paid at stated maturity on December 1,

15 The Series 2016A Term Bonds maturing on December 1, 2033 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the year and in the principal amount as follows: Year Principal Amount to be Redeemed 2032 $1,010,000 The remaining principal amount of such Term Bonds ($1,050,000) will be paid at stated maturity on December 1, The Series 2016A Term Bonds maturing on December 1, 2035 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the year and in the principal amount as follows: Year Principal Amount to be Redeemed 2034 $1,090,000 The remaining principal amount of such Term Bonds ($1,125,000) will be paid at stated maturity on December 1, The Series 2016A Term Bonds maturing on December 1, 2040 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows: Year Principal Amount to be Redeemed 2036 $1,160, ,220, ,280, ,345,000 The remaining principal amount of such Term Bonds ($1,410,000) will be paid at stated maturity on December 1,

16 The Series 2016A Term Bonds maturing on December 1, 2045 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the years and in the respective principal amounts as follows: Year Principal Amount to be Redeemed 2041 $1,480, ,535, ,585, ,645,000 The remaining principal amount of such Term Bonds ($1,700,000) will be paid at stated maturity on December 1, The Series 2016B Term Bonds maturing on December 1, 2036 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on December 1 in the year and in the respective principal amount as follows: Principal Amount Year to be Redeemed 2035 $915,000 The remaining principal amount of such Term Bonds ($945,000) will be paid at stated maturity on December 1, Optional Redemption The Series 2016A Bonds maturing on or after December 1, 2026 are subject to redemption at the option of the School District, either in whole or in part, in such order of maturity as the School District shall determine, on any date on or after December 1, 2025, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. The Series 2016B Bonds maturing on or after December 1, 2026 are subject to redemption at the option of the School District, either in whole or in part, in such order of maturity as the School District shall determine, on any date on or after December 1, 2025, at a redemption price equal to 100% of the principal amount redeemed plus, in each case, accrued interest to the date fixed for redemption. When partial redemption is authorized, the Bonds or portions thereof will be selected by lot within a maturity in such manner as the Bond Registrar may determine, provided, however, that the portion of any such Bond so selected will be in the amount of $5,000 or any integral multiple thereof. The notice of the call for redemption of Bonds shall identify (i) by designation, letters, numbers or other distinguishing marks, such Bonds or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. From and after the specified redemption date, interest on such Bonds (or portions thereof) called for redemption shall cease to accrue. Such notice shall be sent by first class mail to each such registered holder at the address shown in the Bond registration records at least 30 days prior 6

17 to the redemption date. Failure to receive such notice or any defect therein shall not affect the validity of the proceedings for the redemption of any such Bond. ESTIMATED SOURCES AND USES OF FUNDS The proceeds of the Bonds will be applied as follows: Series 2016A Bonds Series 2016B Bonds Total Sources Par value $31,250, $12,380, $43,630, Net original issue premium 1,906, ,560, ,466, Total Sources $33,156, $13,940, $47,096, Uses Deposit to the Project Fund $31,250, $0.00 $31,250, Deposit to Bond Retirement Fund 1,647, ,647, Deposit to Escrow Fund of the Bond Retirement ,829, ,829, Fund to refund the Refunded Bonds Costs of issuance 1 258, , , Total Uses $33,156, $13,940, $47,096, Security for the Bonds SECURITY AND SOURCE OF PAYMENT FOR THE SCHOOL DISTRICT S GENERAL OBLIGATION DEBT The Bonds are voted general obligation debt of the School District, payable from the sources described herein, subject to Chapter 9 of the Bankruptcy Code and other laws affecting creditors rights. The basic security for payment of the Bonds is the requirement that the School District levy ad valorem property taxes outside the ten-mill limitation (which limitation is further described in APPENDIX A under SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS ), which taxes are unlimited as to rate and amount, to the extent necessary to pay the anticipated debt service on the Bonds as the same becomes due, and to the extent that such debt service on the Bonds is not paid from other sources. Such taxes can be expended only for the purpose of paying the anticipated debt service on the Bonds (together with costs of issuing the Bonds) and since such taxes are unlimited as to rate or amount, the rate of millage actually levied in each year while the Bonds are outstanding will be such as is determined to be necessary by the County Auditor to produce the amount necessary to pay debt service on the Bonds due in that year, giving due consideration to the School District s assessed valuation and previous tax collection experience. 1 Includes Underwriter s compensation, rating fees, Bond Registrar and Escrow Trustee fees, Verification Agent fees, printing and distribution costs, legal fees, and other miscellaneous expenses. 7

18 The Bonds are also secured by a pledge of the full faith and credit of the School District. This pledge includes all of the funds of the School District, except those prohibited from use by the Ohio Constitution, State or federal law, or specifically limited to another use. (See SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally in APPENDIX A.) In addition to the right of individual bondholders to sue upon their particular Bonds, State law authorizes the holders of not less than 10% in principal amount of the Bonds to bring mandamus or other actions to enforce all contractual or other rights of the bondholders, including the right to require the School District to levy, collect and apply the taxes to pay debt service on the Bonds, and in the case of any default in payment of debt service on the Bonds, to bring an action to require the School District to account as if it were the trustee of an express trust for the bondholders or to enjoin any acts that may be unlawful or in violation of bondholder rights. School District Bankruptcy An Ohio school district may file for bankruptcy under Chapter 9 of the Bankruptcy Code if it meets certain prerequisites under both federal and State law. Section 109(c) of the Bankruptcy Code sets forth the requirements for a State political subdivision to file for bankruptcy protection. In addition to requiring the school district to be insolvent 1, the school district must be specifically authorized, in its capacity as a school district or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter. 2 With regard to State law, Revised Code Section requires that a political subdivision which desires to file bankruptcy seek and obtain permission of the Tax Commissioner. Moreover, Revised Code Section (E)(5) provides that a school district may not file for bankruptcy if it owes money to the State. The foregoing federal and State laws also permit an Ohio county to initiate Chapter 9 proceedings which, because a county collects certain revenues on behalf of a school district (particularly ad valorem property taxes), may adversely affect the financial condition of such school district. RATING As noted on the Cover, the School District has received a rating of AA- on the Bonds from Standard & Poor s Ratings Services ( Standard & Poor s ), a division of The McGraw Hill Companies, Inc. No application for a rating has been made to any other rating agency. The rating reflects only the views of such rating agency. Any explanation of the significance of the rating may only be obtained from such rating agency at Standard & Poor s Ratings Services, a division of The McGraw Hill Companies, Inc., 55 Water Street, New York, New York 10041, telephone (212) ; website: The School District furnished to the rating agency certain information and materials, some of which may not have been included in this Official Statement, relating to the Bonds and the School District. Generally, rating agencies base their ratings on such information and materials, as well as investigation, studies and assumptions by the rating agencies. Such ratings are not recommendations to buy, sell or hold the Bonds U.S.C. Section 101(32)(C) requires that in order to be insolvent a school district must not be paying its debts as they come due. 2 See 11 U.S.C. Section 109(c)(2). 8

19 There can be no assurance that a rating, when assigned, will continue for any given period of time or that it will not be lowered or withdrawn entirely by a rating agency if, in the rating agency s judgment, circumstances so warrant. In addition, the School District currently expects to provide to Standard & Poor s (but assumes no obligation to furnish to the Underwriter or the holders of the Bonds) further information and materials that it or they may request. The School District does not, however, obligate itself hereby to furnish such information and materials, and may issue unrated bonds and notes from time to time. Failure by the School District to furnish such information and materials, or the issuance of unrated bonds or notes, may result in the suspension or withdrawal of a rating agency s rating on the Bonds. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the marketability or market price of the Bonds. UNDERWRITING Fifth Third Securities, Inc. (the Underwriter ) has agreed, pursuant to the Bond Purchase Agreement with the School District dated February 4, 2016 (the Purchase Agreement ), to purchase all (i) the Series 2016A Bonds at a purchase price of $33,000, (the Series 2016A Purchase Price ), which is equal to the par amount of the Series 2016A Bonds ($31,250,000.00), plus net original issue premium ($1,906,301.45), less Underwriter s discount ($156,250.00) and (ii) the Series 2016B Bonds at a purchase price of $13,878, (the Series 2016B Purchase Price, ), which is equal to the par amount of the Series 2016B Bonds ($12,380,000.00), plus original issue premium ($1,560,275.70), less Underwriter s discount ($61,900.00). The Underwriter is purchasing the Bonds as originally issued for purpose of resale. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers (including dealer banks and dealers depositing the Bonds into unit investment trusts, certain of which may be sponsored or managed by the Underwriter), and others at prices lower than the public offering prices noted on the Cover. The initial offering prices of the Bonds may be changed, from time to time, by the Underwriter. The Underwriter will retain $102, from the Series 2016A Purchase Price to pay certain costs of issuance of the Series 2016A Bonds on behalf of the District, including rating fees, printing and distribution costs, legal fees, and other miscellaneous expenses. The Underwriter will retain $48, from the Series 2016B Purchase Price to pay certain costs of issuance of the Series 2016B Bonds on behalf of the District, including Escrow Trustee fees, Verification Agent fees, rating fees, printing and distribution costs, legal fees and other miscellaneous expenses. The obligation of the Underwriter to accept delivery of the Bonds is subject to the various conditions set forth in the Purchase Agreement. The Underwriter is obligated to purchase all of the Bonds if any of the Bonds are purchased. Litigation Generally LITIGATION To the knowledge of the appropriate officials of the School District, no litigation or administrative action or proceeding is pending or threatened restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Bonds, or the levy and collection of taxes to pay the debt service on the Bonds, or contesting or questioning the proceedings and authority under which the Bonds are to be authorized and are to be issued, sold, executed or delivered, or the validity of the Bonds. 9

20 A no-litigation certificate to such effect will be delivered to the Underwriter at the time of original delivery of the Bonds to the Underwriter. In common with other political subdivisions, the School District from time to time receives notices of claims for money damages. In the opinion of School Board officials, any such claims outstanding, regardless of their merit, are not in excess of the School District s insurance coverage. The School District is party to various legal proceedings seeking damages or injunctive relief and generally incidental to its operations. These proceedings are unrelated to the Bonds or the security therefor. The ultimate disposition of such proceedings is not presently determinable, but will not, in the opinion of School Board officials, have a material adverse effect on the Bonds or the security therefor. School Funding Litigation In 1997, the Ohio Supreme Court determined in the case of DeRolph v. State of Ohio, that Ohio s elementary and secondary public school financing system violated the Ohio Constitution. Included in the DeRolph decision was a ruling that property taxes may be used as a part of a school funding solution, but could no longer be the primary means of financing schools. In 2003, the Ohio Supreme Court effectively prohibited further judicial review of the DeRolph case and the United States Supreme Court denied the plaintiffs Petition for Writ of Certiorari, without opinion. Throughout its rulings the Ohio Supreme Court did not specifically address, and did not hold as invalid: Voted securities issues (bonds and notes previously issued and bond issues that may be placed on the ballot in the future) and the debt service levy included within such voted authority. Unvoted securities issues (bonds and notes previously issued and future bond and note issues), issued for the purpose of constructing permanent improvements or capital facilities, and the debt service levy included within such authority. Voted levies (property taxes or income taxes). The decisions did not address the current authority of school districts to levy and collect operating levies, and the decisions do not prevent school districts from approving additional levies. LEGAL MATTERS Legal matters incident to the issuance of the Bonds and with regard to the excludability of the interest on the Bonds from gross income for federal income tax purposes (see TAX MATTERS herein) are subject to the approving opinion of Bricker & Eckler LLP, Bond Counsel to the School District. A signed copy of that opinion will be delivered to the Underwriter at the time of original delivery. Assuming no change in applicable law prior to the date of delivery of such opinion, the opinion will be substantially in the form attached hereto as APPENDIX D. The opinion will speak only as of its date, and subsequent distribution of it by recirculation of the Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referred to in the opinion subsequent to the date thereof. While Bond Counsel has participated in the preparation of portions of this Official Statement, it has not been engaged to confirm or verify, and expresses and will express no opinion as to the accuracy, completeness or fairness of any of the statements in this Official Statement, including its appendices (other than APPENDIX D), or in any other reports, financial information, offering or disclosure 10

21 documents or other information pertaining to the School District or the Bonds that may be prepared or made available by the School District or others to the holders of the Bonds or others. General TAX MATTERS In the opinion of Bricker & Eckler LLP, Bond Counsel, under existing law interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103(a) of the Code, and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. Further, the Bonds are not private activity bonds as defined in Section 141(a) of the Code. Interest on the Bonds, the transfer thereof, and any profit made on their sale, exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district, and joint economic development district income taxes in Ohio. The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications made by the Board and others, and the compliance with certain covenants of the School District, to be contained in the transcript of proceedings and which are intended to evidence and assure the foregoing, including that the Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel has not and will not independently verify the accuracy of such certifications and representations. The School District has not designated the Bonds as qualified tax-exempt obligations as defined in Section 265(b)(3) of the Code. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and continue to be so excluded from the date of issuance. Noncompliance with these requirements could cause the interest on the Bonds to be included in gross income for federal income tax purposes and thus to be subject to regular federal income tax retroactively to the date of their issuance. The School District has covenanted to take such actions that may be required of it for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes, and not to take any actions which would adversely affect that exclusion. Under the Code, interest on the Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States of America and a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes can have certain adverse federal income tax consequences on items of income or deductions for certain taxpayers, including among them financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, and those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other items of income and expenses of the holders of the Bonds. Bond Counsel will express no opinion and make no representation regarding such consequences. 11

22 Original Issue Discount Certain of the Bonds may be sold to the public at a price of less than 100% of their face amount (the Discount Bonds ). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Discount Bonds. Under present federal income tax law, original issue discount (i.e., the difference between the issue price, as hereinafter defined, of a Discount Bond and the stated redemption price at maturity of such Discount Bond), is treated as accruing ( accreted ) over the term of such Discount Bond. The issue price is the price at which a substantial amount of the Discount Bonds is sold to the public (excluding bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers). In general, the amount of original issue discount that is to be accreted in each accretion period will equal (i) the issue price of that Discount Bond, increased by the amount of original issue discount that has been accreted in all prior accretion periods, multiplied by (ii) the initial offering yield of that Discount Bond reflected on the Cover of this Official Statement (determined on the basis of compounding at the close of each accretion period and properly adjusted for the length of the accretion period), minus, with respect to the Bonds, interest actually paid during such accretion period. For these purposes, accretion period means a six-month period (or shorter period from the date the Discount Bond was issued) which ends on a day in the calendar year corresponding to the maturity date of that Discount Bond or the date six months before such maturity date. The amount of original issue discount so accreted in a particular accretion period will be considered to accrete ratably on each day of the accretion period. Such accreted amount is used for purposes of determining the adjusted basis for federal income tax purposes of the holder of such Discount Bond but is not included in such holder s gross income for federal income tax purposes. Consequently, a purchaser who buys a Discount Bond in the initial offering at the issue price and holds such Discount Bond to its maturity would not realize any gain or loss for federal income tax purposes upon payment of the stated redemption price of that Discount Bond at maturity. Amortizable Bond Premium Certain of the Bonds may be sold at issue prices greater than the principal amount payable at maturity or earlier call date (the Premium Bonds ). The following information, which has not been included in the opinion of Bond Counsel, may be helpful to prospective purchasers of the Premium Bonds. Premium Bonds will be considered to be issuable with amortizable bond premium (the Bond Premium ). A taxpayer who acquires a Premium Bond in the initial public offering will be required to adjust his or her basis in the Premium Bond downward as a result of the amortization of the Bond Premium, pursuant to Section 1016(a)(5) of the Code. The amount of amortizable Bond Premium will be computed on the basis of the taxpayer s yield to maturity with compounding at the end of each accrual period. Rules for determining (i) the amount of amortizable Bond Premium and (ii) the amount amortizable in a particular year are set forth at Section 171(b) of the Code. No income tax deduction for the amount of amortizable Bond Premium will be allowed to a holder pursuant in Section 171(a)(2) of the Code. The amortization of Bond Premium may be taken into account as a reduction in the amount of taxexempt income for purposes of determining other tax consequences of owning the Premium Bonds. A purchaser of a Premium Bond at its issue price in the initial public offering who holds that Premium Bond to maturity will realize no gain or loss upon the retirement of such Premium Bond. PROSPECTIVE PURCHASERS OF THE DISCOUNT OR PREMIUM BONDS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE PURCHASE, SALE, TRANSFER, REDEMPTION, PAYMENT, OR OTHER DISPOSITION OF THE 12

23 DISCOUNT OR PREMIUM BONDS, INCLUDING, WITHOUT LIMITATION, MODIFICATIONS TO THE METHOD FOR ACCRETING ORIGINAL ISSUE DISCOUNT OR AMORTIZING PREMIUM FOR CERTAIN SUBSEQUENT PURCHASERS, AND INCLUDING THE EFFECT OF ANY APPLICABLE STATE OR LOCAL INCOME TAX LAWS. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS Upon delivery of the Bonds, Causey Demgen & Moore P.C., certified public accountants (the Verification Agent ) will deliver reports on the arithmetical accuracy of certain computations contained in schedules provided to them by the Underwriter on behalf of the School District relating to (a) computation of forecasted receipts of principal and interest on the securities held in the Escrow Fund to refund the Refunded Bonds and (b) computation of the yields on the Bonds and the securities held in the Escrow Fund to refund the Refunded Bonds. Such computations will be based solely on assumptions and information supplied by the Underwriter on behalf of the School District, and the Verification Agent has restricted its procedures to examining the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and information on which such computations are based. Accordingly, the Verification Agent has not expressed an opinion on the data used, the reasonableness of the assumptions, or the ability to achieve the forecasted outcome. BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC s book-entry only system has been obtained from DTC and the School District takes no responsibility for the completeness or accuracy thereof. The School District cannot and does not give any assurances that DTC, Direct Participants or Indirect Participants will distribute to the Beneficial Owners (each as hereinafter defined) (a) payments of interest, principal, or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Official Statement. The current Rules applicable to DTC are on file with the Securities and Exchange Commission and the current Procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each 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 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, 13

24 banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bonds. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Bond Registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the School District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 14

25 Redemption proceeds, distributions and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the School District or the Bond Registrar, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Bond Registrar, or the School 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 School District or the Bond 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 a depository with respect to the Bonds at any time by giving reasonable notice to the School District or the Bond Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed (or otherwise produced) and delivered. The School District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed (or otherwise produced) and delivered to DTC. (See also BOOK-ENTRY ONLY SYSTEM Revision of Book-Entry Only System Replacement Bonds ) The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the School District believes to be reliable, but the School District takes no responsibility for the accuracy thereof. Revision of Book-Entry Only System Replacement Bonds The Bond Resolution provides for issuance of fully registered Bonds (the Replacement Bonds ) directly to owners other than DTC or its nominee only if DTC determines not to continue to act as security depository of the Bonds. In such event, the School District may in its discretion establish a securities depository/book-entry relationship with another qualified securities depository. If the School District does not or is unable to do so, and after appropriate notice to DTC, the School District s Bond Registrar will authenticate and deliver fully registered Replacement Bonds, in the denominations of $5,000 or any multiple thereof, to or at the direction of and, if the event is not the result of School District action or inaction, at the expense (including printing costs) of, any persons requesting such issuance. Replacement Bonds may be transferred, registered and assigned only in the registration books of the School District s Bond Registrar. TRANSCRIPT AND CLOSING DOCUMENTS A complete transcript of proceedings for the Bonds, including an appropriate no-litigation certificate (described above under LITIGATION ), will be delivered by the School District when the Bonds are delivered by the School District to the Underwriter. The School District will at that time also provide to the Underwriter a certificate of the Treasurer, in the form attached hereto as APPENDIX E, addressed to the Underwriter relating to the accuracy and completeness of this Official Statement. 15

26 CONTINUING DISCLOSURE The School District has agreed for the benefit of the holders and beneficial owners of the Bonds to provide annual financial and operating information in its Annual Report, not later than December 1 of each year, and to provide notices of certain significant events, as listed in the Disclosure Certificate defined below. Concurrently with the delivery of the Bonds, the School District will deliver a certificate of the Treasurer of the School District (the Disclosure Certificate ), in the form attached hereto as APPENDIX F, describing the nature of the information to be provided, the persons and entities to whom such information will be provided and the times at which such information will be provided. The School District s failure to comply with any undertaking contained in the Disclosure Certificate will not constitute an event of default under the Bonds. The Disclosure Certificate is being signed by the School District to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission. Specifically, the School District agrees to provide the Annual Report to the Municipal Securities Rulemaking Board (the MSRB ) in an electronic format, if required, and to provide notice of the enumerated events to the MSRB in an electronic format, if required. The School District has never failed to comply with certain continuing disclosure requirements in the last five years. The School District has retained Bond Counsel to assist it with its continuing disclosure undertakings. 16

27 CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of such statements will be realized. Information herein has been derived by the School District from official and other sources and is believed by the School District to be reliable, but information other than that obtained from official records of the School District has not been independently confirmed or verified by the School District and its accuracy is not guaranteed. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as or as part of a contract with the original purchasers or holders of the Bonds. This Official Statement has been duly prepared and delivered by the School District, and executed for and on behalf of the School District by the President and the Treasurer of the Board. BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE, MARION, MORROW AND UNION COUNTIES, OHIO By: /s/ Justine M. Santschi President, Board of Education By: /s/ Kelly Ziegler Treasurer, Board of Education 17

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29 APPENDIX A BUCKEYE VALLEY LOCAL SCHOOL DISTRICT GENERAL INFORMATION Introduction The School District is in the northern portion of Delaware County (the County ), and extends into Marion, Morrow and Union Counties. According to the U.S. Census Bureau, the estimated population of the School District in 2014 was 16,576. The School District is an independent political subdivision of the State and operates subject to the provisions of the Ohio Constitution and various sections of the Revised Code. Under such laws, there is no authority for the School District to have a charter or adopt local laws. The School District is not a part of, nor under the control of, the County or any other political subdivision. A-1

30 According to information supplied by OMAC, the School District contains portions of the assessed valuation of other subdivisions, as shown below: Overlapping Subdivisions Buckeye Valley Local School District Percent of Subdivision s Assessed Valuation within the School District Percent of School District s Assessed Valuation within the Subdivision Subdivision Counties Delaware County 8.26% 92.88% Morrow County Marion County Union County Other Political Subdivisions City of Delaware >0.01% >0.01% Village of Ashley Village of Ostrander Brown Township Concord Township Delaware Township Kingston Township Liberty Township Marlboro Township Millcreek Township Oxford Township Peru Township Radnor Township Scioto Township Thompson Township Troy Township Waldo Township 4.97% 0.25% Westfield Township Delaware Career Center JVSD Delaware County 911 Misc Delaware County Health District Misc Delaware County Library District Misc Delaware-Morrow Co. Mental Health District Misc ELM Valley Joint Fire District Misc Fort Morrow Fire District Misc Kingston-Porter Fire District Misc Preservation Park District of Delaware County Misc Tri Township Fire District Misc Union County Health District Misc Source: OMAC A-2

31 Map of Geographic Area BUCKEYE VALLEY LOCAL SCHOOL DISTRICT A-3

32 School District Officials The legislative power of the School District is vested in the Board of Education (the Board ), consisting of five members elected at large for staggered four-year terms. The Board meets regularly on the third Tuesday of each month unless scheduled otherwise. At the first meeting of each year, the Board elects a president and a vice president from its membership, each to serve a one-year term. The Board employs a Superintendent who serves as the executive officer for the Board and a Treasurer who serves as the chief fiscal officer for the Board. School District Officials Buckeye Valley Local School District Official Office Expiration of Current Term Beginning of Tenure Justine M. Santschi President 12/31/ /01/2014 Vic Whitney Vice President 12/31/ /01/2014 Amy B. Dutt Member 12/31/ /01/2014 Justin Osborn Member 12/31/ /01/2016 Jeffrey D. White Member 12/31/ /01/2016 Andrew Miller Superintendent Contract 06/01/2014 Kelly Ziegler Treasurer Contract 08/01/2013 Source: School District School District Employees The School District currently has 158 licensed employees (including 144 teachers) and 83 classified employees. In Fiscal Year 2015, salaries accounted for 53.0% of the School District s operating expenditures, while fringe benefits accounted for 22.6% of the School District s operating expenditures. In the opinion of the School District s officials, labor relations are good. Licensed Staff The licensed teaching staff has been represented by the Buckeye Valley Teacher s Association (the BVTA ) in labor negotiations with the School District for over 41 years. The BVTA is affiliated with the Ohio Education Association and the National Education Association. The Board s three-year agreement was effective August The settlement granted a 1.5% base salary increases for each year of the agreement. The Board paid a step increase in Fiscal Year 2014, a double step increase in Fiscal Year 2015 for the licensed staff members was employed with the School District since 2012, and a step increase in Fiscal Year The Board will pay 89%, 88% and 87% of health insurance premiums in the consecutive years of the agreement. The Board pays one-third of the accumulated unused sick leave for licensed staff members with an accumulation of 120 days, up to 230 days. Classified Staff Classified staff includes secretarial, clerical, custodial and cafeteria workers, as well as bus drivers and other non-teaching, non-administrative personnel. The classified teaching staff has been represented by the Ohio Association of Public School Employees Local #236 ( OAPSE ) in labor negotiations with the School District for over 41 years. The A-4

33 Board s three-year agreement was effective August The settlement granted a 2.0% increase in base salary for each year of the agreement. In addition, classified staff members receive step increases if eligible. The Board pays one-fourth of the accumulated unused sick leave for classified staff members with an accumulation of up to 120 days. If the classified staff member has an accumulation in excess of 140 days, the Board pays 40% of the accumulated sick leave up to 250 days. Pension Obligations Present and retired employees of the School District are covered under two statewide public retirement (including disability retirement) systems. The State Teachers Retirement System (the STRS ) is applicable to all teachers, principals, supervisors and administrators employed by the School District who are required to hold a license issued by the Department pursuant to the Revised Code. Other eligible employees are covered by the School Employees Retirement System (the SERS ). Pursuant to federal law, all School District employees hired after March 31, 1986 are required to participate in the federal Medicare program which currently requires employee and employer contributions each equal to 1.45% of the employee s wages subject to the Federal Insurance Contribution Act ( FICA ) wage limit. Otherwise, School District employees are not presently covered under the Federal Social Security Act. STRS and SERS are not presently subject to the funding and vesting requirements of the Federal Employee Retirement Income Security Act of Both STRS and SERS were created by and operate pursuant to Ohio law. The General Assembly could determine to amend the format of either system and could revise rates or methods of contribution to be made by the School District into the pension funds and revise benefits or benefits levels. School District Facilities The School District presently operates the following school buildings: School District Facilities Buckeye Valley Local School District Name of Building Group/ Grades Housed Enrollment ( ) Capacity Number of Teachers Pupil/ Teacher Ratio Year Building Completed Year(s) of Additions/ Renovations Buckeye Valley East Elementary PreK : , 1997 Buckeye Valley West Elementary PreK : , 1997 Buckeye Valley Middle School : Buckeye Valley High School : , 1992, 2009 Total - 2,383 2, Source: School District A-5

34 After completion of the Project in Fiscal Year 2018, the School District will operate the following facilities: School District Facilities Upon Completion of the Project Buckeye Valley Local School District Buildings Group/Grades Housed Capacity Expected Enrollment New Construction Elementary 1 PreK Elementary 2 PreK Existing Facilities Buckeye Valley Middle School Buckeye Valley High School Total 2,550 2,201 Source: School District Enrollment The School District s daily average enrollments based on the October count for past and current school years, together with projected enrollments for future school years, are shown below. Actual and Projected Enrollment Buckeye Valley Local School District Grade Pre-K K Totals 2,372 2,297 2,243 2,352 2,383 2,217 2,200 2,172 Source: School District 1 Projected enrollment numbers as determined by School District. A-6

35 Community School The School District does not serve as a sponsor for a community school established under Revised Code Chapter There are 81 students residing in the School District enrolled in community schools. The School District s community school transfer is $551, Scholarship The School District s scholarship transfer is $129, The following chart shows the numbers of students residing in the School District who receive scholarships. Scholarships Buckeye Valley Local School District Number of Students Total Transfer Amount Scholarship Type Receiving Scholarship Autism Scholarship 6 $119, Jon Peterson Scholarship 1 9, Source: Ohio Department of Education STEM School There are no students residing in the School District who receive EdChoice Scholarships. There are no students residing in the School District who attend STEM schools and therefore no funding transferred for STEM schools. Open Enrollment The School District began allowing open enrollment in 2009 and currently allows students from adjacent districts only to attend. The School District does not anticipate significant changes to open enrollment in the next five years. The School District receives an open enrollment adjustment of $106, Below is a table showing the net positive gain from open enrollment. Enrollment Changes Due to Open Enrollment Buckeye Valley Local School District Students Open-enrolling Students Open-enrolling Net Change due to Open Enrollment School Year into the School District out of the School District Source: School District Advanced Standing Programs The School District is required by State law to offer its students the opportunity to participate in an advanced standing program. The School District offers the options shown in the table below. A-7

36 Advanced Standing Programs Buckeye Valley Local School District Program Students Participating College Credit Plus with Columbus State Community College 9 Advanced Placement 120 Source: School District Educational Program The School District provides educational programming for students in Kindergarten through 12th grade. The School District has one high school, one middle school and two elementary schools. The high school population includes students enrolled in cooperative vocational educational programs provided by the Delaware Area Career Center. Faculty at each level is supported by the Director of Achievement and Superintendent. Efforts to continuously improve teaching and learning are guided by the School District s Strategic Plan. In addition, regular updates to courses of study are made with the involvement of the faculty and are validated against credible external authorities, before being adopted by the Board. The School District s curriculum includes a wide range of electives and comprehensive courses of study in college preparatory, liberal arts and vocational programs. Test scores indicate that the School District s students generally achieve higher than State and national averages. A full range of extracurricular programs and activities are available to students beginning at the elementary level. A complete competitive athletics program is offered beginning at the middle school level. An intramural sports program is also offered to students at selected grade levels throughout the School District. State Performance Standards In August 2013, the Department began the process of phasing in a new model of local report card (the Local Report Card ) evaluations for Ohio school districts. The Local Report Cards for Ohio school districts released in the fall of 2014 contain 10 measurements that receive grades. Beginning in the fall of 2016, measurements reported on the Local Report Card will be combined into six broad categories, referred to as components, that will also receive grades, and each school district and individual school will also receive an overall grade. The Department will not release component or overall grades until the fall of 2016 in order to give school districts time to adjust to the new evaluation system and focus their efforts on being successful in all of the areas that are being measured. A-8

37 The following table summarizes the School District s letter grade results on its most recent Local Report Card for the school year. Achievement Local Report Card Summary, Buckeye Valley Local School District Performance Index Number of State Indicators Met Progress Overall Value-Added Gifted Value-Added Disabled Value-Added Lowest 20% Value-Added Gap Closing Annual Measurement Objectives Graduation Rate 4-Year Graduation Rate 5-Year Graduation Rate K-3 Literacy K-3 Literacy D Source: Ohio Department of Education The six components that will be on the new Local Report Card are: 1 1. Achievement This component measures absolute academic achievement compared to national standards of success, and this component is comprised of a performance index (the Performance Index ) and a series of 24 State tests (the Indicators ). The Performance Index measures the test results of every student. There are six levels on the Performance Index, and school districts receive points for every student in each of these levels. The Indicators are based on a series of 24 State tests that measure the level of achievement for each student in certain grades and subjects. The State previously required that at least 75% of students score proficient or better to get credit for the corresponding indicator. Starting with the school year, the State now requires that a school district or school have 80% of their students (85% for the 11 th Grade Ohio Graduation Test) reach proficient or better in order to meet an indicator B A A C A A C A A 1 This discussion of the new Local Report Card standards is provided for the convenience of the reader and only summarizes the process by which the Department reaches its designation for school districts. For more information about State performance standards, including more detail about the School District s performance, please see the Department s website relating to State and Local Report Card reporting at A-9

38 Performance Indicator For this component of the Local Report Card, the two A-F letter grades are determined by (1) the percentage of points that they receive out of a total possible 120 points on the Performance Index, and (2) the number of Indicators met out of the 24 total Indicators. Score Letter Grade 90% 100% A 80% 89.9% B 70% 79.9% C 50% 69.9% D Below 50% F For the school year, the School District received a B grade on the Performance Index by scoring points out of 120 points (86.8%), and the School District received an A grade on the Indicators by meeting 23 of 24 (95.8%) of the Indicators. The table below shows the School District s results for each Indicator with bolded Indicators indicating results above the State standard State Performance Indicators Buckeye Valley Local School District State Standard School District Performance Indicator State Standard School District 3 rd Grade Achievement 8 th Grade Achievement 1. Mathematics 80% 89.0% 12. Mathematics 80% 93.3% 2. Reading Reading Science th Grade Achievement 3. Mathematics 80% 89.5% 4. Reading Ohio Graduation Test (10 th Grade) 15. Mathematics 80% 94.9% 5 th Grade Achievement 16. Reading Mathematics 80% 79.8% 17. Science Reading Social Studies Science Writing th Grade Achievement Ohio Graduation Test (11 th Grade) 8. Mathematics 80% 83.5% 20. Mathematics 85% 97.1% 9. Reading Reading Science th Grade Achievement 23. Social Studies Mathematics 80% 86.7% 24. Writing Reading Source: Ohio Department of Education 2. Progress This component measures the average annual improvement for each student (i.e., whether a student gained more or less a year of knowledge and skills each year). This component is commonly referred to as the value-added grade. A-10

39 For this component of the Local Report Card, the A-F grade is determined by the same value-added index that the State adopted in The ranges set forth in the table below show years of growth in one school year s time. Score Letter Grade +2 and higher A Greater or equal to +1 but less than +2 B Greater or equal to -1 but less than +1 C Greater or equal to -2 but less than -1 D Less than -2 F For the school year, the School District s overall value-added grade was an A, its gifted students value-added grade was a C, its students in the lowest 20% in achievement value-added grade was an A, and its students with disabilities value-added grade was an A. 3. Gap Closing This component, referred to as Annual Measurement Objectives ( AMO ), measures how well a school district or individual school is doing in narrowing gaps in reading, math and graduation rate among students according to socioeconomic, racial, ethnic or disability status. A school district or school cannot get an A on this measure if one of its groups is not reaching the goal set for all students. This component will review 10 student groups in reading, math and graduation rate and assign a grade for efforts to close achievement gaps in all groups. The 10 student groups, which are the same groups measured by the Adequate Yearly Progress model, are: All students; American Indian/Alaskan Native; Asian/Pacific Islander; Black, non-hispanic; Hispanic; Multiracial; White, non-hispanic; Economically disadvantaged; Students with disabilities; and Limited English proficiency. The ranges for the AMO grades are: Score Letter Grade 90% 100% A 80% 89.9% B 70% 79.9% C 60% 69.9% D Below 60% F For the school year, the School District s AMO grade was a C (75.7%). A-11

40 4. Graduation Rate This component measures the percentage of students who entered the 9th grade and graduated in four and five years. The ranges for the graduation rate measures are different as set forth below: Four-Year Graduation Rate Score Letter Grade 93% 100% A 89% 92.9% B 84% 88.9% C 79% 83.9% D Less than 79% F For the school year, the School District s four-year graduation rate was 94.6%, which resulted in an A grade. Five-Year Graduation Rate Score Letter Grade 95% 100% A 90% 94.9% B 85% 89.9% C 80% 84.9% D Less than 80% F For the school year, the School District s five-year graduation rate was 96.9%, which resulted in an A grade. 5. K-3 Literacy This component measures the improvement in reading for students in kindergarten through grade three. This component aims to ensure that all students are reading at grade level by the end of third grade and is comprised of two separate measures. First, the third grade proficiency test measures how what proportion of third graders are reading at a proficient level. The second is the overall K-3 literacy improvement score. This measures overall grade to grade reading level improvement for all students in kindergarten through third grade. The minimum range of a C grade will be the statewide average value for the literacy improvement measure and any school district or school that has less than five percent of their kindergartners reading below grade level will not receive a letter grade for this measure or component For the school year 90.4% of the School District s third graders scored as proficient on the State reading test. Additionally, the School District received a D grade on the K-3 Literacy Improvement Index by scoring 13 points out of 44 points (29.5%). 6. Prepared for Success This component measures whether students who graduate are prepared for college or a career without needing to take remedial classes. This component contains six measures that do not receive a grade; they are only reported on the school district s or school s Local Report Card. The component grade is based on the percentage of a school district s or school s graduating class that demonstrates college and career readiness. Any student included in any of the six ungraded measures, such as a student who earns an honors diploma, is considered to have demonstrated college and career readiness. The grade for this component will not be released until the fall of A-12

41 National Standardized Test Scores The following table sets forth average ACT results for the 162 seniors who took the test and graduated from the School District in Average ACT Scores for Seniors Graduating in 2015 Buckeye Valley Local School District School District State United States ACT Score Composite English Mathematics Reading Science Percent of students tested ready for college level courses English Composition 75% 71% 64% Algebra Social Science Biology All four classes Sources: ACT and School District A-13

42 Comparative Position of the School District The following tables compare the School District with its similar district cohort (as defined by the Department) and the State average in the areas of sources of revenue, expenditures by category, and teacher statistics. Sources of Revenue, Buckeye Valley Local School District School District Similar Districts State Local Revenue 62.58% 46.52% 42.16% State Revenue Other Non-Tax Revenue Federal Revenue Source: Ohio Department of Education Expenditures by Category, Buckeye Valley Local School District (Dollars per Pupil) School District Similar Districts State Administration $1,361 $1,201 $1,426 Building Operations 2,179 1,899 2,099 Instruction 5,986 5,436 6,362 Pupil Support Staff Support Total Spending Per Pupil $10,203 $9,299 $10,913 Source: Ohio Department of Education Teachers Salaries Teacher Statistics, Buckeye Valley Local School District School District Similar Districts State Average teacher salary $52,723 $53, Teaching experience $57, years 28.85% 25.67% 24.10% 4-10 years years Source: Ohio Department of Education 1 Figures may not sum to total due to rounding. A-14

43 ECONOMY AND EMPLOYMENT Economic Development The County has experienced exponential growth over the past decade with an estimated population of 178,139 in 2013 according to the United States Bureau of the Census. The County is the fastest growing county in the State, having experienced a 58.4% growth rate since 2000, and it is recognized as one of the most rapidly growing counties in the nation. The County has had the highest median household income in the State since The County is part of the Columbus Metropolitan Statistical Area, nationally recognized as one of the emerging metropolitan areas, and is among the more economically stable metropolitan areas in the United States. A strong residential, commercial and industrial tax base, a diverse labor force, and low unemployment rates have resulted in strong growth throughout the metropolitan area, as well as in and around the School District. The Delaware Area Chamber of Commerce estimates that approximately 60% of the County s labor force works outside of the County. The County is serviced by an excellent transportation system. Area industry enjoys convenient rail service from CSX and Norfolk Southern. CSX operates daily freight service from the City of Columbus to Detroit, Michigan, passing through the County. Norfolk Southern also provides daily freight service through the County. The commercial tax base of the County continues to grow at a robust pace. The Polaris Development, located in the southern region of the County, provides the largest concentration of office and retail development. The cornerstones of the Polaris Development consist of the 1,500,000 square foot Polaris Fashion Mall and the 1,200,000 square foot J.P. Morgan Chase office complex. Over the next 25 years, the total market value of the Polaris Development is projected to approach $1 billion. Also within the County, an area near the interchange of Interstate 71 and State Routes 36/37 recently received zoning approval to be developed as an outlet mall. Similar to the Polaris Development, the School District will benefit from the development of the outlet mall; however, neither development is located directly within the School District. The outlet mall will be jointly developed by the Indianapolisbased Simon Property Group and the North Carolina-based Tanger Outlets. Plans for the outlet mall include a 350,000 square foot retail facility, which is expected to increase the County s sales tax revenues, create new jobs, and enhance local infrastructure networks. In addition to the County s commercial opportunities, the City of Delaware (the City ) has two thriving industrial parks, which are anchored by an impressive list of corporate citizens. The Nippert Company, Liebert Corporation, Midwest Acoust-A-Fiber, and JEGS Automotive are among the businesses establishing roots in the City. The City also boasts a vibrant, historic downtown, which is home to several specialty shops, restaurants and local businesses. Its tax incentive programs, abundant infrastructure, and workforce development initiatives evidence the City s proactive business plan. The County and City also provide a number of educational and recreational opportunities to the citizens of the School District. Adjacent to the City s downtown is the campus of Ohio Wesleyan University, a small liberal arts university, which offers public memberships to the Rickey Physical Education Center. In addition, five state parks, including two large reservoirs, are located in the County and are supplemented by six City parks and seven county parks. Countywide, four private and twelve public golf courses currently operate. The County is also home to the Columbus Zoo and Aquarium. A-15

44 Within an easy commuting distance from the School District are several public and private twoyear and four-year colleges and universities, providing a wide range of educational opportunities. These include The Ohio State University, Capital University, Ohio Wesleyan University, Otterbein University, Ohio Dominican College, Franklin University, Columbus State Community College, DeVry Institute of Technology and the Methodist Theological School in Ohio. The Delaware County Joint Vocational School District offers evening courses and adult education courses in the City. Labor Force Statistics Labor force statistics specific to the School District are not available. The County and the Columbus MSA information presented in this section is included for informational purposes only. It should not be implied from the inclusion of such data in this Official Statement that the School District is representative of the County or the MSA, or vice versa. Year Area Unemployment Rates (annual percentages) Delaware County MSA State United States Year Labor Force (in thousands) Delaware County % 5.5% 5.9% 5.1% Source: Ohio Department of Job and Family Services, Bureau of Labor Market Information 1 Preliminary average through December A-16

45 Largest Employers The following table lists the 50 largest employers in the MSA as of July It should not be implied from the inclusion of such data in this Official Statement that the School District is representative of the MSA, or vice versa. Largest Employers Columbus MSA Rank Firm Number of Employees Industry 1 Ohio State University 30,963 Education 2 State of Ohio 23,859 Government 3 Ohio Health Corp. 19,936 Healthcare 4 JP Morgan Chase & Co. 19,200 Banking & financial services 5 Nationwide Mutual Insurance Company 12,200 Insurance and financial services 6 Kroger Co. 10,242 Retail grocery 7 Mount Carmel Health System 8,818 Healthcare 8 City of Columbus 8,510 Government 9 Nationwide Children s Hospital 8,508 Healthcare 10 Honda North America, Inc. 7,800 Auto manufacturing 11 Franklin County 6,959 Government 12 Columbus City School District 6,488 Education 13 L Brands Inc. 6,090 Retail clothing 14 Huntington Bancshares Inc. 4,661 Banking & financial services 15 Cardinal Health Inc. 4,635 Medical products & services 16 Wal-Mart Stores Inc. 4,543 Retail grocery 17 Giant Eagle Inc. 3,816 Retail grocery 18 U.S. Postal Service 3,630 Federal mail service 19 American Electric Power Company Inc. 3,627 Electric power utility 20 Alliance Data Retail Services 3,465 Marketing/credit card transaction services 21 PNC Financial Services Group Inc. 3,000 Financial services 22 Covelli Enterprises/Panera Bread 2,750 Fast food 23 DLA Land and Maritime 2,600 Defense systems manufacturer 24 South-Western City School District 2,505 Education 25 Group Management Services Inc. 2,475 Employment payroll and benefits management 26 Abercrombie & Fitch Company 2,415 Retail clothing 27 Discover Financial Services LLC 2,082 Financial services 28 TS Tech Americas Inc. 2,078 Auto seat manufacturing 29 Battelle Memorial Institute 2,066 Technology & research development 30 Abbott Laboratories/Abbott Nutrition 2,055 Nutrition research and products 31 Exel 2,046 Contract logistics provider 32 Roosters Inc. 1,900 Fast food 33 Donatos Pizzeria LLC 1,882 Fast food 34 Fairfield Medical Center 1,864 Healthcare 35 Dublin City School District 1,845 Education 36 Time Warner Cable Inc. 1,779 Telecommunications 37 Licking Memorial Health Systems 1,773 Healthcare 37 Satelite AutoGlass 1,773 Automobile repair 39 Hilliard City School District 1,748 Education 40 Teleperformance S.A. 1,682 Call Center, customer service, tech support 41 Worthington Industries Inc. 1,680 Steel manufacturing 42 State Farm Insurance 1,630 Insurance and financial services 42 Westerville City School District 1,630 Education 44 CAS-Chemical Abstracts Service 1,500 Chemical research 44 Wendy s Co. 1,500 Fast food 46 Big Lots Inc. 1,492 Discount retail 47 Boehringer Ingelheim Roxane Inc. 1,450 Develops & markets generic drugs 48 Columbus State Community College 1,426 Education 49 Thirty-One Gifts LLC 1,412 Retail clothing and accessories 50 Express Scripts 1,395 Pharmacy benefit management Source: Columbus Business First, July 2015 A-17

46 Ad Valorem Taxes and Assessed Valuation Overview SCHOOL DISTRICT PROPERTY TAX BASE For property taxation purposes, assessment of real property is performed on a calendar year basis by the elected County Auditor subject to supervision by the Tax Commissioner, and assessment of public utility tangible personal property is performed by the Tax Commissioner. Property taxes are billed and collected by the County Treasurer. Taxes collected from real property in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Public utility tangible personal property taxes collected in one calendar year are levied in the preceding calendar year on assessed values determined as of December 31 of that second year preceding the tax collection year. Beginning with the 2009 tax year, general business tangible personal property is no longer subject to tax. Real Property The assessed valuation of real property is fixed at 35% of true value and is determined pursuant to rules of the Tax Commissioner, except that real property devoted exclusively to agricultural use is assessed at not more than 35% of its current agricultural use value. Beginning in 2009, certain elderly or disabled resident homeowners receive a flat $25,000 property tax exemption on the market value of their homestead. Ohio law requires the County Auditor, subject to supervision by the Tax Commissioner, to adjust the true value of taxable real property every six years to reflect current fair market values. This sexennial reappraisal is done by individual appraisal of properties. In the third year following a sexennial reappraisal, the County Auditor, again subject to supervision by the Tax Commissioner, performs a triennial update to adjust the value of taxable real property to reflect true values. The triennial update is done without individual appraisal of properties, but with reference to a sales-assessment ratio over the three-year period. Personal Property In 2005, the State accelerated its phase-out of the tangible personal property tax. Since 2008, general business tangible personal property has not been subject to tax. Public utility tangible personal property including tangible personal property of electric utilities not used for transmission and distribution and all tangible personal property of gas utilities was not included in the phase-out created by the State. All public utility tangible personal property is assessed at varying percentages of its true value depending on the type of property and the type of utility. The State currently reimburses School Districts for tax losses resulting from the phase-out of the tangible personal property tax. However, recent legislation will reduce and eliminate the amount of such payments. (See SCHOOL DISTRICT PROPERTY TAX BASE Property Tax Rate Calculations. ) Tax Abatements and Economic Development Incentives Tax abatements are temporary property tax exemptions designed to stimulate economic growth or to promote other activities deemed by the State to be in the public interest. Under Ohio law, tax abatements may be granted for urban renewal projects, community redevelopment corporations, A-18

47 community reinvestment areas, property acquired by municipal corporations engaged in urban redevelopment, enterprise zones, railroad property, and for any improvements declared to serve a public purpose in municipalities, townships, and counties. Because the burden of tax abatements falls disproportionately on school districts due to their reliance on property taxes, the State has created safeguards that allow school districts to protect their interests. First, a school district must be given advance notice of a planned abatement, and it must be allowed to comment on the abatement prior to its granting. Under certain circumstances, a board of education may veto a proposed tax abatement and/or negotiate an annual compensation payment. Second, school district representatives sit on tax incentive review councils to monitor compliance with tax abatement agreements and make recommendations on abatements to the governmental entity involved. Finally, municipalities with an income tax in place must negotiate a compensation agreement with a school district if a tax abatement is expected to generate a significant amount of increased payroll to the area. Within the School District boundaries there is an Enterprise Zone located near the Village of Ashley. There are not any tax abated properties currently within the Enterprise Zone. Assessed Valuation The following table classifies the School District s assessed valuation of taxable property according to use: Assessed Valuation Buckeye Valley Local School District (2016 Collection Year) Property Classification Amount Percent of Total Assessed Valuation Real Estate 1 Residential/Agricultural $564,565, % Commercial/Industrial/Mineral 14,700, Public Utility Real 378, Total Real Estate $579,643, % Personal Property Public Utility Personal $ 17,611, % Total Assessed Valuation $597,254, % Source: Delaware County Auditor 1 Property taxes collected in a calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Real property is assessed at 35% of market value and reappraised every six years, with triennial updates every three years. A-19

48 Tax Collection Year Historic Change in Assessed Valuation Buckeye Valley Local School District Assessed Valuation Percent Change Over Prior Year 2009 $497,256, % ,387, ,468, ,861, ,796, ,894, ,324, ,254, Source: Delaware County Auditor 1 Year of sexennial reappraisal. The County s next sexennial reappraisal occurs in tax year 2017, collection year Year of triennial update. The County s next triennial update occurs in tax year 2020, collection year A-20

49 Name Largest Taxpayers The following tables list the largest real estate and public utility taxpayers in the School District. Percentages of total assessed valuation are based on a total assessed valuation of $597,254,940 for collection year Real Estate Taxpayers Largest Taxpayers Buckeye Valley Local School District 2016 Collection Year Type of Business Assessed Valuation Percent of School District s Total Assessed Valuation National Lime & Stone Co. Mineral Production $2,183, % Consolidated Electric Cooperative Inc. Electrical Utility 1,852, Perry Acres Inc Agriculture 1,665, John P. McConnell Private-Residential 1,468, Dublin LLC Real Estate 1,419, Scioto Reserve LLC Country Club 1,317, Delca Inc. Agriculture 1,290, Myrmidon Farms LLC Agriculture 1,215, City of Columbus City Government 1,109, John Arrillaga, Trustee Private-Residential 1,026, Name Public Utility Taxpayers Type of Business Assessed Valuation Percent of School District s Total Assessed Valuation Ohio Edison Power Electrical Utility $4,697, % Ohio Power Company Electrical Utility 4,001, American Transmission Systems Inc. Electrical Utility 2,367, Consolidated Electric Cooperative Inc. Electrical Utility 1,803, AEP Ohio Transmission Company Inc. Electrical Utility 648, Source: Delaware Marion, Morrow and Union County Auditors A-21

50 History of Voted Taxes The table below provides the history of voted taxes in the School District since Issues identified in bold were passed by the voters. Election Date Levy or Bond Issue Description History of Voted Taxes Buckeye Valley Local School District Voting For Voting Against November 3, 2015 $31,250,000 Bond Issue 50.01% 49.99% November 4, 2014 $26,500,000 Bond Issue August 7, 2012 $30,000,000 Bond Issue August 7, % Income Tax Levy (New 5 years) November 8, % Income Tax Levy (New Continuing) November 4, 2008 $16,000,000 Bond Issue March 4, 2008 $18,500,000 Bond Issue August 7, 2007 $17,500,000 Bond Issue May 8, 2007 $17,500,000 Bond Issue February 2, 1999 $1,375,000 (6.50 Mill) Emergency Operating Levy (New 3 years) November 3, 1998 $1,375,000 (6.70 Mill) Emergency Operating Levy (New 3 years) May 5, 1998 $1,375,000 (6.70 Mill) Emergency Operating Levy (New 3 years) May 2, 1995 $14,000,000 Bond Issue November 8, 1994 $12,500,000 Bond Issue November 2, 1993 $14,100,000 Bond Issue May 4, 1993 $14,100,000 Bond Issue June 2, % Income Tax Levy (New Continuing) February 4, 1992 $14,100,000 Bond Issue Source: OMAC The School District anticipates placing an operating levy on the ballot in the next five years. A-22

51 Property Tax Rates and Collections The following are the rates (in mills per $1.00 of assessed valuation) at which the School District levied ad valorem taxes for the general categories of purposes in recent years (without the reduction factor discussed below). Property Tax Rates Buckeye Valley Local School District Collection Debt Year Operating 1 Retirement Permanent 2 Improvement Total Source: Ohio Department of Taxation The total School District operating millage of mills for collection year 2016 includes voted operating levies of mills, all of which were approved by the School District electorate for a continuing period of time and which do not require a renewal vote. The balance of 3.00 mills constitutes the School District s mandated share of the ten mills authorized to be levied without a vote of the electors of the School District. (See SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally Indirect Debt Limitation. ) The following table identifies the historical tax collections for the School District: Property Tax Collections Buckeye Valley Local School District Collection Year Assessed Valuation Taxes Levied Taxes Collected (including delinquent taxes) Collection Rate 2009 $497,256,253 $12,911,155 $12,711, % ,387,155 13,184,579 13,182, ,468,120 13,090,162 13,133, ,861,080 13,356,742 13,302, ,796,920 13,495,077 13,382, ,894,420 13,203,826 12,814, ,324,880 13,993,122 14,009, ,254,940 16,647,831 N/A N/A Source: Delaware County Auditor Property Tax Rate Calculations State law has a reduction factor mechanism that is intended to negate increases in taxes resulting from increases in the true value of real property due solely to inflation. Legislation 1 Includes inside millage and outside (voted) millage mills of inside millage has been allocated to permanent improvement. A-23

52 implementing a 1980 constitutional amendment classifies real property as either (1) residential and agricultural or (2) all other real property, and provides for tax reduction factors to be separately computed for and applied to each class. Statutory procedures limit the amount realized by each taxing subdivision from real property taxation, by the application of a tax reduction factor, to the amount realized from those taxes in the preceding year plus: (i) the proceeds of any new taxes (other than renewals) approved by the electors, calculated to produce an amount equal to the amount that would have been realized if those taxes had been levied in the preceding year, and (ii) amounts realized from new and existing taxes on the assessed valuation of real property added to the tax duplicate since the preceding year. Such limitations are expressly inapplicable to amounts realized from taxes levied at a rate required to produce a specified amount, such as for debt service charges or emergency school levies, and from taxes levied inside the ten-mill limitation or any applicable municipal charter tax rate limitation. Further, such limitations will not reduce operating millage for school districts below 20 mills or for joint vocational school districts below 2 mills. A reduction factor is computed for each separate levy that is subject to the limitation. A resulting effective tax rate reflects the aggregate of those reductions and is the rate at which real property taxes are, in fact, collected. Real property tax amounts from property devoted to residential and agricultural purposes are, in certain cases, further reduced by an additional 10% (12-1/2% in the case of certain owner-occupied residential property) or a flat, $25,000 reduction in taxable value applicable to certain elderly or disabled resident homeowners, when billed to the taxpayer. These reductions are reimbursed to the taxing subdivisions by the State. A phase out of these reductions began in The 10% reduction for residential and agricultural properties and 2-1/2% additional reduction for owner-occupied residential property do not apply to new levies and replacement levies approved by voters after the August 6, 2013 election. Additionally, starting in the 2014 tax year, the $25,000 reduction in taxable value for certain elderly homeowners and homeowners with disabilities is being grandfathered out, with new reductions limited to property owners with total income less than or equal to $30,000. This figure is adjusted for inflation annually by the Tax Commissioner. (See SCHOOL DISTRICT PROPERTY TAX BASE State Reimbursement of Property Tax Revenues for a discussion of reimbursement by the State for these reductions.) A-24

53 Ad Valorem Tax Levies levies: The following table presents certain information concerning the School District s ad valorem tax Year Voted Ad Valorem Tax Levies Buckeye Valley Local School District Current Millage Rates (2016 Collection Year) Authorized Mills Rate Levied for Current Collection Year 1 Residential/ Agricultural Commercial/ Industrial Total Voted Operating Millage Inside (Unvoted) Millage Voted Bond Retirement Millage Permanent Improvement Millage Total Rate Source: Ohio Department of Taxation Repeal of Property Tax Levies Each operating tax levy approved for a continuing period is subject to decrease through a statutory referendum procedure requiring (1) a petition signed by qualified electors of the School District equal in number to those who voted in the last governor s race (to be filed at least 90 days before the general election in any year) stating the amount of the proposed decrease and (2) the approval of the decrease by a majority vote at the general election with the decrease to commence at the expiration of the then current tax levy year. No petition has been filed with respect to any existing current expense tax levy of the School District. If such a petition is filed and subsequently approved by the electors of the School District, under Revised Code Section , the Board must continue to levy and collect such amount as will be sufficient to pay the principal of and interest on any notes in anticipation of an increased rate of levy approved for a continuing period of time. 1 This is the effective rate. The effective tax rates may be less than the authorized rates listed in the first column. See FINANCES OF THE SCHOOL DISTRICT Property Tax Rate Calculations. 2 Ohio Department of Taxation does not report the years in which operating levies approved prior to 1976 were voted, thus operating levies approved prior to 1976 are aggregated in this line mills of inside millage has been allocated to permanent improvement. A-25

54 Total Property Tax Burden The following table displays the total effective tax rates levied on property located in the School District. In addition to the taxes levied by the School District, properties in the School District are subject to a county tax levy, a JVSD, a township and the taxes levied by other overlapping political subdivisions. Location of Property to be Taxed Ad Valorem Tax Levies Buckeye Valley Local School District (mills per $1.00 of assessed valuation; 2016 Collection Year) Taxing Authority School District County JVSD Township Other 1 Total Effective Rates Residential & Agricultural All Other Delaware County Village of Ashley Brown Township City of Delaware - Brown Twp Concord Township Delaware Township City of Delaware Kingston Township Liberty Township Marlboro Township Oxford Township Radnor Township Scioto Township Village of Ostrander - Scioto Thompson Township Troy Township Marion County Waldo Township Morrow County Peru Township Westfield Township Union County Millcreek Township Includes any taxes levied by municipalities and other miscellaneous districts. A-26

55 State Reimbursement of Property Tax Revenues Rollback and Homestead Exemption Reimbursement The State reimburses taxing districts, including school districts, for decreased tax revenues due to (a) the 10% reduction or rollback in certain non-commercial property taxes, (b) the 2-1/2% reduction applicable to certain owner-occupied housing, and (c) the flat, $25,000 reduction in taxable value applicable to certain elderly or disabled homeowners. Such reimbursements are subject to repeal or revision by the State. (See SCHOOL DISTRICT PROPERTY TAX BASE Property Tax Rate Calculations for a discussion of reimbursements by the State for these reductions.) Public Utility Property and Tangible Personal Property Tax Loss Reimbursement In tax year 2001, changes took effect which reduced the assessment percentages applicable to electric generation and natural gas tangible personal property, thereby reducing the amount of tangible public utility property tax revenue collected by taxing districts. In order to replace the taxes no longer received due to the lower assessment percentages, State consumption taxes on electricity and natural gas were enacted in 1999 and 2000, respectively. Beginning in 2006, the State began to phase out the tax on tangible personal property used in business. The State also reimburses certain taxing districts for the loss of tax revenues due to the phaseout of the tax on general business tangible personal property, and on the tangible personal property belonging to telephone, telegraph, and interexchange companies. In order to replace a portion of the lost revenue, a commercial activity tax was enacted in 2005 and is imposed on gross receipts, including receipts from services, in the State. The reimbursement of both types of tangible personal property tax revenues losses, although originally scheduled to end by calendar year 2018, had been frozen. Recent legislation generally combines the two types of tangible personal property tax revenue loss payments, reinstitutes the phase-out and reduces the payments depending on the type of levy. For fixed-rate levies, the reimbursement amounts for Fiscal Year 2014 are compared to the total resources of a school district. Total resources includes Fiscal Year 2015 state education aid; the sum of Fiscal Year 2015 reimbursement payments for current expense fixed-rate levy losses; the sum of Fiscal Year 2015 fixed-sum levy loss reimbursement payments for fixed-sum levies charged for purposes other than paying debt charges; the school district s taxes charged and payable against all real and public utility property for current expenses for tax year 2014; distributions received during calendar year 2014 from municipal income tax levied for municipal and school district purposes; and distributions received during fiscal year 2015 from the gross casino revenue county student fund. The school district s current expense allocation is the district s reimbursement payments for current expense levy losses received in Fiscal Year If a school district s ratio of current expense allocation to total resources is less than the threshold percentage of total resources for a year, then no further reimbursement is made. If the ratio exceeds the threshold percentage, then the school district receives the amount in excess of the percentage. The threshold percentage is based upon the school district s revenue capacity and is increased annually by the amount of the initial threshold percentage. For this purpose, districts will be divided into quintiles, from poorest (first quintile) to richest (fifth quintile). The threshold percentage for each quintile is as follows: A-27

56 First Quintile one percent Second Quintile one and one-fourth percent Third Quintile one and one-half percent Fourth Quintile one and three-fourths percent Fifth Quintile two percent Reimbursement of a school district s operating fixed sum levy losses are phased out ratably between tax years 2017 and Reimbursement is made only to the extent that the losses relate to levies that remain in effect for the current tax year. For fixed sum levies for debt purposes, reimbursement continues at the amount paid in tax year 2014 so long as the qualifying levy remains in effect. For taxes levied with in the ten-mill limitation for debt purposes, reimbursement continues through fiscal year 2016 in the case of public utility property tax loss reimbursement purposes, and through fiscal years 2018 in the case of the general tangible personal property tax loss reimbursement purposes. School Foundation Program OTHER SOURCES OF SCHOOL DISTRICT FUNDING The State assists public school districts under a statutory program that includes the School Foundation Program. 1 School Foundation Program funds distributed to a school district are required to be used for current operating expenses, unless specifically allocated by the State for some other purpose. State reimbursement of property tax losses paid to school districts will be reduced by any increase in School Foundation Program receipts. (See SCHOOL DISTRICT PROPERTY TAX BASE State Reimbursement of Property Tax Revenues. ) Basic eligibility for School Foundation Program payments is based on a school district s compliance with State-mandated minimum standards. The School District is in compliance with those standards and has no reason to believe it will not remain in compliance. The State also assists school districts by funding the School District Solvency Assistance Fund (the Solvency Fund ). Created within the Solvency Fund are the School District Shared Resource Account and the Catastrophic Expenditures Account. A school district must be in a state of fiscal emergency to qualify for assistance and grants from the School District Shared Resource Account. A school district may qualify for assistance and grants from the Catastrophic Expenditures Account if the school district suffers an unforeseen catastrophic event that severely depletes the financial resources of the school district. School districts receiving assistance and grants from the Solvency Fund are required to repay such advances no later than the end of the second Fiscal Year following the Fiscal Year in which they received the assistance and grants, and if they fail to do so, the State will repay the Fund from amounts the school district would otherwise receive pursuant to the School Foundation Program. The School District does not have any outstanding advances from the Solvency Fund. The Solvency Fund, 1 The Supreme Court of Ohio has declared the School Foundation Program unconstitutional. See LITIGATION School Funding Litigation. A-28

57 with the exception of the Catastrophic Expenditures Account, evolved from statutes declared unconstitutional in DeRolph. (See LITIGATION School Funding Litigation. ) State Classroom Facilities Assistance The Ohio School Facilities Commission (the Commission ), a division of the Ohio Facilities Construction Commission, was created in 1997 to administer the provision of financial assistance to Ohio school districts for the acquisition or construction of classroom facilities in accordance with Revised Code Chapter Revised Code Chapter 3318 provides for several different school facilities assistance programs involving financial assistance from the State. These programs include the Classroom Facilities Assistance Program, the Exceptional Needs School Facilities Assistance Program, and the Expedited Local Partnership Program. Each of these programs provides State funding for all or a portion of qualifying school facilities projects based on financial tests, inadequate facilities, or a combination of the two. Participation in these programs also requires the school district to commit to adhere to Commission requirements for project construction. Classroom Facilities Assistance Program Under the Classroom Facilities Assistance Program (the Facilities Program ), the State and a school district share the cost of classroom facilities for the school district. (The Supreme Court of Ohio has declared the Classroom Facilities Assistance Program to be unconstitutional to the extent that it is underfunded. See LITIGATION School Funding Litigation ). The State share and school district share, or local share, for such facilities are determined after the Commission conducts an on-site assessment of the school district s current classroom facilities. With this assessment, the Commission establishes a master classroom facilities plan, including state and local share amounts, for the school district. The Commission approves a new group of school districts for classroom facilities assistance every calendar year based on a three-year average of each school district s adjusted per pupil valuation. This adjusted per pupil valuation ranking is calculated annually by the Department. Once approved by the Commission, a school district may meet its local share obligation from bonds or other local resources. In the event that a school district chooses to meet its local share obligation via bonds, generally the school district must only issue bonds in an amount equal to the greater of: (1) an amount that increases the total net indebtedness of the school district to within $5,000 of the required level of indebtedness under the Facilities Program; or (2) an amount equal to the required percentage of basic project cost, as defined by the Facilities Program. In addition, the Facilities Program also generally requires the school district to comply with certain other requirements, including generating funds to maintain the school facilities for a 23 year period using either: (1) a voted one-half (1/2) mill levy for maintenance purposes; (2) earmarking an existing continuing permanent improvement levy or income tax (or a combination of the two) in an amount equivalent to the amount produced by a one-half (1/2) mill property tax levy; (3) a local donated contribution in whole or in part; or (4) an annual transfer, upon Commission approval. The School District is not currently participating in any of the school facilities assistance programs. School District Income Tax Under Ohio law, a school district, with the approval of the voters, may impose an income tax for the purpose of providing additional funds for the operation of the school district. The tax may be imposed upon the income of individuals residing in the school district and estates of decedents who at the time of A-29

58 their death were residents of the school district; or solely upon the earned income of individuals residing in the school district. Such selection must be made by the board of education prior to submission of the question of an income tax to the board of elections and be clearly stated on the election ballot. The tax may be imposed either for a specified number of years or for a continuing period of time. If the tax is imposed for a period in excess of five years, the voters of the school district may, by majority vote, repeal the tax, provided that a proposal to repeal the tax may not be initiated more than once in any five-year period. The voters of the School District approved a 1.00% income tax on the income of individuals and estates resident in the School District for a continuing period of time at the June 2, 1992 election. The following table shows income tax collections by the School District for the past eight fiscal years. Income tax collections are shown net of collection fees imposed by the Ohio Department of Taxation. Fiscal Year Income Tax Collections Buckeye Valley Local School District Income Tax Rate Income Tax Collections Increase/(Decrease) from Prior Fiscal Year % $4,223, % ,912, ,738,261 (3.55) ,263,195 (10.03) ,480, ,721, ,059, ,447, ,716, ,427,915 1 N/A Source: Ohio Department of Taxation Gross Casino Revenue Tax In 2013, Ohio public school districts began receiving a share of the gross casino revenue tax (the Casino Tax ). The Casino Tax will be distributed twice a year in proportion to each county s respective public school district student population. The Tax Commissioner, acting as an agent for the counties, will calculate and make payments directly to public school districts based on the student population of each county and the student population of each public school district located in whole or in part in the county. According to the Ohio Department of Taxation, the School District received $115,819 in Casino Tax revenues for Fiscal Year 2014 and $111,996 for Fiscal Year Statutory Debt Limitations Generally SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS The School District may issue voted general obligation bonds (such as the Bonds), and notes issued in anticipation thereof, pursuant to a vote of the electors of the School District. Ad valorem taxes, without limitation as to amount or rate, assessed to pay debt service on voted bonds are authorized by the electors at the same time they authorize issuance of the bonds. Such voted debt is subject to the direct 1 Represents receipts of first two quarters only. A-30

59 debt limitations but is not subject to the indirect debt limitation. Voted obligations may also be issued by certain overlapping subdivisions. General obligation bonds, such as the Bonds, and notes issued in anticipation thereof, may also be issued by the School District (and certain overlapping political subdivisions, such as [the City and] the County) without a vote of the electors. Unvoted debt is subject to both the direct and indirect debt limitations. A political subdivision s debt limitations are based on its tax valuation, which is the aggregate of the valuations of real property, personal property, and public utility property that is subject to ad valorem property taxation. For school districts, tax valuation is calculated in accordance with Revised Code Section (PP) and excludes the valuation of tangible personal property used in business, telephone or telegraph property, interchange telecommunications company property, or personal property owned or leased by a railroad company and used in railroad operations. Direct Debt Limitations Revised Code Section provides that, exclusive of certain exempt debt (discussed below), the net principal amount of unvoted general obligation debt of a school district may not exceed the following percentages of a School District s tax valuation: (a) for permanent improvements generally, one-tenth of one percent (0.10%); and (b) for qualified energy conservation projects under Revised Code Section , nine-tenths of one percent (0.90%). Revised Code Section also provides that the net principal amount of both voted and unvoted general obligation debt of the School District may not exceed 9% of a school district s tax valuation, except in the specific situations discussed below These two limitations, referred to as the direct debt limitations, may be amended from time to time by the State. State Consents and Special Needs Status Revised Code Section further provides that bonds shall not be submitted to popular vote in an amount which will make the net indebtedness after the issuance of such bonds exceed 4% of a school district s tax valuation, unless the school district obtains the consent of the State Superintendent (acting under policies adopted by the State Board of Education) and the Tax Commissioner (acting under written policies of said Tax Commissioner). Revised Code Section (E) permits a school district to incur indebtedness in excess of the 9% direct debt limitation if, based on five-year projections showing annual property value growth of 1.5% or more, the State Superintendent determines that such school district is a special needs district. The School District s outstanding debt is currently in excess of the 4% debt limitation but not currently in excess of the 9% direct debt limitation. Approval of the State Superintendent was therefore obtained on July 29, 2015 and the approval of the Tax Commissioner on July 30, Exempt Debt The Revised Code provides that certain debt a school district may issue is exempt from direct debt limitations ( exempt debt ). Exempt debt includes, among other things, bonds payable from school district income taxes under Revised Code Section (E); notes issued in anticipation of the collection of current revenues; notes issued for qualified energy savings projects under Revised Code Section ; and certain bonds issued for school construction purposes following declaration of an emergency. Notes issued in anticipation of exempt bonds also are exempt debt. In calculating debt subject to the direct debt limitations, the amount of money in a school district s bond retirement fund allocable to the principal amount of non-exempt debt is deducted from gross non-exempt debt. A-31

60 Indirect Debt Limitation Unvoted general obligation bonds and bond anticipation notes cannot be issued by the School District unless the tax required to be imposed on taxable property in the School District for the payment of the debt service on (a) such bonds (or the bonds in anticipation of which notes are issued), and (b) all outstanding unvoted general obligation bonds (including bonds in anticipation of which notes are issued) of the combination of overlapping taxing subdivisions in the School District resulting in the highest tax rate required for such debt service, in any one year, is ten mills or less per $l.00 of assessed valuation. This indirect debt limitation, the product of which is commonly referred to as the ten-mill limitation, is imposed by a combination of the provisions of Article XII, Sections 2 and 11 of the Ohio Constitution and Revised Code Section The ten-mill limitation is the maximum aggregate millage for all purposes that may be levied on any single piece of property by all overlapping taxing subdivisions without a vote of the electors. The ten mills which may be levied without a vote of the electors is in fact levied, collected and allocated among the School District and its overlapping taxing subdivisions for general fund purposes pursuant to a statutory formula. This inside millage allocated to each overlapping taxing subdivision is required by current Ohio law to be used first for the payment of debt service on unvoted general obligation debt of the subdivision, unless provision has been made for its payment from other sources. The balance of the millage is available for other purposes of the subdivision. Thus, to the extent that this inside millage is required for debt service of a taxing subdivision (which may exceed the formula allocation to that subdivision), the amount that would otherwise be available to that subdivision or to other such overlapping subdivisions for general fund purposes is reduced. A subdivision s allocation of inside millage can be exceeded only in the event that it is required for the payment of debt service on its unvoted general obligation debt and, in that case, the inside millage allocated to the other overlapping subdivisions would be reduced proportionally to bring the aggregate levies of inside millage down to ten mills. In case of notes issued in anticipation of the issuance of unvoted general obligation bonds, the highest annual debt service estimated for the bonds anticipated by the notes is used to calculate the millage required. The ten-mill limitation applies to all unvoted general obligation debt even if debt service on some of such debt is expected to be paid in fact from income taxes, special assessments, utility earnings or other sources. In calculating whether or not unvoted debt to be issued by the School District is within the ten-mill limitation, it is necessary to determine the total outstanding debt service requirements within the ten-mill limitation of all the taxing subdivisions overlapping the School District. Bond Anticipation Notes Under Ohio law, notes, including renewal notes, issued in anticipation of the issuance of general obligation bonds may be issued and outstanding from time to time up to a maximum period of twenty years from the date of issuance of the original notes. Any period in excess of five years must be deducted from the permitted maximum maturity of the bonds anticipated, and portions of the principal amount of notes outstanding for more than five years must be retired in amounts at least equal to, and payable not later than, principal maturities that would have been required if bonds had been issued at the expiration of the initial five-year period. The last maturity of any bonds issued to refund general obligation bond A-32

61 anticipation notes may not be later than the year of last maturity permitted by law for the bonds anticipated. Bond anticipation notes may be retired at maturity from the proceeds of the sale of renewal notes, the proceeds of the sale of the bonds anticipated by such notes, from other available funds of the School District, or from a combination of these sources. The ability of the School District to retire its outstanding bond anticipation notes from the proceeds of the sale of either renewal notes or bonds will be dependent upon the marketability of such renewal notes or bonds under market conditions then prevailing. Under present Ohio law, there is no ceiling on the annual interest rate permitted on general obligation notes and bonds of school districts. None of the debt of the School District is currently in the form of general obligation bond anticipation notes. School District Debt Currently Outstanding Upon the issuance of the Bonds, the School District will have the following issues of general obligation bonds outstanding, including the Bonds (but excluding the Refunded Bonds to be refunded by the Series 2016B Bonds): Outstanding Debt Buckeye Valley Local School District Issue Dated Date Final Maturity Balance Outstanding March 1, 2016 Advance Refunding Bonds, Series /26/ /01/2016 $172, School Facilities Construction and Improvement Bonds, Series /20/ /01/ , Refunding Bonds, Series /18/ /01/2020 3,775, The Series 2016A Bonds 03/01/ /01/ ,250, The Series 2016B Bonds 03/01/ /01/ ,380, Total $48,285, Source: School District A-33

62 Calendar Year Debt Service Requirements The following schedule presents the School District s actual debt service requirements for general obligation debt currently outstanding (including the Bonds and excluding the debt service on the Refunded Bonds): Debt Service Requirements for General Obligation Debt Buckeye Valley Local School District Prior Obligations Series 2016A Bonds Series 2016B Bonds Total Debt Service Principal Interest Principal Interest Principal Interest 2016 $326, $1,150, $890, $857, $120, $380, $3,724, ,044, , , ,107, , , ,737, ,390, , , ,081, , , ,742, , , , ,068, , , ,722, , , , ,054, , , ,716, , ,040, , , ,734, , ,026, , , ,734, , ,011, , , ,733, , , , , ,732, , , , , ,732, , , , , ,725, , , , , ,733, , , , , ,729, , , , , ,727, , , , , ,729, , , , , ,732, ,010, , , , ,730, ,050, , , , ,735, ,090, , , , ,730, ,125, , , , ,732, ,160, , , , ,733, ,220, , ,760, ,280, , ,759, ,345, , ,760, ,410, , ,758, ,480, , ,758, ,535, , ,761, ,585, , ,757, ,645, , ,762, ,700, , ,759, Total $4,655, $1,766, $31,250, $21,490, $12,380, $6,648, $78,191, Source: School District No bonds have been authorized by the electors that have not yet been issued. The School District is not and has not been in default in the payment of debt service on any of its general obligation bonds or notes. A-34

63 Overlapping Subdivision Indebtedness In addition to the School District, other political subdivisions have the power to issue bonds and to levy taxes or cause taxes to be levied on taxable real property in the School District. The estimated outstanding bonded indebtedness of such political subdivisions (excluding self-supporting debt and debt payable primarily from enterprise revenues) is as follows: Overlapping Units Overlapping Debt Buckeye Valley Local School District Estimated Outstanding Debt Percent Applicable to School District Estimated Amount of Overlapping Debt Delaware County $17,296, % $1,428,650 Marion County 2,520, ,276 Morrow County 5,305, ,269 Union County 10,890, ,267 Village of Ostrander 93, ,075 Liberty Township 8,780, ,292 Scioto Township 800, ,760 Total $2,548,589 Source: OMAC as of March 4, 2016 The following table shows the per capita debt of the residents in the School District based upon the 2014 U.S. Bureau of the Census estimate of 16,576 people residing in the School District, the above overlapping indebtedness figures and the School District debt shown above, including the Bonds: Debt Per Capita Buckeye Valley Local School District School District Debt, per capita $2,913 Overlapping Debt, per capita 154 Total Debt, per capita $3,067 Source: OMAC and School District calculations A-35

64 Debt Capacity Analysis The following table provides an analysis of the School District s debt capacity as of March 1, 2016, including the Bonds and excluding the Refunded Bonds to be refunded by the Series 2016B Bonds. The School District s tax valuation is calculated in accordance with Revised Code Section (PP) and is based on Collection Year 2015 data provided by the State Department of Taxation. Debt Capacity Buckeye Valley Local School District A. Tax valuation $597,254,940 B. Total debt, including the Bonds but excluding the Refunded Bonds 48,285,240 C. Exempt debt 0 D. Total non-exempt debt (B minus C) 48,285,240 E. F. G. H. 1/10 of 1% direct debt limitation (1/10 of 1% of tax valuation) Total limited tax non-exempt bonds and notes outstanding (not including Revised Code Section (G) debt) Debt leeway within 1/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (E minus F) 9/10 of 1% direct debt limitation (Section (G) debt) (9/10 of 1% of tax valuation) 597, ,254 5,375,294 I. Total Revised Code Section (G) debt 0 J. Debt leeway within 9/10 of 1% unvoted debt limitation, but subject to indirect debt limitation (H minus I) 5,375,294 K. 9% direct debt limitation 53,752,944 L. Debt leeway within the 9% direct debt limitation (K minus D) 1 5,467,704 Source: Ohio Department of Taxation and School District calculations 1 Debt leeway is determined without reference to applicable moneys in the School District s Bond Retirement Fund. A-36

65 Lease Obligations Under Ohio law, school districts have only the authority to lease or lease purchase any capital asset that is expressly granted by statute or necessarily implied from expressly granted authority. Express statutory authority exists for true leases (i.e., leases where no portion of the lease payment is applied toward the purchase of the capital asset) or lease-purchase or installment sale arrangements for the following: land, office equipment, school buses, administrative office facilities and buildings for any school district purpose. Except in cases where lease-purchase or installment sale arrangements include certain provisions providing that the obligations under such agreement may be terminated at the end of a Fiscal Year (e.g., a requirement of annual appropriation in order to extend the lease term beyond the current Fiscal Year), such agreements would constitute debt for purposes of the indirect debt limitation and the statutory direct debt limitations discussed more fully herein (see SCHOOL DISTRICT DEBT AND DEBT LIMITATIONS Statutory Debt Limitations Generally ). Leases The School District also currently has a lease obligation for the copier machines used throughout the School District. Under the lease the School District is obligated to pay an annual aggregate amount of $46,159.72, paid in monthly installments. The term of the lease is for five years and expires on October 31, At the expiration of the lease, the School District will own the equipment. The School District s current equity in the property is $96, Future Financings The School District does not anticipate any additional capital financings in the next five years. FINANCES OF THE SCHOOL DISTRICT Budgeting, Tax Levy and Appropriations Procedures The Revised Code contains detailed provisions regarding School District budgeting, tax levy and appropriation procedures. These procedures involve review by County officials at several steps. School District budgeting for a Fiscal Year formally begins with the preparation of a tax budget or alternative document as determined by the County Budget Commission (the Budget Commission ), comprised of the County Auditor, County Treasurer and Prosecuting Attorney of the County. After a public hearing, this budget is adopted by the Board by the January 15th prior to the Fiscal Year to which it pertains. Among other items, the tax budget must show the amounts required for debt service, the estimated receipts for payment from sources other than ad valorem property taxes and the net amount for which an ad valorem property tax levy must be made. The tax budget then is presented for review by the Budget Commission. The Budget Commission holds a public hearing to review the budget, and issues, by March 1st, the Certificate of Estimated Resources that is the basis for School District appropriations and expenditures for the coming Fiscal Year. Upon approval of the tax budget and issuance of the Certificate of Estimated Resources, the Budget Commission certifies its actions to the Board together with the approved tax rates. Thereafter, the Board levies the approved taxes and certifies them to the proper County officials. The approved and certified tax rates are reflected in the tax bills sent to property owners during the collection year. Real property taxes are payable on a calendar year basis, generally in two installments with the first due usually in January and the second due in June or later. A-37

66 At the start of each Fiscal Year, the Board adopts a temporary appropriation measure to begin that new Fiscal Year and then, within three months, a permanent appropriation measure for that Fiscal Year. Permanent appropriation measures may be amended or supplemented during the Fiscal Year. Annual appropriations may not exceed the Budget Commission s official estimates of resources. The County Auditor must certify that the Board s appropriation measures, including any supplements or amendments, do not appropriate moneys in excess of the amount set forth in the latest of those official estimates. The County serves as tax collector for the School District. Investments and deposits of County funds are also governed by Revised Code Chapter 135 (the Uniform Depository Act ). The County Treasurer is responsible for those investments and deposits. The County s most recent audited financials contain a recitation of the County s current investment practices and can be obtained at the Ohio Auditor of State website: Financial Reports and Audits The Board maintains its accounts, appropriations, and other fiscal records on the basis of generally accepted accounting principles ( GAAP ). The State Auditor is charged by law with the responsibility for auditing the financial statements of each taxing subdivision and most public agencies and institutions. A financial report for each Fiscal Year is required to be filed with the State Auditor pursuant to Revised Code Section Such reports are required to be submitted to the State Auditor at the close of each Fiscal Year. At the time of filing of such report, the Treasurer is required to publish a notice that the report is completed and available for review in the Treasurer s office. The most recent audit of the School District s financial statements by the State Auditor was completed through the Fiscal Year ending June 30, The State Auditor did not make any require any adjustments or make any findings for recovery. The State Auditor did make management recommendations regarding properly listing federal awards and receipts, documenting the correct number of meals to children for reimbursement, maintaining documentation that clearly supports purchases made with federal monies, reviewing applicable timesheets and routes of bus drivers, maintaining certifications for reimbursement of employees under the Food Service Fund, reviewing account codes listed for permanent improvement expenditures. The State Auditor has not undertaken bring-down procedures since the date of the financial statements. The audited Financial Statements for the Fiscal Year Ended June 30, 2014 are attached hereto as APPENDIX B. Governmental Accounting Standards Board pronouncements and Financial Accounting Standards Board pronouncements are the principal sources used to determine the accounting principles employed under GAAP. These publications, among other things, provide for a modified accrual basis of accounting for governmental funds and for a full accrual basis of accounting for proprietary funds and for each major and aggregated non-major fiduciary fund. The publications also further provide for the preparation of balance sheets for each major and non-major fund, and statements of revenues and expenditures, and changes in fund balances (major and aggregated non-major governmental funds) or statements of revenues, expenses and changes in retained earnings/equity (major and aggregated non-major proprietary funds) and statement of cash flows. The principles further require preparation of a statement of net assets and a statement of activities for the entity s business type and government type activities on the full accrual basis of accounting, and management s discussion and analysis of major events and transactions during the year. A-38

67 Five-Year Projection Boards of education are required to submit a five-year projection of operational revenues and expenditures (commonly known as the five-year forecast ) according to Department rules. Pursuant to such rules, the Department reviews the School District s five-year projection to determine if the School District has projected a deficit during the first three years of the five-year projection period. If the Department determines that further fiscal analysis is needed, the Department must forward the projection to the State Auditor, who will determine if the School District must be formally notified of a pending projected deficit. The School District must then take steps to eliminate any deficit in the current year and to plan to avoid projected deficits. The Board approved a five-year projection on October 20, 2015, a copy of which is attached hereto as APPENDIX C. Deficit projections arising from the five-year forecast may have the effect of triggering certain fiscal oversight mechanisms created under State law. Fiscal Oversight System The State has created a fiscal oversight system designed to ensure the financial stability of public school districts so that they can continue to perform the vital governmental mission of educating children while meeting their ongoing obligations to creditors, employees, vendors and suppliers. Under this fiscal oversight system, a school district may be declared to be in a state of fiscal caution, fiscal watch, or fiscal emergency based on certain triggering criteria established by law. These triggering criteria relate primarily to the size of the school district s current and projected operating deficits, but also include an evaluation of the school district s financial practices and its effectiveness in taking the necessary corrective measures. Increasing levels of intervention and control are imposed with each successive determination, culminating (at the fiscal emergency level) in the creation of an independent governing board for the school district. This independent governing board, the Financial Planning and Supervision Commission ( FPSC ), is vested with extraordinary powers, including the power to remove the superintendent and/or the treasurer and to implement staff reductions which would otherwise violate existing collective bargaining agreements. The State Auditor may conduct a performance audit of a school district in fiscal caution, fiscal watch, or fiscal emergency at any time. 1 The School District is not subject to a declaration of fiscal caution, fiscal watch, or fiscal emergency, and is not subject to any directives from the State Auditor, the State Superintendent, or a FPSC arising from any prior declaration. General Fund Operations The General Fund is the main operating fund of the School District. It is the fund from which most of the School District s expenditures are paid and into which most of the School District s revenues are deposited. The School District derives most of its revenues from a tax on real and tangible personal property and from State aid, including the School Foundation Program. (See OTHER SOURCES OF SCHOOL DISTRICT FUNDING School Foundation Program. ) 1 For more information about the criteria the State Auditor and State Superintendent use to determine whether a school district should be placed on fiscal caution, fiscal watch, or fiscal emergency, please visit the State Auditor s website at A-39

68 General Fund Set-Aside Ohio school districts are required to establish the following set-aside within their General Fund: Fund Source and Amount of Balance Purpose Capital and Maintenance Fund 1 3% 2 of general fund revenues 3 using the state base-cost formula amount for the preceding Fiscal Year multiplied by the School District s student population for the preceding Fiscal Year Acquisition, replacement, enhancement, maintenance, or repair of permanent improvements Any balance remaining in the above funds at the end of the current Fiscal Year is carried over to the next Fiscal Year. Investment of Funds According to the Treasurer, all moneys of the School District, specifically moneys in the general fund, the bond retirement fund, and all project funds containing proceeds of any debt issuances of the School District (including the Bonds), are presently or will be invested in accordance with the requirements of Ohio law, and in particular the Uniform Depository Act. Under Revised Code Section , the School District may invest its funds, provided that such investments generally must mature or be redeemable within five years from the date of purchase. The classifications of obligations which are eligible for such investment by the School District range from investment in the State Treasury Asset Reserve of Ohio investment pool ( STAR Ohio ) to investment in United States Treasury bills, commercial paper, certificates of deposit and bankers acceptances. Certain investment practices remain exclusive to those school districts whose fiscal officers have completed additional training in accordance with the Uniform Depository Act. Further, pursuant to Revised Code Section , all investments of the School District, except for investments in securities in STAR Ohio and certain no-load money market mutual funds, must be made through members of the National Association of Securities Dealers, Inc., banks, savings banks, or savings and loan associations regulated by the State superintendent of financial institutions or through institutions regulated by the comptroller of the currency, Federal Deposit Insurance Corporation, or board of governors of the Federal Reserve System. The School District interprets the limits on Federal guaranteed investments, bankers acceptances, commercial paper and all other legal investments very conservatively. No moneys of the School District have ever been invested in interest-only obligations, reverse-repurchase obligations, inverse floater obligations, or other investment vehicles commonly referred to as derivative investments. No moneys of the School District are invested in obligations which mature later than the time at which it is reasonably expected that the School District will need access to such moneys in order to meet current financial commitments. The Treasurer has attended special training in all of the investment areas to assure strict compliance with the strictly conservative investment philosophy of the School District. All investments are transacted with banks or other financial institutions operating in the State. Complete detail of the current investment practices of the School District can be found in the most recent audited financial statements of the School District. (See APPENDIX B herein.) 1 A school district may elect to set aside funds pursuant to previous law by notifying the State Auditor within 90 days of the beginning of the fiscal year of such election. 2 A different percentage requirement may be set by the State Auditor. 3 A school district may elect to set-aside funds from the proceeds of a permanent improvement levy instead of diverting funds from the general fund to meet this requirement. A-40

69 School District Insurance The School District maintains its insurance coverage through the Ohio School Plan. The School District maintains comprehensive insurance coverage with private carriers for real property, building contents and vehicles for a maximum amount of $87,662,833, with a $1,000 deductible per occurrence. In addition, the School District maintains general liability coverage with limits of $2,000,000 per occurrence and $4,000,000 in aggregate per year. Employers, fiduciary and educational legal liabilities are also maintained within the School District s policy with limits of $2,000,000 per occurrence and $4,000,000 in aggregate. Vehicle policies include liability coverage for bodily injury and property damage in the amount of $2,000,000 per occurrence. The School District also maintains coverage for cyber security with a limit of $20,000,000 in aggregate per year and pollution liabilities with a limit of $5,000,000 in aggregate per year. Ohio law provides immunity for political subdivisions such as the School District from liability in damages. The immunity covers injury, death, or loss to persons or property allegedly caused by an act or omission of such political subdivisions or their employees in connection with governmental and proprietary functions, as defined in the Ohio statutes. Included among such governmental functions are the design, construction, reconstruction, renovation, repair, maintenance, and operation of any school athletic facility, school auditorium, or gymnasium. The statutes have no effect on any liability imposed by federal law or other federal cause of action. Pursuant to Ohio law, there are, however, five areas in which a political subdivision may be held liable for such loss. These include the negligent operation of a motor vehicle by employees engaged within the scope of their employment and authority; negligent performance of proprietary functions; negligent failure to keep public roads in repair, and other negligent failure to remove obstructions from public roads; negligence of employees due to physical defects within or upon the grounds of buildings used in the performance of governmental functions, excluding jails, juvenile detention workhouses and other detention facilities; and liability specifically imposed by statute. Ohio law also imposes a two-year statute of limitations and puts limits on the damages which may be recovered from such political subdivisions. No punitive or exemplary damages can be recovered, and any insurance benefits are deducted from any award against a political subdivision. Although there is no limitation with respect to compensatory damages representing a person s economic loss, there is a $250,000 per person ceiling on the compensatory damage that represents a person s non-economic loss in cases other than wrongful death, in which case there is no maximum limitation. A-41

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71 APPENDIX B FINANCIAL STATEMENTS Buckeye Valley Local School District Delaware, Marion, Morrow and Union Counties, Ohio for the Fiscal Year ended June 30, 2014

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73 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY SINGLE AUDIT FOR THE YEAR ENDED JUNE 30, 2014

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75 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY TABLE OF CONTENTS TITLE PAGE Independent Auditor s Report... 1 Management s Discussion and Analysis... 5 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis) General Fund Statement of Fiduciary Net Position Fiduciary Fund Statement of Changes in Fiduciary Net Position Fiduciary Fund Notes to the Basic Financial Statements Schedule of Federal Awards Receipts and Expenditures Notes to the Schedule of Federal Awards Receipts and Expenditures Independent Auditor s Report On Internal Control Over Financial Reporting and On Compliance and Other Matters Required By Government Auditing Standards Independent Auditor s Report On Compliance with Requirements Applicable to Each Major Federal Program and Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings Schedule of Prior Audit Findings... 64

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77 INDEPENDENT AUDITOR S REPORT Buckeye Valley Local School District Delaware County 679 Coover Road Delaware, Ohio To the Board of Education: 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 Buckeye Valley Local School District, Delaware County, Ohio, (the District), as of and for the year ended June 30, 2014, 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 preparing and fairly presenting these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes designing, implementing, and maintaining internal control relevant to preparing and fairly presenting financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to opine on these financial statements based on our audit. We audited in accordance with auditing standards generally accepted in the United States of America and the financial audit standards in the Comptroller General of the United States Government Auditing Standards. Those standards require that we plan and perform the audit to reasonably assure the financial statements are free from material misstatement. An audit requires obtaining evidence about the financial statement amounts and disclosures. The procedures selected depend on our judgment, including assessing the risks of material financial statement misstatement, whether due to fraud or error. In assessing those risks, we considered internal control relevant to the District s preparation and fair presentation of the financial statements in order to design appropriate audit procedures, but not to the extent needed to opine on the effectiveness of the District s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of management s accounting policies and the reasonableness of their significant accounting estimates, as well as our evaluation of the overall financial statement presentation. We believe the audit evidence we obtained is sufficient and appropriate to support our opinions. 1

78 Buckeye Valley Local School District Delaware County Independent Auditor s Report Page 2 Opinion 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 Buckeye Valley Local School District, Delaware County, Ohio, as of June 30, 2014, and the respective changes in financial position and the budgetary comparison for the General Fund thereof for the year then ended in accordance with the accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require this presentation to include Management s discussion and analysis, listed in the table of contents, to supplement the basic financial statements. Although this information is not part of the basic financial statements, the Governmental Accounting Standards Board considers it essential for placing the basic financial statements in an appropriate operational, economic, or historical context. We applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, consisting of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, to the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not opine or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to opine or provide any other assurance. Supplementary and Other Information Our audit was conducted to opine on the District s basic financial statements taken as a whole. The Schedule of Federal Award Receipts and Expenditures presents additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and is not a required part of the financial statements. The Schedule is management s responsibility, and derives from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. We subjected this Schedule to the auditing procedures we applied to the basic financial statements. We also applied certain additional procedures, including comparing and reconciling the Schedule directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves in accordance with auditing standards generally accepted in the United States of America. In our opinion, this Schedule is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 2

79 Buckeye Valley Local School District Delaware County Independent Auditor s Report Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 16, 2015 on our consideration of the District s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report describes the scope of our internal control testing over financial reporting and compliance, and the results of that testing, and does not opine on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. Dave Yost Auditor of State Columbus, Ohio March 18,

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81 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The management s discussion and analysis of the Buckeye Valley Local School District s (the District ) financial performance provides an overall review of the District s financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the District s financial performance as a whole; readers should also review the basic financial statements and the notes to the basic financial statements to enhance their understanding of the District s financial performance. Financial Highlights Key financial highlights for fiscal year 2014 are as follows: In total, net position of governmental activities increased $2,483,621, which represents a 14.50% increase from fiscal year General revenues accounted for $24,488,827 in revenue or 88.58% of total revenues. Program specific revenues in the form of charges for services and sales, and operating grants and contributions accounted for $3,158,261 in revenue or 11.42% of total revenues of $27,647,088. The District had $25,163,467 in expenses related to governmental activities; $3,158,261 of these expenses were offset by program specific charges for services and sales, and operating grants and contributions. General revenues supporting governmental activities (primarily taxes and unrestricted grants and entitlements) of $24,488,827 were adequate to provide for these programs. The District s major governmental funds are the general fund and the debt service fund. The general fund had $23,394,128 in revenues and other financing sources and $21,323,273 in expenditures. During fiscal year 2014, the general fund s fund balance increased $2,070,855 from $6,137,615 to $8,208,470. The debt service fund had $2,298,805 in revenues and $2,102,769 in expenditures. During fiscal year 2014, the debt service fund s fund balance increased $196,036 from $1,172,066 to $1,368,102. Using the Basic Financial Statements (BFS) This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the District as a financial whole, an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. The statement of net position and statement of activities provide information about the activities of the whole District, presenting both an aggregate view of the District s finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the District s most significant funds with all other nonmajor funds presented in total in one column. In the case of the District, the general fund and the debt service fund are by far the most significant funds, and the only governmental funds reported as major funds. 5

82 Reporting the District as a Whole BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) Statement of Net Position and the Statement of Activities While this document contains the large number of funds used by the District to provide programs and activities, the view of the District as a whole looks at all financial transactions and asks the question, How did the District do financially during fiscal year 2014? The statement of net position and the statement of activities answer this question. These statements include all assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenues and expenses using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting will take into account all of the current year s revenues and expenses regardless of when cash is received or paid. These two statements report the District s net position and changes in net position. This change in net position is important because it tells the reader that, for the District as a whole, the financial position of the District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the District s property tax base, current property tax laws in Ohio restricting revenue growth, facility conditions, required educational programs and other factors. In the statement of net position and the statement of activities, the governmental activities include the District s programs and services, including instruction, support services, operations and maintenance, pupil transportation, extracurricular activities, and food service operations. The District s statement of net position and statement of activities can be found on pages 13 and 14 of this report. Reporting the District s Most Significant Funds Fund Financial Statements The analysis of the District s major governmental funds begins on page 9. Fund financial reports provide detailed information about the District s major funds. The District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the District s most significant funds. The District s major governmental funds are the general fund and the debt service fund. Governmental Funds Most of the District s activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund financial statements provide a detailed short-term view of the District s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds is reconciled in the basic financial statements. The basic governmental fund financial statements can be found on pages of this report. 6

83 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) Reporting the District s Fiduciary Responsibilities The District is the trustee, or fiduciary, for scholarship programs. This activity is presented as a privatepurpose trust fund. The District also acts in a trustee capacity as an agent for individuals, private organizations, other governmental units, and/or other funds. These activities are reported in an agency fund. The District s fiduciary activities are reported in separate statements of fiduciary net position and changes in fiduciary net position on pages 20 and 21. These activities are excluded from the District s other financial statements because the assets cannot be utilized by the District to finance its operations. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. These notes to the basic financial statements can be found on pages of this report. The District as a Whole The statement of net position provides the perspective of the District as a whole. The table below provides a summary of the District s net position at June 30, 2014 and June 30, Net Position Governmental Governmental Activities Activities Assets Current and other assets $ 23,357,328 $ 22,479,124 Capital assets, net 30,370,658 29,741,426 Total assets 53,727,986 52,220,550 Deferred outflows of resources 260, ,697 Liabilities Current liabilities 2,380,692 2,317,792 Long-term liabilities 23,195,570 23,838,982 Total liabilities 25,576,262 26,156,774 Deferred inflows of resources 8,800,212 9,200,066 Net position Net investment in capital assets 10,066,636 8,913,876 Restricted 987,773 1,531,703 Unrestricted 8,557,619 6,682,828 Total net position $ 19,612,028 $ 17,128,407 Over time, net position can serve as a useful indicator of a government s financial position. At June 30, 2014, the District s assets plus deferred outflows of resources exceeded liabilities plus deferred inflows of resources by $19,612,028. 7

84 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) At fiscal year end, capital assets represented 56.53% of total assets. Capital assets include land, land improvements, buildings and improvements, furniture and equipment, vehicles, and infrastructure. The net investment in capital assets at June 30, 2014 was $10,066,636. These capital assets are used to provide services to the students and are not available for future spending. Although the District s investment in capital assets is reported net of related debt, it should be noted that the resources to repay the debt must be provided from other sources, since capital assets may not be used to liquidate these liabilities. A portion of the District s net position, $987,773, represents resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net position of $8,557,619 may be used to meet the District s ongoing obligations to the students and creditors. The graph below illustrates the District s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position at June 30, 2014 and June 30, Governmental Activities $60,000,000 $40,000,000 $20,000,000 $- $53,988,502 $52,485,247 $34,376,474 $35,356,840 $19,612,028 $17,128, Net Position Liabilities and Deferred Inflows Assets and Deferred Outflows The table below shows the changes in net position for governmental activities for fiscal years 2014 and Change in Net Position Governmental Governmental Activities Activities Revenues Program revenues: Charges for services and sales $ 1,824,428 $ 1,883,870 Operating grants and contributions 1,333,833 1,347,080 General revenues: Property taxes 12,277,540 12,401,938 Income taxes 5,627,131 5,356,089 Grants and entitlements 6,227,716 6,264,787 Investment earnings 13,243 12,784 Miscellaneous 343,197 94,725 Total revenues 27,647,088 27,361,273 8

85 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) Change in Net Position Governmental Governmental Activities Activities Expenses Program expenses: Instruction: Regular $ 11,535,031 $ 11,688,486 Special 2,325,735 1,723,951 Vocational 246, ,185 Other 10,026 5,865 Support services: Pupil 1,125,137 2,379,876 Instructional staff 398, ,856 Board of education 171, ,377 Administration 1,909,879 1,822,235 Fiscal 600, ,909 Operations and maintenance 2,086,224 2,222,573 Pupil transportation 2,016,407 1,743,274 Central 127,832 29,287 Operation of non-instructional services: Food service operations 779, ,359 Other non-instructional services 30,716 28,037 Extracurricular activities 679, ,882 Interest and fiscal charges 1,120,153 1,125,012 Total expenses 25,163,467 25,572,164 Change in net position 2,483,621 1,789,109 Net position at beginning of year 17,128,407 15,339,298 Net position at end of year $ 19,612,028 $ 17,128,407 Governmental Activities Net position of the District s governmental activities increased $2,483,621. Total governmental expenses of $25,163,467 were offset by program revenues of $3,158,261 and general revenues of $24,488,827. Program revenues supported 12.55% of the total governmental expenses. The primary sources of revenue for governmental activities are derived from property taxes, income taxes, and grants and entitlements. These revenue sources account for 87.29% of the total governmental revenues. Miscellaneous revenue increased mainly due to an increase in other local revenues from Delaware City School District and Delaware County reported in the general fund. The largest expense of the District is for instructional programs. Instruction expenses totaled $14,116,901 or 56.10% of the total governmental expenses for fiscal year The decrease in pupil expenses, and subsequent increases in special, central, and extracurricular activities expenses, is primarily due to a change in the coding of expenses for services provided to the District by the Educational Service Center of Central Ohio. 9

86 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The graph below presents the District s governmental activities revenues and expenses for fiscal years 2014 and Governmental Activities - Revenues and Expenses $28,000,000 $27,000,000 $26,000,000 $25,000,000 $24,000,000 $23,000,000 $27,647,088 $27,361,273 $25,163,467 $25,572,164 Fiscal Year 2014 Fiscal Year 2013 Revenues Expenses The statement of activities shows the cost of program services and the charges for services and grants offsetting those services. The following table shows, for governmental activities, the total cost of services and the net cost of services for fiscal years 2014 and That is, it identifies the cost of these services supported by tax revenues, unrestricted State grants and entitlements, and other general revenues of the District. Governmental Activities Total Cost of Net Cost of Total Cost of Net Cost of Services Services Services Services Program expenses Instruction: Regular $ 11,535,031 $ 10,715,187 $ 11,688,486 $ 10,872,690 Special 2,325,735 1,663,042 1,723,951 1,357,623 Vocational 246, , ,185 82,975 Other 10,026 10,026 5,865 5,865 Support services: Pupil 1,125, ,354 2,379,876 1,858,256 Instructional staff 398, , , ,987 Board of education 171, , , ,377 Administration 1,909,879 1,893,441 1,822,235 1,799,182 Fiscal 600, , , ,792 Operations and maintenance 2,086,224 2,086,224 2,222,573 2,214,323 Pupil transportation 2,016,407 1,988,898 1,743,274 1,687,226 Central 127, ,832 29,287 29,287 Operation of non-instructional services: Food service operations 779,869 (22,388) 786,359 (23,780) Other non-instructional services 30,716 22,693 28,037 18,630 Extracurricular activities 679, , , ,769 Interest and fiscal charges 1,120,153 1,120,153 1,125,012 1,125,012 Total $ 25,163,467 $ 22,005,206 $ 25,572,164 $ 22,341,214 10

87 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The dependence upon taxes and other general revenues for governmental activities is apparent, as 88.50% of instruction activities are supported through taxes and other general revenues. For all governmental activities, general revenue support is 87.45%. The District s taxpayers and grants and entitlements from the State of Ohio, as a whole, are by far the primary support for the District s students. The graph below presents the District s governmental activities revenue for fiscal years 2014 and Governmental Activities - General and Program Revenues $30,000,000 $20,000,000 $10,000,000 $- $24,488,827 $24,130,323 $3,158,261 $3,230,950 Fiscal Year 2014 Fiscal Year 2013 General Revenues Program Revenues The District s Funds The District s governmental funds reported a combined fund balance of $11,054,811, which is more than last year s total balance of $9,745,141. The table below indicates the fund balance and the total change in fund balance as of June 30, 2014 and June 30, Fund Balance Fund Balance June 30, 2014 June 30, 2013 Change Percentage Change General fund $ 8,208,470 $ 6,137,615 $ 2,070, % Debt service fund 1,368,102 1,172, , % Nonmajor governmental funds 1,478,239 2,435,460 (957,221) (39.30) % Total $ 11,054,811 $ 9,745,141 $ 1,309, % General Fund During fiscal year 2014, the District s general fund balance increased $2,070,

88 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The table that follows assists in illustrating the financial activities of the general fund Increase/ Percentage Amount Amount (Decrease) Change Revenues Taxes $ 15,260,719 $ 15,079,605 $ 181, % Tuition 800, ,218 4, % Earnings on investments 11,029 9,591 1, % Intergovernmental 6,162,811 5,897, , % Other revenues 546, , , % Total $ 22,781,866 $ 22,127,615 $ 654, % Expenditures Instruction $ 12,559,808 $ 11,946,328 $ 613, % Support services 7,651,710 8,462,443 (810,733) (9.58) % Operation of non-instructional 9,781 11,810 (2,029) (17.18) % Extracurricular activities 408, , , % Capital outlay 612, , % Debt service 81, ,280 10, % Total $ 21,323,273 $ 20,684,735 $ 638, % Overall revenues of the general fund increased $654,251 or 2.96%. Taxes increased $181,114 or 1.20% primarily due to a modest increase in income tax revenue reported by the District. Intergovernmental revenue increased $264,959 or 4.49%, which was partially due to an increase in Medicaid reimbursements received during fiscal year Other revenues increased $202,619 or 58.84% mainly due to an increase in other local revenues received from Delaware City School District and Delaware County. All other revenue classifications remained comparable to the prior fiscal year. Overall expenditures of the general fund increased $638,538 or 3.09%. Support services expenditures decreased $810,733 or 9.58%, which was partially offset by increases in instruction expenditures of $613,480 or 5.14% and extracurricular activities expenditures of $145,278 or 55.16%. Capital outlay and debt service expenditures both increased due to the inception of a new capital lease during fiscal year All other expenditure classifications remained comparable to the prior fiscal year. Debt Service Fund The debt service fund had $2,298,805 in revenues and $2,102,769 in expenditures. During fiscal year 2014, the debt service fund s fund balance increased $196,036 from $1,172,066 to $1,368,

89 General Fund Budgeting Highlights BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The District s budget is prepared according to Ohio law and is based on accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The most significant budgeted fund is the general fund. For the general fund, final budgeted revenues and other financing sources of $21,172,441 matched exactly to the original budgeted amounts. Actual revenues and other financing sources of $22,181,829 were $1,009,388 more than final budgeted amounts. General fund actual expenditures and other financing uses of $20,945,454 were $1,194,328 less than the final appropriations (appropriated expenditures plus other financing uses) of $22,141,713. The final budgeted expenditures and other financing uses were $2,951,800 more than the original budgeted expenditures and other financing uses of $19,187,982. This increase from the original budget to the final budget is primarily due to the implementation of a more conservative budgetary approach by the end of fiscal year Capital Assets and Debt Administration Capital Assets At the end of fiscal year 2014, the District had $30,370,658 invested in land, land improvements, buildings and improvements, furniture and equipment, vehicles, and infrastructure. This entire amount is reported in governmental activities. The table that follows shows June 30, 2014 balances compared to June 30, Capital Assets at June 30 (Net of Depreciation) Governmental Activities Land $ 498,673 $ 498,673 Land improvements 1,503,820 1,023,006 Buildings and improvements 25,998,120 26,439,799 Furniture and equipment 1,289, ,998 Vehicles 1,003,915 1,046,351 Infrastructure 76,865 79,599 Total $ 30,370,658 $ 29,741,426 The increase in capital assets of $629,232 is attributable to capital outlays of $1,470,937 exceeding depreciation expense of $841,705 during fiscal year See Note 9 to the basic financial statements for detail on the District s capital assets. Debt Administration At June 30, 2014, the District had $21,023,678 in general obligation bonds and capital lease obligations outstanding. The general obligation bonds are comprised of current issue bonds, capital appreciation bonds, and accreted interest on capital appreciation bonds. Of the total amount outstanding, $1,470,785 is due within one year and $19,552,893 is due in more than one year. 13

90 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (UNAUDITED) The table that follows summarizes the outstanding debt at June 30, 2014 and June 30, Outstanding Debt, at Year End Governmental Governmental Activities Activities Series 1995 general obligation bonds $ 1,510,000 $ 2,195,000 Series 2004 refunding bonds - current interest 3,845,008 3,910,008 Series 2004 refunding bonds - capital appreciation 204, ,992 Series 2004 refunding bonds - accreted interest 562, ,865 Series 2009 school facilities bonds - current interest 13,300,000 13,730,000 Series 2009 school facilities bonds - capital appreciation 419, ,994 Series 2009 school facilities bonds - accreted interest 505, ,928 Capital lease obligations 675, ,581 Total $ 21,023,678 $ 21,546,368 At June 30, 2014, the District s overall legal debt margin was $28,428,606 with an unvoted debt margin of $514,894. See Note 15 to the basic financial statements for detail on the District s debt administration. Current Financial Related Activities The District completed a bus loop renovation project at the high school that was started in the spring of The bus loop was open for improved transportation in the fall of Buckeye Valley North Elementary School was closed for the and school years, and remains closed for the school year. In the fall of 2014, the Board of Education placed a bond levy on the ballot to renovate and re-open Buckeye Valley North Elementary School, but the issue was defeated. The District s management retains the possibility of re-opening this elementary school once funding becomes available. Contacting the District s Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Ms. Kelly Moore, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio

91 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF NET POSITION JUNE 30, 2014 Governmental Activities Assets: Equity in pooled cash and cash equivalents... $ 8,139,476 Receivables: Property taxes ,209,133 Income taxes ,570,364 Accounts ,027 Accrued interest ,077 Intergovernmental ,893 Prepayments ,075 Materials and supplies inventory ,288 Inventory held for resale ,995 Capital assets: Nondepreciable capital assets ,673 Depreciable capital assets, net ,871,985 Capital assets, net ,370,658 Total assets ,727,986 Deferred outflows of resources: Unamortized deferred charges on debt refunding. 260,516 Total deferred outflows of resources ,516 Liabilities: Accounts payable ,540 Accrued wages and benefits payable ,787,587 Pension obligation payable ,171 Intergovernmental payable ,558 Accrued interest payable ,836 Long-term liabilities: Due within one year ,700,224 Due in more than one year ,495,346 Total liabilities ,576,262 Deferred inflows of resources: Property taxes levied for the next fiscal year... 8,800,212 Total deferred inflows of resources ,800,212 Net position: Net investment in capital assets ,066,636 Restricted for: Capital projects ,866 Debt service ,702 Locally funded programs ,332 State funded programs ,501 Federally funded programs ,042 Student activities ,604 Other purposes ,726 Unrestricted ,557,619 Total net position $ 19,612,028 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 15

92 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Net (Expense) Revenue and Changes in Program Revenues Net Position Charges for Operating Grants Governmental Expenses Services and Sales and Contributions Activities Governmental activities: Instruction: Regular $ 11,535,031 $ 780,497 $ 39,347 $ (10,715,187) Special ,325,735 44, ,694 (1,663,042) Vocational , ,458 2,311 (105,340) Other , (10,026) Support services: Pupil ,125,137 59, ,006 (854,354) Instructional staff ,936 3,051 87,073 (308,812) Board of education , (171,091) Administration ,909,879 2,677 13,761 (1,893,441) Fiscal , (600,534) Operations and maintenance.... 2,086, (2,086,224) Pupil transportation ,016,407 3,820 23,689 (1,988,898) Central , (127,832) Operation of non-instructional services: Food service operations , , ,310 22,388 Other non-instructional services.. 30,716 8,023 - (22,693) Extracurricular activities , ,179 15,642 (359,967) Interest and fiscal charges ,120, (1,120,153) Total governmental activities..... $ 25,163,467 $ 1,824,428 $ 1,333,833 (22,005,206) General revenues: Property taxes levied for: General purposes ,597,333 Debt service ,983,581 Capital outlay ,626 Income taxes levied for: General purposes ,627,131 Grants and entitlements not restricted to specific programs ,227,716 Investment earnings ,243 Miscellaneous ,197 Total general revenues ,488,827 Change in net position ,483,621 Net position at beginning of year ,128,407 Net position at end of year $ 19,612,028 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 16

93 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2014 Nonmajor Total Debt Governmental Governmental General Service Funds Funds Assets: Equity in pooled cash and cash equivalents... $ 5,859,613 $ 877,584 $ 1,402,279 $ 8,139,476 Receivables: Property taxes ,529,644 1,986, ,971 12,209,133 Income taxes ,570, ,570,364 Accounts , ,027 Accrued interest , ,077 Interfund loans , ,388 Intergovernmental , , ,893 Due from other funds , ,863 Prepayments , ,075 Materials and supplies inventory , ,288 Inventory held for resale ,995 1,995 Total assets $ 18,333,131 $ 2,864,102 $ 2,288,346 $ 23,485,579 Liabilities: Accounts payable $ 20,054 $ - $ 4,486 $ 24,540 Accrued wages and benefits payable ,730,066-57,521 1,787,587 Pension obligation payable ,311-11, ,171 Compensated absences payable , ,069 Interfund loans payable ,388 10,388 Intergovernmental payable ,991-15, ,558 Due to other funds , ,863 Total liabilities ,354, ,685 2,572,176 Deferred inflows of resources: Property taxes levied for the next fiscal year... 6,875,628 1,426, ,738 8,800,212 Delinquent property tax revenue not available ,540 69,154 24, ,817 Income tax revenue not available , ,346 Classroom materials and fees revenue not available. 35, ,312 Intergovernmental revenue not available ,344-70, ,905 Total deferred inflows of resources ,770,170 1,496, ,422 9,858,592 Fund balances: Nonspendable: Materials and supplies inventory ,288-1,995 8,283 Prepaids , ,075 Restricted: Debt service ,368,102-1,368,102 Capital improvements , ,866 Food service operations , ,436 Extracurricular ,604 65,604 Other purposes , ,057 Committed: Capital improvements , ,914 Student and staff support , ,999 Assigned: Student instruction , ,151 Student and staff support , ,251 Extracurricular , ,692 Subsequent year's appropriations ,143, ,143,592 School supplies , ,749 Other purposes , ,438 Unassigned (deficit) ,594,235 - (42,633) 5,551,602 Total fund balances ,208,470 1,368,102 1,478,239 11,054,811 Total liabilities, deferred inflows of resources and fund balances $ 18,333,131 $ 2,864,102 $ 2,288,346 $ 23,485,579 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 17

94 Total governmental fund balances $ 11,054,811 Amounts reported for governmental activities on the statement of net position are different because: BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2014 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 30,370,658 Other long-term assets are not available to pay for current period expenditures and therefore are deferred inflows of resources in the funds. Property taxes receivable $ 420,817 Income taxes receivable 389,346 Accounts receivable 35,312 Intergovernmental receivable 212,905 Total 1,058,380 Unamortized premiums on bonds issued are not recognized in the funds. (734,970) Unamortized deferred amounts on debt refundings are not recognized in the funds. 260,516 Accrued interest payable is not due and payable in the current period and therefore is not reported in the funds. (65,836) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. General obligation bonds payable (20,347,712) Capital lease obligations payable (675,966) Compensated absences payable (1,307,853) Total (22,331,531) Net position of governmental activities $ 19,612,028 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 18

95 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Revenues: From local sources: Property taxes ,654,906 Nonmajor Total Debt Governmental Governmental General Service Funds Funds $ $ 1,993,065 $ 700,876 $ 12,348,847 Income taxes ,605, ,605,813 Tuition , ,339 Earnings on investments , ,513 13,457 Charges for services , ,947 Extracurricular , , ,815 Classroom materials and fees , , ,957 Rental income ,500 9,500 Contributions and donations ,408-14,212 20,620 Contract services , ,800 Other local revenues ,889 25,967 14, ,182 Intergovernmental - state ,002, , ,372 6,394,985 Intergovernmental - federal , ,053 1,146,109 Total revenues ,781,866 2,298,805 2,621,700 27,702,371 Expenditures: Current: Instruction: Regular ,484, ,696 11,220,861 Special ,951, ,401 2,315,721 Vocational , , ,304 Other , ,026 Support services: Pupil , ,082 1,111,459 Instructional staff ,340-98, ,053 Board of education , ,600 Administration ,933,587-16,405 1,949,992 Fiscal ,585 32,195 11, ,357 Operations and maintenance ,083,485-54,259 2,137,744 Pupil transportation ,607, ,446 1,799,039 Central , ,143 Operation of non-instructional services: Food service operations , ,428 Other non-instructional services ,781-7,972 17,753 Extracurricular activities , , ,493 Facilities acquisition and construction , ,430 Capital outlay , ,262 Debt service: Principal retirement ,688 1,180, ,189 1,365,877 Interest and fiscal charges , ,574 6, ,421 Total expenditures ,323,273 2,102,769 3,578,921 27,004,963 Excess (deficiency) of revenues over (under) expenditures ,458, ,036 (957,221) 697,408 Other financing sources: Capital lease transaction , ,262 Total other financing sources , ,262 Net change in fund balances ,070, ,036 (957,221) 1,309,670 Fund balances at beginning of year ,137,615 1,172,066 2,435,460 9,745,141 Fund balances at end of year $ 8,208,470 $ 1,368,102 $ 1,478,239 $ 11,054,811 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 19

96 Net change in fund balances - total governmental funds $ 1,309,670 Amounts reported for governmental activities in the statement of activities are different because: BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Capital asset additions $ 1,470,937 Current year depreciation (841,705) Total 629,232 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes (71,307) Income taxes 21,318 Classroom materials and fees (6,281) Intergovernmental 15,618 Total (40,652) Repayment of bond and capital lease principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities on the statement of net position. Bonds 1,180,000 Capital leases 185,877 Total 1,365,877 Capital lease transactions are recorded as other financing sources in the funds; however, in the statement of activities, they are not reported as other financing sources as they increase liabilities on the statement of net position. (612,262) In the statement of activities, interest is accrued on outstanding bonds, whereas in governmental funds, an interest expenditure is reported when due. The following items resulted in additional interest being reported in the statement of activities: Decrease in accrued interest payable 7,362 Accreted interest on capital appreciation bonds (230,925) Amortization of bond premiums 23,012 Amortization of deferred charges (4,181) Total (204,732) Some expenses reported in the statement of activities, such as compensated absences, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. 36,488 Change in net position of governmental activities $ 2,483,621 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 20

97 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Revenues: From local sources: Property taxes ,226,940 Variance with Budgeted Amounts Final Budget Positive Original Final Actual (Negative) $ $ 9,226,940 $ 9,258,725 $ 31,785 Income taxes ,192,360 5,192,360 5,529, ,397 Tuition , , ,028 (4,955) Earnings on investments ,242 9,242 10,460 1,218 Extracurricular , , ,236 (16,898) Classroom materials and fees ,023 49,023 57,521 8,498 Rental income ,250 8,250 - (8,250) Contributions and donations Contract services ,467 1,467 1, Other local revenues ,535 48, , ,152 Intergovernmental - state ,972,663 5,972,663 6,002,755 30,092 Intergovernmental - federal ,718 32, , ,285 Total revenues ,151,893 21,151,893 21,881, ,679 Expenditures: Current: Instruction: Regular ,349,578 11,167,309 10,354, ,015 Special ,490,113 2,040,113 1,985,505 54,608 Vocational , , ,554 22,533 Other ,865 5,865 10,790 (4,925) Support services: Pupil ,576 1,787, , ,718 Instructional staff , , ,078 17,980 Board of education , , ,102 29,093 Administration ,850,959 1,953,547 1,951,610 1,937 Fiscal , , ,143 (9,587) Operations and maintenance ,158,014 2,236,426 2,246,781 (10,355) Pupil transportation ,001,453 1,021,453 1,698,798 (677,345) Central , , ,018 7,241 Operation of non-instructional services: Other non-instructional services Extracurricular activities , , ,754 9,697 Total expenditures ,046,382 22,000,113 20,928,482 1,071,631 Excess (deficiency) of revenues over (under) expenditures ,105,511 (848,220) 953,090 1,801,310 Other financing sources (uses): Refund of prior year's expenditures ,810 11, , ,447 Transfers (out) (141,600) (141,600) (16,972) 124,628 Advances in ,738 8,738 - (8,738) Total other financing sources (uses)..... (121,052) (121,052) 283, ,337 Net change in fund balance ,984,459 (969,272) 1,236,375 2,205,647 Fund balance at beginning of year ,935,369 3,935,369 3,935,369 - Prior year encumbrances appropriated.. 244, , ,171 - Fund balance at end of year $ 6,163,999 $ 3,210,268 $ 5,415,915 $ 2,205,647 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 21

98 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2014 Private-Purpose Trust Scholarship Agency Assets: Equity in pooled cash and cash equivalents... $ 47,748 $ 72,536 Total assets ,748 $ 72,536 Liabilities: Due to students $ 48,603 Undistributed monies ,933 Total liabilities $ 72,536 Net position: Endowments ,000 Held in trust for scholarships ,748 Total net position $ 47,748 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 22

99 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Private-Purpose Trust Scholarship Additions: Interest $ 55 Change in net position Net position at beginning of year ,693 Net position at end of year $ 47,748 SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS 23

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101 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 NOTE 1 - DESCRIPTION OF THE DISTRICT Buckeye Valley Local School District (the District ) is organized under Article VI, Sections 2 and 3 of the Constitution of the State of Ohio. The District operates under a locally-elected Board form of government consisting of five members elected at-large for staggered four-year terms. The District provides educational services as authorized by State and federal guidelines. The District was established in The District serves an area of approximately 196 square miles, and is located in Delaware, Marion, Morrow, and Union Counties. The District is staffed by 78 classified employees, 147 certified teaching personnel, and 12 administrative employees who provide services to 2,274 students and other community members. The District currently operates two elementary schools, a junior high school, a high school, an administration building, and a bus garage. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements (BFS) of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District s significant accounting policies are described below. A. Reporting Entity The reporting entity has been defined in accordance with GASB Statement No. 14, The Financial Reporting Entity as amended by GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units and GASB Statement No. 61, The Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14 and No. 34. The reporting entity is composed of the primary government and component units. The primary government consists of all funds, departments, boards and agencies that are not legally separate from the District. For the District, this includes general operations, food service, and student related activities of the District. Component units are legally separate organizations for which the District is financially accountable. The District is financially accountable for an organization if the District appoints a voting majority of the organization s Governing Board and (1) the District is able to significantly influence the programs or services performed or provided by the organization; or (2) the District is legally entitled to or can otherwise access the organization s resources; or (3) the District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or (4) the District is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the District in that the District approves the budget, the issuance of debt or the levying of taxes. Certain organizations are also included as component units if the nature and significance of the relationship between the primary government and the organization is such that exclusion by the primary government would render the primary government s financial statements incomplete or misleading. Based upon the application of these criteria, the District has no component units. The basic financial statements of the reporting entity include only those of the District (the primary government). 25

102 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) The following organizations are described due to their relationship to the District: JOINTLY GOVERNED ORGANIZATIONS Tri-Rivers Educational Computer Association The District is a participant in the Tri-Rivers Educational Computer Association (TRECA), which is a computer consortium. TRECA is an association of school districts within the boundaries of Delaware, Knox, Marion, Morrow, Muskingum, and Wyandot Counties. The organization was formed for the purpose of applying modern technology with the aid of computers and other electronic equipment to administrative and instructional functions among member districts. The Governing Board of TRECA consists of one representative from each county elected by majority vote of all charter member districts within each county, one representative from the city school districts, and the Superintendent from Tri-Rivers Joint Vocational School. During fiscal year 2014, the District paid $46,542 to TRECA for various services. Financial information can be obtained from the Tri-Rivers Educational Computer Association, 100 Executive Drive, Marion, Ohio Delaware Area Career Center The Delaware Area Career Center (Career Center) is a distinct political subdivision of the State of Ohio that provides vocational education. The Career Center operates under the direction of a Board consisting of one representative from each of the six participating districts Boards of Education. The Board possesses its own budgeting and taxing authority. The degree of control exercised by the participating districts is limited to their representation on the Board. Financial information can be obtained from the Delaware Area Career Center, 4565 Columbus Pike, Delaware, Ohio Metropolitan Educational Council The Metropolitan Educational Council (MEC) is a purchasing cooperative made up of 142 school districts, libraries, and related agencies in 27 counties. The purpose of the MEC is to obtain prices for quality merchandise and services commonly used by the participants. The Governing Board of the MEC consists of one representative from each participant. All participants must pay all fees, charges, or other assessments as established by the MEC. During fiscal year 2014, the District paid $977 to the MEC for membership dues. Financial information can be obtained from the Metropolitan Educational Council, 2100 Citygate Drive, Columbus, Ohio

103 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) PUBLIC ENTITY RISK POOLS Ohio School Plan The District participates in the Ohio School Plan (Plan), an insurance purchasing pool established under Section of the Ohio Revised Code. The Plan is an unincorporated nonprofit association of its members, which enables the participants to provide for a formalized joint insurance purchasing program for maintaining adequate insurance protection, and provides risk management programs and other administrative services. The Plan s business and affairs are conducted by a 15-member Board consisting of Superintendents, Treasurers, the President of Harcum-Schuett Insurance Agency, Inc., and a member of the Hylant Group, Inc. The Hylant Group, Inc. is the Plan s administrator and is responsible for processing claims. Harcum-Schuett Insurance Agency, Inc. serves as the sales and marketing representative, which establishes agreements between the Plan and its members. Financial information can be obtained from Harcum-Schuett Insurance Agency, Inc., 246 East Sycamore Street, Columbus, Ohio Ohio School Boards Association Workers Compensation Group Rating Plan The District participates in a group rating plan for workers compensation as established under Section of the Ohio Revised Code. The Ohio School Boards Association Workers Compensation Group Rating Plan (GRP) was established through the Ohio School Boards Association (OSBA) as an insurance purchasing pool. The GRP s business and affairs are conducted by a three-member Board of Directors consisting of the President, the President-Elect, and the Immediate Past President of the OSBA. The Executive Director of the OSBA, or his designee, serves as coordinator of the GRP. Each year, the participants pay an enrollment fee to the GRP to cover the costs of administering the program. Stark County Schools Council of Governments The Stark County Schools Council of Governments (Council) is governed by an Assembly, which consists of one representative from each participating school district (usually the Superintendent or designee). The Assembly elects officers for one-year terms to serve as the Board of Directors. The Assembly exercises control over the operation of the Council. All Council revenues are generated from charges for services. The Council has a Health Benefits Program, which is a shared risk pool comprised of an 85-member council (66 of which are member school districts). 27

104 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) B. Basis of Presentation The District s basic financial statements consist of government-wide financial statements, including a statement of net position and a statement of activities, and fund financial statements that provide a more detailed level of financial information. Government-wide Financial Statements - The statement of net position and the statement of activities display information about the District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. These statements usually distinguish between those activities of the District that are governmental activities (primarily supported by taxes and intergovernmental revenues) and those that are considered business-type activities (primarily supported by fees and charges). However, the District has no business-type activities. The statement of net position presents the financial condition of the governmental activities of the District at fiscal year end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function of the District s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and, therefore, clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants, contributions, and interest that are restricted to meeting the operational or capital requirements of a particular program. Revenues which are not classified as program revenues are presented as general revenues of the District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District. Fund Financial Statements - During the fiscal year, the District segregates transactions related to certain District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the District at this more detailed level. The focus of governmental fund financial statements is on major funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single column. Fiduciary funds are reported by type. C. Fund Accounting The District uses funds to maintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The funds of the District are divided into two categories, governmental and fiduciary. GOVERNMENTAL FUNDS Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets plus deferred outflows of resources and liabilities plus deferred inflows of resources is reported as fund balance. 28

105 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) The following are the District s major governmental funds: General fund - The general fund is used to account for and report all financial resources not accounted for and reported in another fund. The general fund balance is available for any purpose provided it is expended or transferred according to the general laws of Ohio. Debt service fund - The debt service fund is used to account for the accumulation of resources and payment of general obligation bond and note principal, interest, and related costs. Other governmental funds of the District are used to account for (a) financial resources that are restricted, committed, or assigned to expenditures for capital outlays including the acquisition or construction of capital facilities and other capital assets, and (b) specific revenue sources that are restricted or committed to an expenditure for specified purposes other than debt service or capital projects. FIDUCIARY FUNDS Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds, and agency funds. Trust funds are used to account for assets held by the District under a trust agreement for individuals, private organizations, or other governments and are not available to support the District s own programs. The District s private-purpose trust fund accounts for programs that provide college scholarships to students after graduation. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The District s agency funds account for various staff-related and student-managed activities. D. Measurement Focus Government-wide Financial Statements - The government-wide financial statements are prepared using a flow of economic resources measurement focus. All assets, deferred outflows of resources, liabilities, and deferred inflows of resources associated with the operation of the District are included on the statement of net position. The statement of activities presents increases (e.g., revenues) and decreases (e.g., expenses) in total net position. Fund Financial Statements - All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and deferred outflows of resources, and current liabilities and deferred inflows of resources, are generally included on the balance sheet. The statement of revenues, expenditures, and changes in fund balances reflects the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the governmentwide financial statements are prepared. Governmental fund financial statements, therefore, include a reconciliation with brief explanations to better identify the relationship between the government-wide statements and the fund financial statements for governmental funds. Private-purpose trust funds are accounted for using a flow of economic resources measurement focus. Agency funds do not report a measurement focus as they do not report operations. 29

106 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) E. Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting on the fund financial statements. Fiduciary funds also use the accrual basis of accounting. Differences in the accrual and modified accrual basis of accounting arise in the recognition of revenue, the recording of deferred inflows and deferred outflows of resources, and in the presentation of expenses versus expenditures. Revenues - Exchange and Nonexchange Transactions - Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, available means expected to be received within sixty days of fiscal year end. Nonexchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, income taxes, grants, entitlements, and donations. On the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied (See Note 6). Revenue from income taxes is recognized in the fiscal year in which the income is earned (See Note 8). Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the fiscal year when the resources are required to be used or the fiscal year when use is first permitted; matching requirements, in which the District must provide local resources to be used for a specified purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. On the modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized. Under the modified accrual basis, the following revenue sources are considered both measurable and available at fiscal year end: property taxes available as an advance, income taxes, grants, interest, tuition, student fees, and charges for services. Deferred Inflows of Resources and Deferred Outflows of Resources - A deferred inflow of resources is an acquisition of net position by the District that is applicable to a future reporting period. A deferred outflow of resources is a consumption of net position by the District that is applicable to a future reporting period. Property taxes for which there is an enforceable legal claim as of June 30, 2014, but which were levied to finance fiscal year 2015 operations, and other revenues received in advance of the fiscal year for which they were intended to finance, have been recorded as deferred inflows of resources. Income taxes and grants not received within the available period, grants and entitlements received before the eligibility requirements are met, and delinquent property taxes due at June 30, 2014, are recorded as deferred inflows of resources on the governmental fund financial statements. On governmental fund financial statements, receivables that will not be collected within the available period have been reported as deferred inflows of resources. 30

107 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) Expenses/Expenditures - On the accrual basis, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization, are not recognized in governmental funds. F. Budgetary Process The District is required by State statute to adopt an annual appropriated cash basis budget for all funds, except agency funds. The specific timetable is as follows: 1. Prior to January 15, the Superintendent and Treasurer submit to the Board of Education a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing for all funds. Public hearings are publicized and conducted to obtain taxpayers comments. The purpose of this budget document is to reflect the need for existing (or increased) tax rates. 2. By no later than January 20, the Board-adopted budget is filed with the Delaware County Budget Commission for tax rate determination. 3. Prior to April 1, the Board of Education accepts, by formal resolution, the tax rates as determined by the Budget Commission and receives the Commission s certificate of estimated resources which states the projected revenue of each fund. Prior to July 1, the District must revise its budget so that total contemplated expenditures from any fund during the ensuing year will not exceed the amount stated in the certificate of estimated resources. The revised budget then serves as a basis for the appropriation measure. On or about July 1, the certificate of estimated resources is amended to include any unencumbered balances from the preceding year as reported by the District Treasurer. The certificate of estimated resources may be further amended during the year if projected increases or decreases in revenue are identified by the District Treasurer. The amounts reported in the budgetary statement reflect the amounts set forth in the original and final amended certificates of estimated resources issued for fiscal year By July 1, the annual appropriation resolution is legally enacted by the Board of Education at the function level of expenditures for the general fund and fund level for all other funds, which is the legal level of budgetary control. Budgetary allocations at the object level within the general fund and at the function and object level for all other funds are made by the District Treasurer. State statute permits a temporary appropriation to be effective until no later than October 1 of each year. Appropriations by fund must be within the estimated resources as certified by the County Budget Commission, and the total of expenditures may not exceed the appropriation total. 5. Any revisions that alter the total of any fund appropriation or function level of the general fund must be approved by the Board of Education. 6. Formal budgetary integration is employed as a management control device during the year for all funds consistent with the general obligation bond indenture and other statutory provisions. All funds completed the year within the amount of their legally authorized cash basis appropriation. 31

108 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) 7. Appropriation amounts are as originally adopted, or as amended by the Board of Education through the year by supplemental appropriations which either reallocated or increased the original appropriated amounts. All supplemental appropriations were legally enacted by the Board during fiscal year All amounts reported in the budgetary statement reflect the original appropriations and the final appropriations, including all modifications legally enacted by the Board. 8. Unencumbered appropriations lapse at year end. Encumbered appropriations are carried forward to the succeeding fiscal year and need not be reappropriated. Expenditures may not legally exceed budgeted appropriations at the fund level. G. Cash and Investments To improve cash management, cash received by the District is pooled. Monies for all funds are maintained in this pool. Individual fund integrity is maintained through the District s records. Each fund s interest in the pool is presented as equity in pooled cash and cash equivalents on the basic financial statements. During fiscal year 2014, investments were limited to the State Treasury Asset Reserve of Ohio (STAR Ohio). STAR Ohio is an investment pool managed by the State Treasurer s Office, which allows governments within the State to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of Investments in STAR Ohio are valued at STAR Ohio s shares price, which is the price the investment could be sold for on June 30, Following Ohio statutes, the Board of Education has, by resolution, specified the funds to receive an allocation of interest earnings. Interest revenue credited to the general fund during fiscal year 2014 was $11,029, which includes $1,893 assigned from other District funds. For presentation on the basic financial statements, investments of the cash management pool and investments with original maturities of three months or less at the time they are purchased by the District are considered to be cash equivalents. Investments with an initial maturity of more than three months are reported as investments. An analysis of the District s investment account at fiscal year end is provided in Note 4. H. Prepayments Certain payments to vendors reflect the costs applicable to future accounting periods and are recorded as prepayments in both government-wide and fund financial statements. These items are reported as assets on the statement of net position/balance sheet using the consumption method. A current asset for the prepaid amounts is recorded at the time of the purchase and the expense/expenditure is reported in the year in which services are consumed. At fiscal year end, because prepayments are not available to finance future governmental fund expenditures, the fund balance is considered nonspendable in an amount equal to the carrying value of the asset on the fund financial statements. 32

109 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) I. Inventory On government-wide and fund financial statements, purchased inventories are presented at the lower of cost or market and donated commodities are presented at their entitlement value. Inventories are recorded on a first-in, first-out basis and are expensed/expended when used. Inventories are accounted for using the consumption method on the government-wide and fund financial statements. On the fund financial statements, reported materials and supplies inventory is equally offset by nonspendable fund balance in the governmental funds, which indicates that it does not constitute available spendable resources even though it is a component of net current assets. Inventory consists of expendable supplies held for consumption, supplies held for resale, donated food and purchased food. J. Capital Assets General capital assets are those assets specifically related to governmental activities. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net position, but are not reported in the fund financial statements. All capital assets are capitalized at cost and updated for additions and deductions during the fiscal year. Donated capital assets are recorded at their fair market value on the date donated. The District maintains a capitalization threshold of $2,500. Improvements are capitalized. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset s life are not capitalized. All capital assets, except land, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Governmental Activities Description Estimated Lives K. Interfund Balances Land improvements years Buildings and improvements years Furniture and equipment 3-50 years Vehicles years Infrastructure 50 years On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as interfund loans receivable/payable, and receivables and payables resulting from short-term interfund loans to cover negative cash balances are classified as due to/from other funds. These amounts are eliminated in the governmental activities column on the statement of net position. 33

110 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) L. Compensated Absences Compensated absences of the District consist of vacation leave and sick leave to the extent that payments to the employee for these absences are attributable to services already rendered and are not contingent on a specific event that is outside the control of the District and the employee. In accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences, a liability for vacation leave is accrued if a) the employees rights to payment are attributable to services already rendered; and b) it is probable that the employer will compensate the employees for the benefits through paid time off or other means, such as cash payment at termination or retirement. An accrual for earned sick leave is made to the extent that it is probable that the benefits will result in termination (severance) payments. A liability for sick leave is accrued using the vesting method; i.e., the liability is based on the sick leave accumulated at June 30, 2014, by those employees who are currently eligible to receive termination (severance) payments, as well as those employees expected to become eligible in the future. For purposes of establishing a liability for sick leave on employees expected to become eligible to retire in the future, all employees with at least ten years of service at any age were considered expected to become eligible to retire in accordance with GASB Statement No. 16. The total liability for vacation leave and sick leave payments has been calculated using pay rates in effect at June 30, 2014 and reduced to the maximum payment allowed by labor contract and/or statute, plus any applicable additional salary related payments. The entire compensated absences liability is reported on the government-wide financial statements. For governmental fund financial statements, compensated absences are recognized as liabilities and expenditures as payments come due each period upon the occurrence of employee resignations and retirements. Any applicable amounts are recorded in the account compensated absences payable in the funds from which the employees who have accumulated unpaid leave are paid. The noncurrent portion of the liability is not reported. M. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities and long-term obligations are reported on the governmentwide financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, compensated absences that are paid from governmental funds are reported as liabilities on the fund financial statements only to the extent that they are due for payment during the current fiscal year. Bonds and capital lease obligations are recognized as liabilities on the fund financial statements when due. N. Unamortized Bond Premium and Discount/Accounting Gain or Loss On the government-wide financial statements, bond premiums are deferred and amortized over the term of the bonds using the straight-line method, which approximates the effective interest method. Bond premiums are presented as an addition to the face amount of the bonds. 34

111 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) For bond refundings resulting in the defeasance of debt reported on the government-wide financial statements, the difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized as a component of interest expense. This accounting gain or loss is amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter, and is presented as a deferred outflow of resources on the statement of net position. On the governmental fund financial statements, bond premiums are recognized in the current period. A reconciliation between the bonds face value and the amount reported on the statement of net position is presented in Note 15. O. Net Position Net position represents the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources. The net position component net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing or liabilities used for the acquisition, construction or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of those assets or related debt also should be included in this component of net position. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The amount restricted for other purposes represents amounts restricted for food service operations, the Brandon Wade memorial, and school farm activities. The District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available. P. Fund Balance Fund balance is divided into five classifications based primarily on the extent to which the District is bound to observe constraints imposed upon the use of the resources in the governmental funds. The classifications are as follows: Nonspendable - The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form or legally required to be maintained intact. The not in spendable form criterion includes items that are not expected to be converted to cash. Restricted - Fund balance is reported as restricted when constraints are placed on the use of resources that are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. 35

112 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) Committed - The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by a formal action (resolution) of the District Board of Education (the highest level of decision making authority). Those committed amounts cannot be used for any other purpose unless the District Board of Education removes or changes the specified use by taking the same type of action (resolution) it employed to previously commit those amounts. Committed fund balance also incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned - Amounts in the assigned fund balance classification are intended to be used by the District for specific purposes, but do not meet the criteria to be classified as restricted nor committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the general fund, assigned amounts represent intended uses established by policies of the District Board of Education, which includes giving the Treasurer the authority to constrain monies for intended purposes. Unassigned - Unassigned fund balance is the residual classification for the general fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is only used to report a deficit fund balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. The District applies restricted resources first when expenditures are incurred for purposes for which restricted and unrestricted (committed, assigned, and unassigned) fund balance is available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. Q. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenses/expenditures in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. Repayments from funds responsible for particular expenses/expenditures to the funds that initially paid for them are not presented on the basic financial statements. The District did not report any interfund activity during fiscal year R. Estimates The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and accompanying notes. Actual results may differ from those estimates. 36

113 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) S. Extraordinary and Special Items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Board of Education and that are either unusual in nature or infrequent in occurrence. Neither type of transaction occurred during fiscal year NOTE 3 - ACCOUNTABILITY AND COMPLIANCE A. Change in Accounting Principles For fiscal year 2014, the District has implemented GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. GASB Statement No. 70 improves the recognition, measurement, and disclosures for state and local governments that have extended or received financial guarantees that are nonexchange transactions. The implementation of GASB Statement No. 70 did not have an effect on the financial statements of the District. B. Deficit Fund Balances Fund balances at June 30, 2014 included the following individual fund deficits: Nonmajor governmental funds Deficit Vocational education enhancement $ 2 Race to the top 6,289 IDEA, part B 7,895 Title I 28,328 Improving teacher quality 119 The general fund is liable for any deficits in these funds and provides transfers when cash is required, not when accruals occur. The deficit fund balances are a result of adjustments for accrued liabilities and the reporting of short-term interfund loans as a fund liability rather than as an other financing source. NOTE 4 - DEPOSITS AND INVESTMENTS State statutes classify monies held by the District into three categories. Active deposits are public deposits necessary to meet current demands on the treasury. Such monies must be maintained either as cash in the District treasury, in commercial accounts payable or withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts. Inactive deposits are public deposits that the Board of Education has identified as not required for use within the current five year period of designation of depositories. Inactive deposits must either be evidenced by certificates of deposit maturing not later than the end of the current period of designation of depositories, or by savings or deposit accounts including, but not limited to, passbook accounts. 37

114 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) Interim deposits are deposits of interim monies. Interim monies are those monies which are not needed for immediate use, but which will be needed before the end of the current period of designation of depositories. Interim deposits must be evidenced by time certificates of deposit maturing not more than one year from the date of deposit or by savings or deposit accounts including passbook accounts. Interim monies may be deposited or invested in the following securities: 1. United States Treasury Notes, Bills, Bonds, or any other obligation or security issued by the United States Treasury or any other obligation guaranteed as to principal and interest by the United States; 2. Bonds, notes, debentures, or any other obligations or securities issued by any federal government agency or instrumentality, including, but not limited to, the Federal National Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation, Government National Mortgage Association, and Student Loan Marketing Association. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities; 3. Written repurchase agreements in the securities listed above provided that the market value of the securities subject to the repurchase agreement must exceed the principal value of the agreement by at least two percent and be marked to market daily, and that the term of the agreement must not exceed thirty days; 4. Bonds and other obligations of the State of Ohio; 5. No-load money market mutual funds consisting exclusively of obligations described in items (1) and (2) above and repurchase agreements secured by such obligations, provided that investments in securities described in this division are made only through eligible institutions; 6. The State Treasurer's investment pool (STAR Ohio); 7. Certain banker s acceptance and commercial paper notes for a period not to exceed one hundred eighty days from the purchase date in an amount not to exceed twenty-five percent of the interim monies available for investment at any one time; and, 8. Under limited circumstances, corporate debt interests rated in either of the two highest classifications by at least two nationally recognized rating agencies. Protection of the District's deposits is provided by the Federal Deposit Insurance Corporation (FDIC), by eligible securities pledged by the financial institution as security for repayment, by surety company bonds deposited with the Treasurer by the financial institution or by a single collateral pool established by the financial institution to secure the repayment of all public monies deposited with the institution. 38

115 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) Investments in stripped principal or interest obligations, reverse repurchase agreements and derivatives are prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage and short selling are also prohibited. An investment must mature within five years from the date of purchase unless matched to a specific obligation or debt of the District, and must be purchased with the expectation that it will be held to maturity. Investments may only be made through specified dealers and institutions. Payment for investments may be made only upon delivery of the securities representing the investments to the Treasurer or, if the securities are not represented by a certificate, upon receipt of confirmation of transfer from the custodian. A. Cash on Hand At June 30, 2014, the District had $3,915 in undeposited cash on hand, which is included on the basic financial statements of the District as part of equity in pooled cash and cash equivalents. B. Deposits with Financial Institutions At June 30, 2014, the carrying amount of all District deposits was $5,621,125. Based on the criteria described in GASB Statement No. 40, Deposits and Investment Risk Disclosures, as of June 30, 2014, $1,175,572 of the District s bank balance of $5,939,551 was exposed to custodial risk as discussed below, while $4,763,979 was covered by the FDIC. Custodial credit risk is the risk that, in the event of bank failure, the District s deposits may not be returned. All deposits are collateralized with eligible securities in amounts equal to at least 105% of the carrying value of the deposits. Such collateral, as permitted by the Ohio Revised Code, is held in single financial institution collateral pools at Federal Reserve Banks, or at member banks of the federal reserve system, in the name of the respective depository bank and pledged as a pool of collateral against all of the public deposits it holds or as specific collateral held at the Federal Reserve Bank in the name of the District. The District has no deposit policy for custodial credit risk beyond the requirements of State statute. Although the securities were held by the pledging institutions trust department and all statutory requirements for the deposit of money had been followed, noncompliance with federal requirements could potentially subject the District to a successful claim by the FDIC. C. Investments As of June 30, 2014, the District had the following investment and maturity: Investment Maturity 6 Months or Investment type Fair Value Less STAR Ohio $ 2,634,720 $ 2,634,720 Interest Rate Risk: Interest rate risk arises when potential purchasers of debt securities will not agree to pay face value for those securities if interest rates subsequently increase. As a means of limiting its exposure to fair value losses arising from rising interest rates and according to State law, the District s investment policy limits investment portfolio maturities to five years or less. 39

116 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued) Credit Risk: Standard & Poor s has assigned STAR Ohio an AAAm money market rating. Ohio law requires that STAR Ohio maintain the highest rating provided by at least one nationally recognized standard rating service. The District s investment policy does not specifically address credit risk beyond requiring the District to only invest in securities authorized by State statute. Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The District has no investment policy dealing with investment custodial credit risk beyond the requirement in State statute that prohibits payment for investments prior to the delivery of the securities representing such investments to the Treasurer or qualified trustee. Concentration of Credit Risk: The District places no limit on the amount that may be invested in any one issuer. The following table includes the percentage of each investment type held by the District at June 30, 2014: Investment type Fair Value % of Total STAR Ohio $ 2,634, D. Reconciliation of Cash and Investments to the Statement of Net Position The following is a reconciliation of cash and investments as reported in the note above to cash and investments as reported on the statement of net position as of June 30, 2014: Cash and investments per note Carrying amount of deposits $ 5,621,125 Investments 2,634,720 Cash on hand 3,915 Total $ 8,259,760 NOTE 5 - INTERFUND TRANSACTIONS Cash and investments per statement of net position Governmental activities $ 8,139,476 Private-purpose trust funds 47,748 Agency funds 72,536 Total $ 8,259,760 A. Interfund loans receivable/payable consisted of the following at June 30, 2014, as reported on the fund financial statements: Receivable Fund Payable Funds Amount General fund Nonmajor governmental funds $ 10,388 The primary purpose of interfund balances is to cover costs in specific funds where revenues were not received by June 30. The interfund balances will be repaid once the anticipated revenues are received. All interfund balances are expected to be repaid within one year. 40

117 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 5 - INTERFUND TRANSACTIONS - (Continued) Interfund balances between governmental funds are eliminated on the government-wide financial statements; therefore, no internal balances at June 30, 2014 are reported on the statement of net position. B. Amounts due to/from other funds consisted of the following at June 30, 2014, as reported on the fund financial statements: Receivable Fund Payable Funds Amount General fund Nonmajor governmental funds $ 117,863 The primary purpose of these interfund balances is to cover negative cash balances in specific funds where revenues were requested, but were not received by June 30. These interfund balances will be repaid once the anticipated revenues are received. The District met the exception requirements of Ohio Revised Code Section , allowing negative cash balances in these funds. Interfund balances between governmental funds are eliminated on the government-wide financial statements; therefore, no internal balances at June 30, 2014 are reported on the statement of net position. NOTE 6 - PROPERTY TAXES Property taxes are levied and assessed on a calendar year basis while the District fiscal year runs from July through June. First half tax collections are received by the District in the second half of the fiscal year. Second half tax distributions occur in the first half of the following fiscal year. Property taxes include amounts levied against all real property and public utility property. Real property tax revenues received in calendar year 2014 represent the collection of calendar year 2013 taxes. Real property taxes received in calendar year 2014 were levied after April 1, 2013, on the assessed values as of January 1, 2013, the lien date. Assessed values for real property taxes are established by State statute at 35 percent of appraised market value. Real property taxes are payable annually or semiannually. If paid annually, payment is due December 31; if paid semiannually, the first payment is due December 31, with the remainder payable by June 20. Under certain circumstances, State statute permits alternate payment dates to be established. Public utility property tax revenues received in calendar year 2014 represent the collection of calendar year 2013 taxes. Public utility real and personal property taxes received in calendar year 2014 became a lien on December 31, 2012, were levied after April 1, 2013, and are collected with real property taxes. Public utility real property is assessed at 35 percent of true value; public utility tangible personal property is currently assessed at varying percentages of true value. The District receives property taxes from Delaware, Morrow, Union, and Marion Counties. The County Auditors periodically advance to the District its portion of the taxes collected. Second-half real property tax payments collected by the Counties by June 30, 2014, are available to finance fiscal year 2014 operations. The amount available as an advance at June 30, 2014 was $2,326,476 in the general fund, $490,518 in the debt service fund, and $171,110 in the permanent improvement fund (a nonmajor governmental fund). This amount is recorded as revenue. 41

118 NOTE 6 - PROPERTY TAXES - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) The amount available for advance at June 30, 2013 was $1,930,295 in the general fund, $377,176 in the debt service fund, and $158,164 in the permanent improvement fund (a nonmajor governmental fund). The amount of second-half real property taxes available for advance at fiscal year end can vary based on the date the tax bills are sent. Accrued property taxes receivable includes real property, public utility property and delinquent tangible personal property taxes which are measurable as of June 30, 2014 and for which there is an enforceable legal claim. Although total property tax collections for the next fiscal year are measurable, only the amount of real property taxes available as an advance at June 30 was levied to finance current fiscal year operations and is reported as revenue at fiscal year end. The portion of the receivable not levied to finance current fiscal year operations is offset by a credit to deferred inflows of resources. On the accrual basis of accounting, collectible delinquent property taxes have been recorded as a receivable and revenue, while on a modified accrual basis of accounting the revenue has been reported as a deferred inflow of resources. The assessed values upon which the fiscal year 2014 taxes were collected are: 2013 Second 2014 First Half Collections Half Collections Amount Percent Amount Percent Agricultural/residential and other real estate $ 495,907, $ 500,110, Public utility personal 13,970, ,783, Total $ 509,878, $ 514,894, Tax rate per $1,000 of assessed valuation $ $ NOTE 7 - RECEIVABLES Receivables at June 30, 2014 consisted of property taxes, income taxes, accounts (student fees and billings for user charged services), accrued interest, and intergovernmental grants and entitlements. All receivables are considered collectible in full due to the ability to foreclose for the nonpayment of taxes, the stable condition of State programs, and the current year guarantee of federal funds. All receivables, except property taxes, are expected to be collected within one year. Property taxes, although ultimately collectible, include some portion of delinquencies that will not be collected within one year. A list of the principal items of receivables reported on the statement of net position follows: Governmental activities: Property taxes $ 12,209,133 Income taxes 2,570,364 Accounts 87,027 Accrued interest 2,077 Intergovernmental 337,893 Total $ 15,206,494 42

119 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 8 - INCOME TAX The District levies a voted tax of 1 percent for general operations on the income of residents and of estates. The tax was effective on January 1, 1993, and is for a continuing period. Employers of residents are required to withhold income tax on compensation and remit the tax to the State. Taxpayers are required to file an annual return. The State makes quarterly distributions to the District after withholding amounts for administrative fees and estimated refunds. Income tax revenue of $5,605,813 was credited to the general fund during fiscal year NOTE 9 - CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2014, was as follows: Balance Balance July 1, 2013 Additions Deductions June 30, 2014 Governmental activities: Capital assets, not being depreciated: Land $ 498,673 $ - $ - $ 498,673 Total capital assets, not being depreciated 498, ,673 Capital assets, being depreciated: Land improvements 1,637, ,885-2,182,497 Buildings and improvements 32,381, ,381,066 Furniture and equipment 1,954, ,588 (18,934) 2,681,844 Vehicles 2,493, ,464-2,673,150 Infrastructure 154, ,668 Total capital assets, being depreciated 38,621,222 1,470,937 (18,934) 40,073,225 Less: accumulated depreciation: Land improvements (614,606) (64,071) - (678,677) Buildings and improvements (5,941,267) (441,679) - (6,382,946) Furniture and equipment (1,300,192) (111,321) 18,934 (1,392,579) Vehicles (1,447,335) (221,900) - (1,669,235) Infrastructure (75,069) (2,734) - (77,803) Total accumulated depreciation (9,378,469) (841,705) 18,934 (10,201,240) Depreciable capital assets, net 29,242, ,232-29,871,985 Governmental activities capital assets, net $ 29,741,426 $ 629,232 $ - $ 30,370,658 Buckeye Valley North Elementary School was closed for the school year. The District s management retains the possibility of re-opening this elementary school once funding becomes available. 43

120 NOTE 9 - CAPITAL ASSETS - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) Depreciation expense was charged to governmental activities as follows: Instruction: Regular $ 387,975 Special 15,382 Vocational 5,697 Support services: Pupil 10,887 Instructional staff 24,565 Administration 15,250 Fiscal 718 Operations and maintenance 61,266 Pupil transportation 206,584 Operation of non-instructional services: Other non-instructional services 12,976 Food service operations 14,487 Extracurricular activities 85,918 Total depreciation expense $ 841,705 NOTE 10 - RISK MANAGEMENT A. Property and Liability The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. For fiscal year 2014, the District participated in the Ohio School Plan (Plan), an insurance purchasing pool. Each participant enters into an individual agreement with the Plan for insurance coverage and pays annual premiums to the Plan based on the types and limits of coverage and deductibles selected by the participant. Coverage provided by the Ohio School Plan is as follows: Automobile Liability $2,000,000 Uninsured Motorist 1,000,000 Buildings and Contents/Boiler and Machinery 72,021,566 General District Liability Per Occurrence 2,000,000 Total Per Year 4,000,000 Excess Liability 1,000,000 Settled claims have not exceeded this commercial coverage in any of the past three fiscal years, and there has been no significant reduction in insurance coverage from the prior fiscal year. 44

121 NOTE 10 - RISK MANAGEMENT - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) B. Workers Compensation Rating Plan During fiscal year 2014, the District participated in the Ohio School Boards Association Workers Compensation Group Rating Plan (GRP), an insurance purchasing pool. The intent of the GRP is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the GRP. The workers compensation experience of the participants is calculated as one experience and a common premium rate is applied to all participants in the GRP. Each participant pays its workers compensation premium to the State based on the rate for the GRP rather than its individual rate. Participation in the GRP is limited to participants that can meet the GRP s selection criteria. The firm of CompManagement, Inc. provides administrative, cost control, and actuarial services to the GRP. C. Employee Group Insurance Benefits During fiscal year 2014, the District participated in the Stark County Schools Council of Governments Health Benefits Program to provide employee medical/surgical and dental benefits. The Stark County Schools Council s Health Benefits Program is a shared risk pool comprised of an 85-member council (66 of which are member school districts). Rates are set through an annual calculation process. The District pays a monthly contribution, which is paid in a common fund from which claims payments are made for all participants regardless of claims flow. The Board of Directors has the right to return monies to an exiting participant subsequent to the settlements of all outstanding expenses and claims. NOTE 11 - PENSION PLANS A. School Employees Retirement System Plan Description - The District contributes to the School Employees Retirement System (SERS), a cost-sharing, multiple-employer defined benefit pension plan. SERS provides retirement, disability, survivor benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Authority to establish and amend benefits is provided by Chapter 3309 of the Ohio Revised Code. SERS issues a publicly available, stand-alone financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the School Employees Retirement System, 300 East Broad Street, Suite 100, Columbus, Ohio It is also posted on the SERS Ohio website, under Employers/Audit Resources. Funding Policy - Plan members are required to contribute 10 percent of their annual covered salary and the District is required to contribute at an actuarially determined rate. The current District rate is 14 percent of annual covered payroll. A portion of the District s contribution is used to fund pension obligations with the remainder being used to fund health care benefits. For fiscal year 2014, percent and 0.05 percent of annual covered salary was the portion used to fund pension obligations and death benefits, respectively. The contribution requirements of plan members and employers are established and may be amended by the SERS Retirement Board up to a statutory maximum amount of 14 percent for plan members and 14 percent for employers. Chapter 3309 of the Ohio Revised Code provides statutory authority for member and employer contributions. 45

122 NOTE 11 - PENSION PLANS - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) The District s required contributions for pension obligations and death benefits to SERS for the fiscal years ended June 30, 2014, 2013 and 2012 were $345,772, $342,703 and $380,725, respectively; percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and B. State Teachers Retirement System of Ohio Plan Description - The District participates in the State Teachers Retirement System of Ohio (STRS Ohio), a cost-sharing, multiple-employer public employee retirement plan. STRS Ohio provides retirement and disability benefits to members and death and survivor benefits to beneficiaries. STRS Ohio issues a stand-alone financial report that may be obtained by writing to STRS Ohio, 275 E. Broad St., Columbus, OH , by calling (888) , or by visiting the STRS Ohio website at under Publications. New members have a choice of three retirement plans, a Defined Benefit (DB) Plan, a Defined Contribution (DC) Plan and a Combined Plan. The DB plan offers an annual retirement allowance based on final average salary times a percentage that varies based on years of service, or an allowance based on a member s lifetime contributions and earned interest matched by STRS Ohio funds divided by an actuarially determined annuity factor. The DC Plan allows members to place all their member contributions and employer contributions equal to 10.5 percent of earned compensation into an investment account. Investment decisions are made by the member. A member is eligible to receive a retirement benefit at age 50 and termination of employment. The member may elect to receive a lifetime monthly annuity or a lump sum withdrawal. The Combined Plan offers features of both the DC Plan and the DB Plan. In the Combined Plan, member contributions are invested by the member, and employer contributions are used to fund the defined benefit payment at a reduced level from the regular DB Plan. The DB portion of the Combined Plan payment is payable to a member on or after age 60; the DC portion of the account may be taken as a lump sum or converted to a lifetime monthly annuity at age 50. Benefits are established by Chapter 3307 of the Ohio Revised Code. A DB or Combined Plan member with five or more years credited service who becomes disabled may qualify for a disability benefit. Eligible spouses and dependents of these active members who die before retirement may qualify for survivor benefits. Members in the DC Plan who become disabled are entitled only to their account balance. If a member of the DC Plan dies before retirement benefits begin, the member s designated beneficiary is entitled to receive the member s account balance. Funding Policy - For fiscal year 2014, plan members were required to contribute 11 percent of their annual covered salaries. The District was required to contribute 14 percent; 13 percent was the portion used to fund pension obligations. Contribution rates are established by the State Teachers Retirement Board, upon recommendations of its consulting actuary, not to exceed statutory maximum rates of 14 percent for members and 14 percent for employers. Chapter 3307 of the Ohio Revised Code provides statutory authority for member and employer contributions. 46

123 NOTE 11 - PENSION PLANS - (Continued) BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) The District s required contributions for pension obligations to STRS Ohio for the fiscal years ended June 30, 2014, 2013 and 2012 were $1,162,983, $1,122,665 and $1,205,389, respectively; percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and Contributions to the DC and Combined Plans for fiscal year 2014 were $56,720 made by the District and $44,566 made by the plan members. C. Social Security System Effective July 1, 1991, all employees not otherwise covered by the SERS/STRS Ohio have an option to choose Social Security or the SERS/STRS Ohio. As of June 30, 2014 certain members of the Board of Education have elected Social Security. The District s liability is 6.2 percent of wages paid. NOTE 12 - POSTEMPLOYMENT BENEFITS A. School Employees Retirement System Plan Description - The District participates in two cost-sharing, multiple employer postemployment benefit plans administered by the School Employees Retirement System (SERS) for non-certificated retirees and their beneficiaries, a Health Care Plan and a Medicare Part B Plan. The Health Care Plan includes hospitalization and physicians' fees through several types of plans including HMO s, PPO s, Medicare Advantage, and traditional indemnity plans. A prescription drug program is also available to those who elect health coverage. SERS employs two third-party administrators and a pharmacy benefit manager to manage the self-insurance and prescription drug plans, respectively. The Medicare Part B Plan reimburses Medicare Part B premiums paid by eligible retirees and beneficiaries as set forth in Section of the Ohio Revised Code. Qualified benefit recipients who pay Medicare Part B premiums may apply for and receive a monthly reimbursement from SERS. The reimbursement amount is limited by statute to the lesser of the January 1, 1999 Medicare Part B premium or the current premium. The Medicare Part B monthly premium for calendar year 2014 was $ for most participants, but could be as high as $ per month depending on their income and the SERS reimbursement to retirees was $ Benefit provisions and the obligations to contribute are established by the System based on authority granted by State statute. The financial reports of both Plans are included in the SERS Comprehensive Annual Financial Report which is available by contacting SERS at 300 East Broad St., Suite 100, Columbus, Ohio It is also posted on the SERS Ohio website, under Employers/Audit Resources. Funding Policy - State statute permits SERS to fund the health care benefits through employer contributions. Each year, after the allocation for statutorily required benefits, the Retirement Board allocates the remainder of the employer contribution of 14 percent of covered payroll to the Health Care Fund. The Health Care Fund was established and is administered in accordance with Internal Revenue Code Section 105(e). For 2014, 0.14 percent of covered payroll was allocated to health care. An additional health care surcharge on employers is collected for employees earning less than an actuarially determined minimum compensation amount, pro-rated according to service credit earned. Statutes provide that no employer shall pay a health care surcharge greater than 2.0 percent of that employer s SERS-covered payroll; nor may SERS collect in aggregate more than 1.5 percent of the statewide SERS-covered payroll for the health care surcharge. For fiscal year 2014, the actuarially determined amount was $20,

124 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 12 - POSTEMPLOYMENT BENEFITS - (Continued) Active members do not contribute to the postemployment benefit plans. The Retirement Board establishes the rules for the premiums paid by the retirees for health care coverage for themselves and their dependents or for their surviving beneficiaries. Premiums vary depending on the plan selected, qualified years of service, Medicare eligibility and retirement status. The District s contributions for health care (including surcharge) for the fiscal years ended June 30, 2014, 2013 and 2012 were $53,325, $47,455 and $59,606, respectively; percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and The Retirement Board, acting with advice of the actuary, allocates a portion of the employer contribution to the Medicare B Fund. For fiscal year 2014, this actuarially required allocation was 0.76 percent of covered payroll. The District s contributions for Medicare Part B for the fiscal years ended June 30, 2014, 2013 and 2012 were $20,060, $19,359 and $22,484, respectively; percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and B. State Teachers Retirement System of Ohio Plan Description - The District contributes to the cost sharing, multiple employer defined benefit Health Plan (the Plan ) administered by the State Teachers Retirement System of Ohio (STRS Ohio) for eligible retirees who participated in the defined benefit or combined pension plans offered by STRS Ohio. Benefits include hospitalization, physicians fees, prescription drugs and reimbursement of monthly Medicare Part B premiums. The Plan is included in the report of STRS Ohio which may be obtained by visiting under Publications or by calling (888) Funding Policy - Ohio law authorizes STRS Ohio to offer the Plan and gives the Retirement Board authority over how much, if any, of the health care costs will be absorbed by STRS Ohio. Active employee members do not contribute to the Plan. All benefit recipients pay a monthly premium. Under Ohio law, funding for post-employment health care may be deducted from employer contributions. For 2014, STRS Ohio allocated employer contributions equal to 1 percent of covered payroll to the Health Care Stabilization Fund. The District s contributions for health care for the fiscal years ended June 30, 2014, 2013 and 2012 were $89,460, $86,359 and $92,722, respectively; percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and

125 NOTE 13 - OTHER EMPLOYEE BENEFITS A. Compensated Absences BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) The criteria for determining vacation leave and sick leave benefits are derived from negotiated agreements and State laws. Classified employees earn ten to twenty days of vacation leave per year, depending upon length of service. Accumulated unused vacation leave is paid to classified employees upon termination of employment. Teachers do not earn vacation leave. Teachers, administrators, and classified employees earn sick leave at a rate of one and onefourth days per month. Sick leave may be accumulated to a maximum of two hundred fortyfive days for all employees. Upon retirement, payment is made for one-fourth of their accrued, but unused sick leave credit. In addition, sick leave in excess of one hundred twenty days is calculated on a basis of the total accumulated sick leave days up to and including two hundred thirty days multiplied by for classified employees, and up to and including two hundred thirty days multiplied by for certified employees. B. Health Care Benefits During fiscal year 2014, the District offered medical/surgical and dental insurance benefits to employees through the Stark County Schools Council of Governments Health Benefits Program. Employees share the cost of the monthly premium with the Board of Education. The employee premium varies depending on the terms of the union contract. NOTE 14 - COMMITMENTS The District utilizes encumbrance accounting as part of its budgetary controls. Encumbrances outstanding at year end may be reported as part of restricted, committed, or assigned classifications of fund balance. At year end, the District s commitments for encumbrances in the governmental funds were as follows: Year End Fund Encumbrances General fund $ 361,231 Nonmajor governmental funds 259,048 Total $ 620,279 49

126 NOTE 15 - LONG-TERM OBLIGATIONS BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) A. During fiscal year 2014, the following changes occurred in governmental activities long-term obligations: Balance Balance Amounts Outstanding Outstanding Due in July 1, 2013 Additions Deletions June 30, 2014 One Year General Obligation Bonds: School Building Bonds (Series 1995) Term Bonds % $ 2,195,000 $ - $ (685,000) $ 1,510,000 $ 725,000 Refunding School Building Bonds (Series 2004) Current Interest Bonds % 3,910,008 - (65,000) 3,845,008 - Capital Appreciation Bonds 204, ,992 17,454 Accreted Interest on Capital Appreciation Bonds 463,865 98, ,499 47,893 School Facilities Bonds (Series 2009) Current Interest Bonds 2.50%-5.00% 13,730,000 - (430,000) 13,300, ,000 Capital Appreciation Bonds 419, ,994 - Accreted Interest on Capital Appreciation Bonds 372, , ,219 - Total, general obligation bonds 21,296, ,925 (1,180,000) 20,347,712 1,230,347 Other Long-Term Obligations: Capital lease obligations 249, ,262 (185,877) 675, ,438 Compensated absences 1,534, ,341 (330,051) 1,436, ,439 Total, other long-term obligations 1,784, ,603 (515,928) 2,112, ,877 Total, all governmental activities long-term liabilities 23,081,000 $ 1,075,528 $ (1,695,928) 22,460,600 $ 1,700,224 Add: unamortized premiums 757, ,970 Total on statement of net position $ 23,838,982 $ 23,195,570 Compensated Absences - Compensated absences will be paid primarily from the general fund. Capital Lease Obligations - Capital lease obligations will be paid from the general fund and the permanent improvement fund (a nonmajor governmental fund). See Note 16 for details. B. School Building Bonds (Series 1995) - On December 1, 1995, the District issued $14,000,000 in voted general obligation bonds for improving and constructing school buildings and facilities. The bonds were issued for a twenty-five year period, with final maturity during fiscal year Interest payments on the bonds are due on June 1 and December 1 of each year. The interest rates on the bonds range from 5.00% to 6.85%. The bonds are being retired through the debt service fund. 50

127 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 15 - LONG-TERM OBLIGATIONS - (Continued) C. Refunding School Building Bonds (Series 2004) - On October 1, 2004, the District issued refunding bonds in the amount of $4,650,000 to partially refund bonds previously issued in fiscal year 1996 for improving and constructing school buildings and facilities. The refunding bond issue is comprised of both current interest bonds and capital appreciation bonds in the amounts of $4,445,008 and $204,992, respectively. The bonds were issued for a sixteen year period, with final maturity during fiscal year Interest payments on the current interest bonds are due on June 1 and December 1 of each year. The bonds are being retired through the debt service fund. The current interest bonds are subject to prior redemption on or after December 1, 2014, by and at the sole option of the District, either in whole on any date or in part on any interest payment date, and in integral multiples of $5,000, at 100% of the principal amount redeemed plus accrued interest to the redemption date. The capital appreciation bonds are not subject to prior redemption. The capital appreciation bonds mature on December 1, 2014, 2015 and 2016 (stated interest 14.24%) at a redemption price equal to 100% of the principal, plus accrued interest to the redemption date. The accreted value at maturity for the capital appreciation bonds is $1,050,000. Total accreted interest of $562,499 has been included on the statement of net position at June 30, D. School Facilities Bonds (Series 2009) - On April 20, 2009, the District issued general obligation bonds to finance building construction and improvements. The issue is comprised of both current interest bonds, par value $15,580,000, and capital appreciation bonds, par value $419,994. The interest rate on the current interest bonds ranges from 2.50% to 5.00%. The capital appreciation bonds mature on December 1, 2015, 2016 and 2017 (stated interest 16.05%) at a redemption price equal to 100% of the principal, plus accrued interest to the redemption date. The accreted value at maturity for the capital appreciation bonds is $1,350,000. Total accreted interest of $505,219 has been included on the statement of net position at June 30, These bonds are general obligations of the District for which the full faith and credit of the District is pledged for repayment. Accordingly, such unmatured obligations of the District are accounted for on the statement of net position. Payments of principal and interest relating to this bond issuance are recorded as expenditures in the debt service fund. Interest payments on the current interest bonds are due on June 1 and December 1 of each year. The final maturity stated for this bond issuance is December 1, E. Principal and interest requirements to retire long-term general obligation bonds outstanding at June 30, 2014, were as follows: Fiscal Year School Building Bonds - Series 1995 Ending June 30, Principal Interest Total 2015 $ 725,000 $ 78,603 $ 803, ,000 26, ,886 Total $ 1,510,000 $ 105,489 $ 1,615,489 51

128 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 15 - LONG-TERM OBLIGATIONS - (Continued) Fiscal Year Current Interest Bonds - Series 2004 Capital Appreciation Bonds - Series 2004 Ending June 30, Principal Interest Total Principal Interest Total 2015 $ - $ 152,890 $ 152,890 $ 17,454 $ 52,546 $ 70, , ,890 15,211 54,789 70, , , , , , , ,145 1,045, ,000 98,400 1,048, ,985,008 80,100 2,065, Total $ 3,845,008 $ 772,315 $ 4,617,323 $ 204,992 $ 845,008 $ 1,050,000 Fiscal Year Current Interest Bonds - Series 2009 Capital Appreciation Bonds - Series 2009 Ending June 30, Principal Interest Total Principal Interest Total 2015 $ 440,000 $ 597,138 $ 1,037,138 $ - $ - $ , , , , , , , , , , , , , , , , ,100 1,032, ,550,000 2,620,967 5,170, ,115,000 2,029,883 5,144, ,905,000 1,213,590 5,118, ,840, ,750 3,057, Total $ 13,300,000 $ 9,033,041 $ 22,333,041 $ 419,994 $ 930,006 $ 1,350,000 F. Legal Debt Margin The Ohio Revised Code provides that voted net general obligation debt of the District shall never exceed 9% of the total assessed valuation of the District. The Code further provides that unvoted indebtedness shall not exceed 1/10 of 1% of the property valuation of the District. The Code additionally states that unvoted indebtedness related to energy conservation debt shall not exceed 9/10 of 1% of the property valuation of the District. The assessed valuation used in determining the District s legal debt margin has been modified by House Bill 530 which became effective March 30, In accordance with House Bill 530, the assessed valuation used in the District s legal debt margin calculation excluded tangible personal property used in business, telephone or telegraph property, interexchange telecommunications company property, and personal property owned or leased by a railroad company and used in railroad operations. The effects of these debt limitations at June 30, 2014, are a voted debt margin of $28,428,606 (including available funds of $1,368,102) and an unvoted debt margin of $514,894. NOTE 16 - CAPITAL LEASES - LESSEE DISCLOSURE In the current fiscal year, the District entered into a capital lease agreement for copier equipment. In a prior fiscal year, the District entered a capital lease agreement for the acquisition of computer and technology equipment. These lease agreements meet the criteria of a capital lease as defined by generally accepted accounting principles, which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee. 52

129 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 16 - CAPITAL LEASES - LESSEE DISCLOSURE (Continued) Capital lease payments have been reclassified and are reflected as debt service expenditures in the fund financial statements for the governmental funds. These expenditures are reported as function expenditures on the budgetary statements. The computer and technology equipment acquired by the capital lease in fiscal year 2013 did not meet the District s capitalization threshold, and therefore is not included in the District s capital assets. Capital assets consisting of copier equipment have been capitalized in the amount of $612,262. This amount represents the present value of the minimum lease payments at the time of acquisition. Accumulated depreciation as of June 30, 2014 for this copier equipment was $61,226, leaving a current book value of $551,036. A corresponding liability was recorded on the statement of net position. Principal and interest payments in fiscal year 2014 totaled $185,877 and $24,847, respectively. These amounts are reflected as debt service expenditures in the general fund and the permanent improvement fund (a nonmajor governmental fund). The following is a schedule of the future long-term minimum lease payments required under the capital leases and the present value of the minimum lease payments as of June 30, 2014: Governmental Fiscal Year Ending June 30, Activities 2015 $ 268, , , , ,889 Total 743,305 Less: amount representing interest (67,339) Present value of minimum lease payments $ 675,966 NOTE 17 - DONOR RESTRICTED ENDOWMENTS The District s private-purpose trust fund activity includes donor restricted endowments. Endowments, in the amount of $25,000, represent the principal portion. The amount of net appreciation in donor restricted investments that is available for expenses by the District is $22,748, which is included as net position held in trust for scholarships. State law permits the District to appropriate, for purposes consistent with the endowment s intent, net appreciation, realized and unrealized, unless the endowment terms specify otherwise. The endowments indicate that the interest should be used to provide scholarships each fiscal year. 53

130 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 18 - BUDGETARY BASIS OF ACCOUNTING While reporting financial position, results of operations, and changes in fund balance on the basis of accounting principles generally accepted in the United States of America (GAAP), the budgetary basis as provided by law is based upon accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The statement of revenues, expenditures and changes in fund balance - budget and actual (non- GAAP budgetary basis) presented for the general fund is presented on the budgetary basis to provide a meaningful comparison of actual results with the budget. The major differences between the budget basis and the GAAP basis are that: (a) Revenues and other financing sources are recorded when received in cash (budget basis) as opposed to when susceptible to accrual (GAAP basis); (b) Expenditures and other financing uses are recorded when paid in cash (budget basis) as opposed to when the liability is incurred (GAAP basis); (c) In order to determine compliance with Ohio law, and to reserve that portion of the applicable appropriation, total outstanding encumbrances (budget basis) are recorded as the equivalent of an expenditure, as opposed to assigned or committed fund balance for that portion of outstanding encumbrances not already recognized as an account payable (GAAP basis); (d) Advances-in and advances-out are operating transactions (budget basis) as opposed to balance sheet transactions (GAAP basis); (e) Investments are reported at fair value (GAAP basis) rather than cost (budget basis); and, (f) Some funds are included in the general fund (GAAP basis), but have separate legally adopted budgets (budget basis). The adjustments necessary to convert the results of operations for the year on the budget basis to the GAAP basis for the general fund is as follows: Net Change in Fund Balance General fund Budget basis $ 1,236,375 Net adjustment for revenue accruals 480,187 Net adjustment for expenditure accruals (322,988) Net adjustment for other sources/uses 328,977 Funds budgeted elsewhere (42,732) Adjustment for encumbrances 391,036 GAAP basis $ 2,070,855 Certain funds that are legally budgeted in separate fund classifications are considered part of the general fund on a GAAP basis. This includes the uniform school supplies fund, public school support fund, library/bv east opera fund, student age child care fund, recycling fund, and portions of the special trust fund. 54

131 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) NOTE 19 - SET-ASIDES The District is required by State law to annually set-aside certain general fund revenue amounts, as defined by statutory formula, for the acquisition and construction of capital improvements. Amounts not spent by the end of the fiscal year or offset by similarly restricted resources received during the year must be held in cash at fiscal year end. This amount must be carried forward to be used for the same purpose in future years. Expenditures and other applicable offsets exceeding the set-aside requirement may not be carried forward to the next fiscal year. The following cash basis information describes the change in the fiscal year end set-aside amount for capital improvements. Disclosure of this information is required by State statute. Capital Improvements Set-aside balance June 30, 2013 $ - Current year set-aside requirement 384,359 Current year offsets (770,873) Total $ (386,514) Balance carried forward to fiscal year 2015 $ - Set-aside balance June 30, 2014 $ - During fiscal year 2009, the District issued $15,999,994 in capital related school improvement bonds. These proceeds may be used to reduce the capital improvements set-aside amount for future years. The amount presented for prior year offset from bond proceeds is limited to an amount needed to reduce the capital improvements set-aside balance to $0. The District is responsible for tracking the amount of bond proceeds that may be used as an offset in future periods, which was $15,999,994 at June 30, NOTE 20 - CONTINGENCIES A. Grants The District receives significant financial assistance from numerous federal, State and local agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the District. However, in the opinion of management, any such disallowed claims will not have a material effect on the financial position of the District. B. Litigation The District is a party to legal proceedings. The District management is of the opinion that ultimate disposition of these claims, if any, will not have a material effect on the financial condition of the District. A loss is not anticipated at this time. 55

132 NOTE 20 CONTINGENCIES (Continued) C. Other BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY, OHIO NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 (Continued) The Auditor of State is currently performing special audit procedures to assess whether certain District arrangements and payments constitute an unlawful use of public funds. The results of these arrangements and payments are still pending as of the date of this report. Any disallowed claims resulting from the audit could become a liability of the General Fund or other applicable funds. However, the effect of any such disallowed claims on the overall financial position of the School District at June 30, 2014, if applicable, cannot be determined at this time and in the opinion of management, any such disallowed claims will not have a material adverse effect. NOTE 21 - SUBSEQUENT EVENT On September 4, 2014, the District issued $3,795,000 in general obligation refunding bonds to refund a portion of the District s series 2004 general obligation refunding bonds. The bonds bear interest at rates ranging from 1.00% to 4.00%, and have a final maturity of December 1,

133 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY SCHEDULE OF FEDERAL AWARDS RECEIPTS AND EXPENDITURES FOR THE YEAR ENDED JUNE 30, 2014 FEDERAL GRANTOR Federal Pass Through Grantor Grant Award CFDA Program Title Year Number Receipts Expenditures UNITED STATES DEPARTMENT OF AGRICULTURE Passed Through Ohio Department of Education Nutrition Cluster: Non-Cash Assistance (Food Distribution) National School Lunch Program $ 44,569 $ 44,569 Cash Assistance School Breakfast Program ,485 35,485 National School Lunch Program , ,515 Total Nutrition Cluster 312, ,569 Total United States Department of Agriculture 312, ,569 UNITED STATES DEPARTMENT OF EDUCATION Passed Through Ohio Department of Education Title I Grants to Local Educational Agencies , , ,220 22,131 Total Title I Grants to Local Educational Agencies 168, ,902 Special Education Cluster: Special Education Grants to States , ,046 Preschool Special Education Grants ,688 4,688 Total Special Education Cluster 304, ,734 Improving Teacher Quality State Grants ,061 55, Total Improving Teacher Quality State Grants 55,061 55,534 ARRA- Race to the Top ,982 70, ,777 20,798 Total ARRA- Race to the Top 55,759 90,837 Total United States Department of Education 582, ,007 Total Federal Awards $ 895,432 $ 1,058,576 The accompanying notes are an integral part of this schedule. 57

134 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY NOTES TO THE SCHEDULE OF FEDERAL AWARDS RECEIPTS AND EXPENDITURES FISCAL YEAR ENDED JUNE 30, 2014 NOTE A - SIGNIFICANT ACCOUNTING POLICIES The accompanying Schedule of Federal Awards Receipts and Expenditures (the Schedule) reports the Buckeye Valley Local School District s (the District s) federal award programs receipts and disbursements. The Schedule has been prepared on the cash basis of accounting. NOTE B - CHILD NUTRITION CLUSTER The District commingles cash receipts from the U.S. Department of Agriculture with similar State grants. When reporting expenditures on this Schedule, the District assumes it expends federal monies first. NOTE C FOOD DONATION PROGRAM The District reports commodities consumed on the Schedule at the entitlement value. 58

135 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS REQUIRED BY GOVERNMENT AUDITING STANDARDS Buckeye Valley Local School District Delaware County 679 Coover Road Delaware, Ohio To the Board of Education: We have audited, in accordance with auditing standards generally accepted in the United States and the Comptroller General of the United States Government Auditing Standards, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Buckeye Valley Local School District, Delaware County, Ohio, (the District) as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District s basic financial statements and have issued our report thereon dated March 18, Internal Control Over Financial Reporting As part of our financial statement audit, we considered the District s internal control over financial reporting (internal control) to determine the audit procedures appropriate in the circumstances to the extent necessary to support our opinion on the financial statements, but not to the extent necessary to opine on the effectiveness of the District s internal control. Accordingly, we have not opined on it. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, when performing their assigned functions, to prevent, or detect and timely correct misstatements. A material weakness is a deficiency, or combination of internal control deficiencies resulting in a reasonable possibility that internal control will not prevent or detect and timely correct a material misstatement of the Entity s financial statements. 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 internal control deficiencies that might be material weaknesses or significant deficiencies. Given these limitations, we did not identify any deficiencies in internal control that we consider material weaknesses. However, unidentified material weaknesses may exist. 59

136 Buckeye Valley Local School District Delaware County Independent Auditor s Report on Internal Control Over Financial Reporting and Other Matters Required by Government Auditing Standards Page 2 Compliance and Other Matters As part of reasonably assuring whether the District s financial statements are free of material misstatement, we tested its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could directly and materially affect the determination of financial statement amounts. However, opining on compliance with those provisions was not an objective of our audit and accordingly, we do not express an opinion. The results of our tests disclosed no instances of noncompliance or other matters we must report under Government Auditing Standards. Purpose of this Report This report only describes the scope of our internal control and compliance testing and our testing results, and does not opine on the effectiveness of the District s internal control or on compliance. This report is an integral part of an audit performed under Government Auditing Standards in considering the District s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Dave Yost Auditor of State Columbus, Ohio March 18,

137 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Buckeye Valley Local School District Delaware County 679 Coover Road Delaware, Ohio To the Board of Education: Report on Compliance for Each Major Federal Program We have audited the Buckeye Valley Local School District s (the District s) compliance with the applicable requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133, Compliance Supplement that could directly and materially affect each of the Buckeye Valley Local School District s major federal programs for the year ended June 30, The Summary of Audit Results in the accompanying schedule of findings identifies the District s major federal programs. Management s Responsibility The District s Management is responsible for complying with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to opine on the District s compliance for each of the District s major federal programs based on our audit of the applicable compliance requirements referred to above. Our compliance audit followed auditing standards generally accepted in the United States of America; the standards for financial audits included in the Comptroller General of the United States Government Auditing Standards; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. These standards and OMB Circular A-133 require us to plan and perform the audit to reasonably assure whether noncompliance with the applicable compliance requirements referred to above that could directly and materially affect a major federal program occurred. An audit includes examining, on a test basis, evidence about the District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our compliance opinion on the District s major programs. However, our audit does not provide a legal determination of the District s compliance. Opinion on Each Major Federal Program In our opinion, the Buckeye Valley Local School District complied, in all material respects with the compliance requirements referred to above that could directly and materially affect each of its major federal programs for the year ended June 30,

138 Buckeye Valley Local School District Delaware County Independent Auditor s Report on Compliance With Requirements Applicable to Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 Page 2 Report on Internal Control Over Compliance The District s management is responsible for establishing and maintaining effective internal control over compliance with the applicable compliance requirements referred to above. In planning and performing our compliance audit, we considered the District s internal control over compliance with the applicable requirements that could directly and materially affect a major federal program, to determine our auditing procedures appropriate for opining on each major federal program s compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not to the extent needed to opine on the effectiveness of internal control over compliance. Accordingly, we have not opined on the effectiveness of the District s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, when performing their assigned functions, to prevent, or to timely detect and correct, noncompliance with a federal program s applicable compliance requirement. 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 federal program compliance requirement will not be prevented, or timely detected and corrected. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with federal program s applicable compliance requirement 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 would not necessarily 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. This report only describes the scope of our internal control compliance tests and the results of this testing based on OMB Circular A-133 requirements. Accordingly, this report is not suitable for any other purpose. Dave Yost Auditor of State Columbus, Ohio March 18,

139 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY SCHEDULE OF FINDINGS OMB CIRCULAR A JUNE 30, SUMMARY OF AUDITOR S RESULTS (d)(1)(i) Type of Financial Statement Opinion Unmodified (d)(1)(ii) (d)(1)(ii) (d)(1)(iii) (d)(1)(iv) (d)(1)(iv) Were there any material control weaknesses reported at the financial statement level (GAGAS)? Were there any significant deficiencies in internal control reported at the financial statement level (GAGAS)? Was there any reported material noncompliance at the financial statement level (GAGAS)? Were there any material internal control weaknesses reported for major federal programs? Were there any significant deficiencies in internal control reported for major federal programs? No No No No No (d)(1)(v) Type of Major Programs Compliance Opinion Unmodified (d)(1)(vi) Are there any reportable findings under.510(a)? No (d)(1)(vii) Major Programs (list): Nutrition Cluster: CFDA #10.553, Special Education Cluster: CFDA #84.027, (d)(1)(viii) Dollar Threshold: Type A\B Programs Type A: > $ 300,000 Type B: all others (d)(1)(ix) Low Risk Auditee? No None None 2. FINDINGS RELATED TO THE FINANCIAL STATEMENTS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS 3. FINDINGS FOR FEDERAL AWARDS 63

140 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY SCHEDULE OF PRIOR AUDIT FINDINGS OMB CIRCULAR A (b) JUNE 30, 2014 Finding Number Finding Summary Financial Statement Adjustments Reporting & Cash Management Fully Corrected? Yes Eligibility Yes Paid Lunch Equity Calculation No Yes Not Corrected, Partially Corrected; Significantly Different Corrective Action Taken; or Finding No Longer Valid; Explain Partially Corrected; Issued in Management Letter 64

141 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT DELAWARE COUNTY CLERK S CERTIFICATION This is a true and correct copy of the report which is required to be filed in the Office of the Auditor of State pursuant to Section , Revised Code, and which is filed in Columbus, Ohio. CLERK OF THE BUREAU CERTIFIED APRIL 2, East Broad Street, Fourth Floor, Columbus, Ohio Phone: or Fax:

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143 APPENDIX C FIVE-YEAR PROJECTION OF OPERATIONAL REVENUES AND EXPENDITURES Buckeye Valley Local School District Delaware, Marion, Morrow and Union Counties, Ohio Following is a summary of a five-year financial projection prepared by the Treasurer of the School District through June 30, 2020, in compliance with Revised Code Section (see discussion in APPENDIX A under FINANCES OF THE SCHOOL DISTRICT Five-Year Projection ). The projection is based upon certain assumptions required to be made in accordance with rules promulgated by the Department, including the assumption that no revenues from future voterapproved tax levies will be available. A complete version of the projection may be obtained from the Treasurer s office or from the Department. Readers of this Official Statement are cautioned that actual circumstances may differ from the assumptions required to be used in preparation of this projection. As a result, the actual future financial situation of the School District may be materially different from that stated in this projection, and investors are cautioned not to place undue reliance on such forward-looking statements. C-1

144 Buckeye Valley Five Year Forecast for Fiscal Year 2016 Actual Forecasted Line General Property (Real Estate) 8,713,411 8,842,385 9,479,978 10,031,831 10,032,295 10,078,137 10,128,369 10,192, Tangible Personal Property Tax 384, , , , , , , , Income Tax 5,139,120 5,529,757 5,798,973 5,991,931 6,171,689 6,356,840 6,547,545 6,743, Unrestricted Grants-in-Aid 4,547,577 4,610,188 4,671,308 4,679,659 5,042,332 4,714,889 4,569,257 4,748, Restricted Grants-in-Aid 10,516 38,343 18,959 77,136 79,072 79,208 77, Restricted Federal Grants-in-Aid - SFSF 14, Property Tax Allocation 1,319,399 1,354,224 1,437,713 1,488,911 1,498,440 1,506,248 1,514,300 1,524, All Other Operating Revenue 789,043 1,091, , , , , , , Total Revenue 20,917,989 21,881,572 22,759,845 23,693,243 24,174,955 24,097,608 24,210,506 24,594, Advances-In 8, All Other Financial Sources 11, , ,151 75,876 76,249 76,629 77, Total Other Financing Sources 20, , ,151 75,876 76,249 76,629 77, Total Revenues and Other Financing Sources 20,938,537 22,181,821 22,971,996 23,769,119 24,251,204 24,174,237 24,287,522 24,594, Personnel Services 10,400,185 10,870,425 11,422,673 11,868,662 12,380,777 12,793,670 13,402,571 13,848, Employees' Retirement/Insurance Benefits 4,425,721 4,568,667 4,869,739 4,579,824 5,441,111 5,726,704 6,076,302 6,444, Purchased Services 2,665,894 3,788,174 4,073,353 4,423,875 4,526,808 4,615,280 4,706,407 4,794, Supplies and Materials 885, , , , , ,501 1,000,368 1,036, Capital Outlay -2,819 5, , , , , , Other Objects 1,816, , , , , , , , Total Expenditures 20,193,571 20,535,516 21,570,659 22,402,403 23,926,763 24,752,038 25,841,590 26,784, Operational Transfers - Out 354,000 16, , , , , , Advances - Out 10, Total Other Financing Uses 364,388 16, , , , , , Total Expenditure and Other Financing Uses 20,557,959 20,552,488 21,889,987 22,557,403 24,081,763 24,907,038 25,996,590 26,784, Excess Rev & Oth Financing Sources over(under) Exp & Oth Financing 380,578 1,629,333 1,082,009 1,211, , ,801-1,709,068-2,190, Beginning Cash Balance 3,798,967 4,179,545 5,808,878 6,890,887 8,102,603 8,272,044 7,539,243 5,830, Ending Cash Balance 4,179,545 5,808,878 6,890,887 8,102,603 8,272,044 7,539,243 5,830,175 3,639, Outstanding Encumbrances 244, , , , , , , Fund Balance June 30 for Certification of Appropriations 3,935,375 5,497,802 6,579,811 7,791,527 7,960,968 7,228,167 5,519,099 3,639, Fund Bal June 30 for Cert of Contracts,Salary Sched,Oth Obligations 3,935,375 5,497,802 6,579,811 7,791,527 7,960,968 7,228,167 5,519,099 3,639, Unreserved Fund Balance June 30 3,935,375 5,497,802 6,579,811 7,791,527 7,960,968 7,228,167 5,519,099 3,639,341 C-2

145 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 September 20 th 2015 The following assumptions were used in projecting revenue and expenditures for Fiscal Year 2015 through This is the district s best estimates at this point in time. This forecast is subject to change due to current economic factors, the rapidly changing nature of state funding and other factors such as current legislation. REVENUES Lines Real Estate The district collects real estate taxes from four counties: Delaware, Morrow, Marion and Union. This revenue represents 40% of total revenue for the district. Real Estate revenue estimates are based on historical growth patterns and also taking into account the current economic state and housing market was a reappraisal year for Delaware and Morrow counties, by far our largest counties. Overall, values have been going up in Delaware County. The number used for FY2016 and beyond is based off of historical trends and current property tax valuations from the Delaware County Auditor s office. Reappraisal happens every six years and requires that each parcel of property be visited and appraised. The update occurs 3 years after the reappraisal and can adjust values based upon market fluctuations. CAUV values have grown significantly since 2011 and for Calendar Year 2014 Buckeye Valley saw an increase of 88% in their CAUV values. With Buckeye Valley being at the 20 mill floor, this generated an increase of roughly $500,000 in revenue in the fall 2015 collections. For FY 17 and beyond the district anticipates a leveling of values and stable minimal increases going forward. Line Tangible Personal Property/ Public Utility Personal Property This line item represents not only Tangible Personal Property, but Public Utility Personal Property as well. Revenues from Tangible Personal Property have decreased sharply in this area for the past several years due to the phase-out of the tax. The state was reimbursing districts for the loss of this tax which is on line 1.05 of the forecast. Public Utility Personal Property has been growing slightly over the past 3 years; therefore, the district is increasing this line item by 4.0% for FY 2016 and 2.0% for the remaining years of the forecast. Line Income Tax The 1% income tax represents approximately 24.9% of the district s total revenue in the General Fund. FY 2014 and FY 2015 showed an average of 4.1% increase, a very welcome trend. Therefore, to be on the conservative side, the forecast estimates a 3.33 % increase for fiscal year 2016 and a 3.0% for the rest of the years of the forecast. C-3

146 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 Line Unrestricted Grants-in-Aid Unrestricted grants-in-aid represent funds received through the State Foundation statement settlements from the Ohio Department of Education (ODE). The State funding for schools is based on several factors, all of which are subject to deliberations and approval of the Ohio General Assembly. School funding for fiscal year 2016 is based upon the current simulations by ODE under the state s funding formula. The school funding formula passed for the FY16-17 budget maintains much of the current framework for funding schools as the previous formula. The most significant way in which the current (FY14-15) school funding formula departed from previous formulas was the implementation of the State Share Index (SSI) to compute the state and local share of funding in each district rather than using the local millage charge off approach that had been in place from the mid-1980s through The budget bill was signed on June 30 th, In 2009, Ohio voters approved the construction of four full-service casinos in the State of Ohio. The Constitutional Amendment directs that school districts receive a portion of the gross casino revenue based on student populations for students who are residents of the county in which the student resides. The revenue is intended to supplement current State aid, not supplant. The estimates used are based on current enrollment and revenues supplementing, not supplanting. The amounts used are $50.50 per student for FY16 and beyond for a total of $109,234 for each fiscal year. Line Restricted Grants-in-Aid This line represents our Career Tech and Economic Disadvantaged money. For FY 2016 and beyond, the district anticipates receiving $3,033 in Career Tech funding. In regards to Economic Disadvantage funding, this amount is tied directly to the funding formula and will change with the formula. FY for FY 16 and beyond the district is anticipating $28,305. An increase in revenue in FY 2016 and beyond is due to the district getting reimbursed for Catastrophic Costs from the Ohio Department of Education. Catastrophic Aid is available as a supplemental payment to districts, joint vocational schools, and community schools for special educational students in funding categories two through six. This reimbursement is available to the financially responsible district or school for any child in categories two, three, four or five whose educational and related expenses exceeded $27,375, and any child in category six whose expenses exceeded $32,850 in the prior fiscal year. For FY 2016 the district anticipates a 20% reimbursement for costs that occurred for students in FY 2015, or roughly $45,000. This amount is being projected over the life of the forecast. C-4

147 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 Line Restricted Federal Grants-in-Aid SFSF and ED Jobs This is our SFSF money (State Fiscal Stabilization Funds) and Education Jobs fund money. This line item has been zeroed out for the rest of the years of the forecast. Line Property Tax Allocations This is our rollback and homestead, and tangible personal property tax loss reimbursements from the state. Because the rollback and homestead amounts mirror the real estate amounts, the district has projected the same percentage increases in this line that were projected in the real estate line and then added in the Tangible Personal Property Tax loss reimbursements that we were receiving. In the latest budget bill for FY 16 and FY 17 the Governor vetoed the line item of Tangible Personal Property supplement. The TTP Supplement is essentially a guarantee intended to ensure that no district receive less total state funding (Formula Aid + TPP replacement payments) in FY16 and FY17 than they received in FY15. Buckeye Valley has not received any Tangible Personal Property Tax supplement since FY 12; therefore, this line veto has no impact on the district. Line All Other Revenues This figure includes open enrollment payments, SF14 tuition, fees, rentals, interest; pay to participate fees and all other revenue. For FY 2015 and beyond, the only reoccurring revenue will be Delaware Revenue Sharing in the amount of $60,000. The district has an $83,000 receivable outstanding from Medicaid for its FY 12 and $89,000 for its FY 13 audit that it is waiting on. At the time these assumptions were written, the money had not been received but have been informed by the Ohio Department of Education that the money should be received in FY 16. Line All other financing Sources This figure includes any refund that the district received from a prior fiscal year. In FY 2014 the amounts increased significantly due to the following refunds. 1.) Bureau of Worker s Compensation in the amount of $68,604 2.) Overpayment of SERS in the amount of $44,625 3.) Refund of Run out Claims from CDMU in the amount of $151,548 4.) Refund from Insurance Company for Lawsuit Settlement in the amount of $12,474 5.) Refund from ERATE- $14,471 C-5

148 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 For FY 16 and beyond, these amounts are not the norm and the only figures that will be projected going forward are the Overpayment to SERS, various prior year refunds, and ERATE amounts. EXPENDITURES Line Personal Services Personal Services (Salaries) represent 52.2% of the total expenditures of the general fund. The district completed negotiations with the BVTA (Buckeye Valley Teachers Association) in July, 2013 for a three year contract. Base salary will increase at 1.5%, for the FY 2014, FY2015, and FY In addition, all members eligible for step movement will advance one step per year during the life of this contract. The district completed negotiations with the OAPSE union in August 2015 for a three year contract. Base salary will increase 2% in FY 2016, FY 2017 and 2% for FY 18. In addition, all members eligible for step movement will advance one step per year during the life of this contract. In April 2014, the board adopted a new administrative compensation plan that will phase out the pick- up on pick-up on any existing administrative contracts. Administrators who are currently in a contract will receive a 2.5% increase each year until their current contract expires. Any new administrators that are hired will be placed on the plan with no pick-up on pick-up. Very conservative increases have been projected into future years based on uncertainties such as education movement, mandated positions, negotiated agreements, and historical trends over time. Line 3.02 Employees Retirement/Insurance Benefits Benefits represent approximately 22.2% of the total expenditures in the general fund. This includes retirement, unemployment, workers compensation, Medicare, health insurance, dental insurance, vision insurance and life insurance. Because the retirement amounts mirror the personal services increases, the district has projected the same percentage increases in this line that were projected above. The district belongs to the Stark County Council of Government for their medical, dental, vision, and life insurance. For FY 2016 the district received a 5.0% increase in insurance premiums. For FY 2016, the district received a 2.6% increase in premiums. Going forward, the district is projecting a 7% increase in premiums each fiscal year of the five year forecast. Fiscal Year 2016 was the first year that Buckeye Valley was eligible for a premium holidays. A premium holiday C-6

149 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 is a pay period in which the employee s medical insurance premiums will not be deducted from the employee s pay. Buckeye Valley has received two premium holidays savings the district roughly $572,000. This savings is not guaranteed and will not be projected for the remaining fiscal years of the forecast. However, per the new negotiated agreement that was settled in August 2013, the certificated staff will pay 11% of the premium in FY 2014, 12% in FY 2015, and 13% in FY Also, per the new negotiated agreement that was settled in August 2015, the classified staff will pay 10% of the premium in FY 2016, 11% in FY 2017, and 12% in FY Line 3.03 Purchased Services The purchased services line represents 18.6% of the total general fund budget and includes copier leases and charges; repairs; mileage and meeting expenses; utilities; postage; legal expenditures; community school charges; and property and fleet insurance. The district receives a vast array of services from the ESC which include: Occupational Therapists, Physical Therapists, LPN, Speech Pathologists, School Psychologists; etc. In prior years, this amount was represented in line Looking forward, the ESC expenses will continue to be presented in this line item. For FY 16 and beyond there is an average increase in expenses of 3.2% due to the increase of additional purchased staff for district needs. Line 3.04 Supplies and Materials The supplies and material line represents 3.9% of the total general fund budget and examples include, but are not limited to, general supplies, instructional materials including textbooks and media materials, bus fuel and tires, and all other maintenance supplies Small increases have been estimated over the life of the forecast. Going forward, the district will continue to look at cost saving measures for this line item. For FY 15 the district has also seen a savings of $67,000 in bus fuel due to the lower cost of diesel per gallon. With the district being 206 square miles, fuel is a large cost for this line item. Going forward, the district does not anticipate lower fuel costs and will monitor closely. Line 3.05 Capital Outlay Prior to FY 16 there have not been any Capital Outlay expenses for the district in the general fund because of the 1.5 mill permanent improvement dollars. For FY 16 and beyond the district C-7

150 BUCKEYE VALLEY LOCAL SCHOOLS, DELAWARE COUNTY NOTES/ASSUMPTIONS TO FIVE-YEAR FORECAST FOR APPROVAL September 20 th 2015 is going to budget $300,000 each fiscal year to pay for the maintenance and upkeep of the facilities. Line 4.30 Other Objects The other object line represents 1.7% of the total general fund budget and includes the contract for GAAP preparation, audit expenses, auditor and treasurer fees, election expenses and liability insurance. Line Operating Transfers- Out In FY 15 the Board of Education established a fund for the purpose of which cash may be accumulated for paying termination benefits or for paying salaries when the number of pay periods exceeds the usual and customary for a year. This amount has been determined by current liability calculations and will have a transfer amount equal to liability for every year of the forecast. C-8

151 APPENDIX D FORM OF APPROVING LEGAL OPINION OF BRICKER & ECKLER LLP Fifth Third Securities, Inc. Columbus, Ohio We have acted as bond counsel to the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio (the School District ) in connection with the issuance by the School District of its $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A dated March 1, 2016 (the Series 2016A Bonds ) and its $12,380,000 Refunding Bonds, Series 2016B dated March 1, 2016 (the Series 2016B Bonds, and together with the Series 2016A Bonds, the Bonds ). In such capacity, we have examined such law and such 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. Based upon the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been duly authorized and executed by the School District, and are valid and binding general obligations of the School District. 2. The Bonds are secured by the pledge of the full faith and credit of the School District for the payment thereof and by the pledge of the School District to levy ad valorem taxes outside the ten mill limitation of Article XII, Section 2 of the Constitution of the State of Ohio, upon all property on the general tax lists and duplicates of the School District, in an amount sufficient to pay the principal of and interest on the Bonds when due, which taxes are unlimited as to rate and amount. 3. The interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code ), and is not treated as an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the School District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The School District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. D-1

152 4. Interest on the Bonds, the transfer thereof, and any profit made on their sale, exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district, and joint economic development district income taxes in Ohio. The School District has not designated the Bonds as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. Although we have participated in the preparation of portions of the Official Statement dated February 4, 2016 (the Official Statement ) relating to the Bonds, we have not been engaged to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement) and we express no opinion and make no representation relating thereto (excepting only the matters set forth as our opinion in the Official Statement). Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. Please be advised that the rights of the holders of the Bonds and the enforceability thereof are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights generally, and by equitable principles, 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. We bring to your attention the fact that our legal opinions are an expression of our professional judgment and are not a guarantee of a result. D-2

153 APPENDIX E BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) Voted November 3, 2015 $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 FORM OF CLOSING CERTIFICATE To Fifth Third Securities, Inc.: It is my understanding that, in considering whether to purchase the above-captioned obligations, you have relied on the Official Statement for such obligations dated February 4, 2016 (the Official Statement ), which Official Statement was prepared and executed by and for the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio (the School District ) under the direction of the Board of Education of the School District. In connection with your reliance as stated above, I hereby certify that: 1. I have reviewed the Official Statement and have made such investigation and inquiries as I deemed necessary in the circumstances; 2. The statements and information contained in the Official Statement are correct and complete in all material respects, and they do not omit any statement or information necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading or incomplete in any material respect; and 3. To the best of my knowledge, since the date of the Official Statement, nothing has occurred which has caused, or which might reasonably be expected to cause, a material adverse change in the condition or prospects of the School District. Date: March 1, 2016 Treasurer, Board of Education Buckeye Valley Local School District Delaware, Marion, Morrow and Union Counties, Ohio E-1

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155 APPENDIX F BUCKEYE VALLEY LOCAL SCHOOL DISTRICT Delaware, Marion, Morrow and Union Counties, Ohio $31,250,000 School Facilities Construction and Improvement Bonds, Series 2016A (General Obligation Unlimited Tax) Voted November 3, 2015 $12,380,000 Refunding Bonds, Series 2016B (General Obligation Unlimited Tax) Voted November 4, 2008 FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the Disclosure Certificate ) is executed and delivered by the Treasurer of the Buckeye Valley Local School District, Delaware, Marion, Morrow and Union Counties, Ohio (the School District ) pursuant to the resolution of the Board of Education of the School District authorizing the issuance and sale of the above-captioned bonds (the Bonds ). The School District covenants and agrees as follows: Section 1. Definitions. The following capitalized terms shall have the following meanings: Annual Report means any annual report provided by the School District referred to in the Official Statement and any appendix thereto. EMMA shall mean the Electronic Municipal Market Access system of the MSRB for use in the collection and dissemination of information, which system the Securities and Exchange Commission has stated to be consistent with its Rule 15c2-12. Currently, the following is the website address for EMMA: emma.msrb.org. Listed Events shall mean any of the events listed in Section 5 of this Disclosure Certificate. MSRB shall mean the Municipal Securities Rulemaking Board, located at: 1300 I Street NW, Suite 1000 Washington, DC Phone: (202) Fax: (202) Internet: Bonds. Official Statement shall mean the Official Statement prepared in connection with the sale of the Participating Underwriter shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Bonds. Rule shall mean Rule 15c2-12(b)(5) adopted by the United States Securities and Exchange Commission ( SEC ) under the Securities Exchange Act of 1934, as the same may be amended from time to time. F-1

156 Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the School District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. Section 3. Provision of Annual Reports. (a) (b) The School District shall, not later than December 1 of each year, commencing December 1, 2016, provide to the MSRB in an electronic format as prescribed by the MSRB an Annual Report for the fiscal year of the School District ended June 30 of such year, which Annual Report shall be consistent with the requirements of Section 4 of this Disclosure Certificate. The School District shall furnish an Annual Report to any person requesting the same. Requests for Annual Reports shall be made to: Kelly Ziegler, Treasurer, Buckeye Valley Local School District, 679 Coover Road, Delaware, Ohio 43015, Telephone: (740) If the School District fails to provide an Annual Report to the MSRB by the date set forth in subsection (a) of this Section 3, the School District shall send in a timely manner to the MSRB notice of such failure, which shall include a statement as to the date by which the School District anticipates that the Annual Report will be provided to the MSRB. Section 4. Contents of the Annual Report. (a) The Annual Report shall contain or incorporate by reference the following: (1) Audited financial statements of the School District. (2) Five-year projection of the School District. (3) Fiscal year data for the table entitled History of Voted Taxes and contained in APPENDIX A to the Official Statement under the caption SCHOOL DISTRICT PROPERTY TAX BASE History of Voted Taxes. (4) Fiscal year data for the table entitled Property Tax Collections and contained in APPENDIX A to the Official Statement under the caption SCHOOL DISTRICT PROPERTY TAX BASE Property Tax Rates and Collections. (5) Enrollment data for the table entitled Actual and Projected Enrollment (Average Daily Membership ADM) and contained in APPENDIX A to the Official Statement under the caption GENERAL INFORMATION Enrollment. All or any of the items listed above may be included by specific reference from other documents which have previously been provided to the MSRB or to the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. If this School District prepares a Comprehensive Annual Financial Report ( CAFR ) that includes the items listed above, the School District may designate the CAFR as the Annual Report. (b) The audited financial statements of the School District to be included in the Annual Report shall be initially prepared in accordance with generally accepted accounting principles (provided, however, that if the School District shall subsequently change its accounting method, the audited financial statements shall indicate the accounting method F-2

157 then in use) and shall be accompanied by a report of the Auditor of the State of Ohio, or, if applicable, the independent certified public accountants who audited the financial statements; provided, however, if such audited financial statements are not available to the School District at the time of providing the Annual Report to the MSRB as provided in Section 3 of this Disclosure Certificate, the School District will provide such audited financial statements to the MSRB as provided in Section 3 of this Disclosure Certificate as soon as they are available. Section 5. Reporting of Significant Events. The School District shall provide to the MSRB in a timely manner not in excess of ten business days after the occurrence of the event notice of any of the following events with respect to the Bonds: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) Principal and interest payment delinquencies; Non-payment related defaults, if material; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; Modifications to rights of holders of the Bonds, if material; (1) Calls for redemption of the Bonds, if material, other than calls pursuant to the mandatory sinking fund provisions of the Bonds, if any, and (2) tender offers; Defeasances; Release, substitution or sale of property securing repayment of the Bonds, if material; Rating changes; Bankruptcy, insolvency, receivership or similar event of the School District; The consummation of a merger, consolidation, or acquisition involving the School District or the sale of all or substantially all of the assets of the School District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and Appointment of a successor or additional trustee or the change of name of a trustee, if material. For the purposes of subsection (l), above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the School District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or F-3

158 business of the School District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the School District. Section 6. Means of Reporting Information. The School District shall provide information to the MSRB s EMMA disclosure service as prescribed by the MSRB. As of the date hereof, submissions must be by electronic submission in an electronic portable document format ( PDF ) that shall have a word-search function permitting a user to search the document. The School District is authorized to transmit information to the MSRB by whatever means are mutually acceptable to the School District and the MSRB. Section 7. Termination of Reporting Obligation. The School District s obligation under this Disclosure Certificate shall terminate upon the defeasance, redemption or payment in full of all of the Bonds. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the School District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if the School District has received an opinion of counsel knowledgeable in federal securities laws to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the School District from disseminating any other information (using the means of dissemination set forth in this Disclosure Certificate or any other means of communication) or including any other information in any Annual Report or providing notice of occurrence of events, in addition to that which is required by this Disclosure Certificate. If the School District chooses to include any information in an Annual Report or provide notice of occurrence of events which are not Listed Events in addition to that which is specifically required by this Disclosure Certificate, the School District shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default; Remedies. Failure of the School District to perform any of its undertakings contained in this Disclosure Certificate shall not constitute an event of default with respect to the Bonds. The exclusive remedy for any such failure shall be enforcement of the School District s obligations to so perform by actions or proceedings taken in accordance with Ohio Revised Code Section (B)(4)(b) or Section (C)(1). Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the School District, the Participating Underwriter and the holders of the Bonds, and shall create no rights in any other person or entity. F-4

159 Date: March 1, 2016 BUCKEYE VALLEY LOCAL SCHOOL DISTRICT, DELAWARE, MARION, MORROW AND UNION COUNTIES, OHIO By: Treasurer, Board of Education F-5

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164 Buckeye Valley Local School District, Ohio School Facilities Construction and Improvement Bonds, Series 2016A and Refunding Bonds, Series 2016B (General Obligation Unlimited Tax)