$13,020,000* MUHLENBERG COUNTY SCHOOL DISTRICT … · 2018. 7. 8. · 1 OFFICIAL STATEMENT Relating...

DATED AUGUST 17, 2016NEW ISSUE RATINGElectronic Bidding via Parity® Moody’s: " "NOT Bank Interest Deduction EligibleBOOK-ENTRY-ONLY SYSTEM

In the opinion of Bond Counsel, under existing law (i) interest on the Bonds will be excludable from gross income of the holders thereof for purposes of federal taxation and (ii) intereston the Bonds will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, all subject to the qualifications described hereinunder the heading "Tax Exemption." The Bonds and interest thereon are exempt from income taxation and ad valorem taxation by the Commonwealth of Kentucky and political subdivisions thereof(see "Tax Exemption" herein).

$13,020,000*MUHLENBERG COUNTY SCHOOL DISTRICT FINANCE CORPORATION

SCHOOL BUILDING REFUNDING REVENUE BONDS,SERIES OF 2016

Dated: September 1, 2016 Due: as shown below

Interest on the Bonds is payable each May 1 and November 1, beginning November 1, 2016. The Bonds will matureas to principal on November 1, 2016 and each November 1 thereafter as shown below. The Bonds are being issued in Book-Entry-Only Form and will be available for purchase in principal amounts of $5,000 and integral multiples thereof.

Maturing Interest Reoffering Maturing Interest Reoffering November 1 Amount Rate Yield CUSIP November 1 Amount Rate Yield CUSIP

2016 $575,000 % % 2024 $995,000 % %2017 $590,000 % % 2025 $1,020,000 % %2018 $600,000 % % 2026 $1,040,000 % %2019 $605,000 % % 2027 $920,000 % %2020 $930,000 % % 2028 $940,000 % %2021 $950,000 % % 2029 $965,000 % %2022 $955,000 % % 2030 $945,000 % %2023 $990,000 % %

The Bonds are subject to redemption prior to their stated maturity as described herein.

Notwithstanding the foregoing, the Corporation reserves the right to call, upon thirty (30) days notice, the Bondsin whole or in part on any date for redemption upon the total destruction by fire, lightning, windstorm or other hazard of anyof the building(s) constituting the Project(s) and apply casualty insurance proceeds to such purpose.

The Bonds constitute a limited indebtedness of the Muhlenberg County School District Finance Corporation andare payable from and secured by a pledge of the gross income and revenues derived by leasing the Project (as hereinafterdefined) on an annual renewable basis to the Muhlenberg County Board of Education.

The Muhlenberg County (Kentucky) School District Finance Corporation will until August 24, 2016 at 11:30 A.M.,E.S.T., receive competitive bids for the Bonds at the office of the Executive Director of the Kentucky School FacilitiesConstruction Commission, 229 West Main Street, Suite 102, Frankfort, Kentucky 40601.

*As set forth in the "Official Terms and Conditions of Bond Sale," the principal amount of Bonds sold to thesuccessful bidder is subject to a Permitted Adjustment by increasing or decreasing the amount not to exceed$2,605,000.

PURCHASER'S OPTION: The Purchaser of the Bonds, within 24 hours of the sale, may specify to the FinancialAdvisor that any Bonds may be combined immediately succeeding sequential maturities into a Term Bond(s), bearing a singlerate of interest, with the maturities set forth above (or as may be adjusted as provided herein) being subject to mandatoryredemption in such maturities for such Term Bond(s).

The Bonds will be delivered utilizing the BOOK-ENTRY-ONLY-SYSTEM administered by The Depository TrustCompany.

The Corporation deems this preliminary Official Statement to be final for purposes of the Securities and ExchangeCommission Rule 15c2-12(b)(1), except for certain information on the cover page hereof which has been omitted inaccordance with such Rule and which will be supplied with the final Official Statement.

Th

is P

reli

min

ary

Off

icia

l S

tate

men

t a

nd

th

e in

form

ati

on

co

nta

ined

her

ein

are

su

bje

ct t

o c

om

ple

tio

n o

r a

men

dm

ent.

Un

der

no

cir

cum

sta

nce

s sh

all

this

Pre

lim

ina

ry O

ffic

ial

Sta

tem

ent

con

stit

ute

an

off

er t

o s

ell

or

the

soli

cita

tio

n o

f a

n o

ffer

to

bu

y, n

or

sha

ll t

her

e b

e a

ny

sa

les

of

thes

e B

on

ds

in a

ny

juri

sdic

tio

n i

n w

hic

h s

uch

off

er, so

lici

tati

on

or

sale

wo

uld

be

un

law

ful

pri

or

to r

egis

tra

tio

n o

r q

ua

lifi

cati

on

un

der

th

e la

ws

of

an

y s

uch

ju

risd

icti

on

.

PRELIMINARY OFFICIAL STATEMENT

i

MUHLENBERG COUNTY, KENTUCKYBOARD OF EDUCATION

Dr. Kelly Tarter, ChairmanMartha Hargrove, Vice Chairman

Shelley Lovell, MemberStefanie Rager, Member

Margaret Williams, Member

Randy McCarty, Superintendent/Secretary

MUHLENBERG COUNTY SCHOOL DISTRICTFINANCE CORPORATION

Dr. Kelly Tarter, PresidentMartha Hargrove, Vice President

Shelley Lovell, MemberStefanie Rager, Member

Margaret Williams, Member

Randy McCarty, SecretaryEric Bletzinger, Treasurer

BOND COUNSEL

Steptoe & Johnson PLLCLouisville, Kentucky

FINANCIAL ADVISOR

Ross, Sinclaire & Associates, LLCLexington, Kentucky

PAYING AGENT AND REGISTRAR

Old National Trust CompanyEvansville, Indiana

BOOK-ENTRY-ONLY-SYSTEM

ii

REGARDING USE OF THIS OFFICIAL STATEMENT

This Official Statement does not constitute an offering of any security other than the original offeringof the Muhlenberg County School District Finance Corporation School Building Refunding Revenue Bonds,Series of 2016, identified on the cover page hereof. No person has been authorized by the Corporation or theBoard to give any information or to make any representation other than that contained in the OfficialStatement, and if given or made such other information or representation must not be relied upon as havingbeen given or authorized. This Official Statement does not constitute an offer to sell or the solicitation of anoffer to buy, and there shall not be any sale of the Bonds by any person in any jurisdiction in which it isunlawful to make such offer, solicitation or sale.

The information and expressions of opinion herein are subject to change without notice, and neitherthe delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the Corporation or the Board since the date hereof.

Neither the Securities and Exchange Commission nor any other federal, state or other governmentalentity or agency, except the Corporation will pass upon the accuracy or adequacy of this Official Statementor approve the Bonds for sale.

The Official Statement includes the front cover page immediately preceding this page and allAppendices hereto.

iii

TABLE OF CONTENTS Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Book-Entry-Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1The Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Kentucky School Facilities Construction Commission . . . . . . . . . . . . . . . . . . . . 3Biennial Budget for Period Ending June 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . 4Outstanding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Registration, Payment and Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5The Lease; Pledge of Rental Revenues . . . . . . . . . . . . . . . . . . . . . . . . . 6

State Intercept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Commission's Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Verification of Mathematical Accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6The Plan of Refunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Purpose of the Prior Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Estimated Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Estimated Use of Bond Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8District Student Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9State Support of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Support Education Excellence in Kentucky (SEEK) . . . . . . . . . . . . . . . 9Capital Outlay Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Facilities Support Program of Kentucky . . . . . . . . . . . . . . . . . . . . . . . 10

Local Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Homestead Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Limitation on Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Local Thirty Cents Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Additional 15% Not Subject to Recall . . . . . . . . . . . . . . . . . . . . . . . . . 11Assessment Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Special Voted and Other Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 11Local Tax Rates, Property Assessments and Revenue Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Overlapping Bond Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12SEEK Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13State Budgeting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Potential Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Continuing Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Tax Exemption; Not Bank Qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Original Issue Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Absence of Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Approval of Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16No Legal Opinion Expressed as to Certain Matters . . . . . . . . . . . . . . . . . . . . . . 16Bond Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Approval of Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Demographic and Economic Data . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX AFinancial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX BContinuing Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX COfficial Terms & Conditions of Bond Sale . . . . . . . . . . . . . . . . . . APPENDIX DOfficial Bid Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX E

1

OFFICIAL STATEMENTRelating to the Issuance of

$13,020,000*

MUHLENBERG COUNTY SCHOOL DISTRICT FINANCE CORPORATIONSCHOOL BUILDING REFUNDING REVENUE BONDS,

SERIES OF 2016

*Subject to Permitted Adjustment

INTRODUCTION

The purpose of this Official Statement, which includes the cover page and Appendices hereto, is to setforth certain information pertaining to the Muhlenberg County School District Finance Corporation (the"Corporation") School Building Refunding Revenue Bonds, Series of 2016 (the "Bonds").

The Bonds are being issued to (i) pay the accrued interest and refund in advance of maturity on May 1,2017 the outstanding Muhlenberg County School District Finance Corporation School Building Revenue Bonds,Series of 2007, dated May 1, 2007 (the "2007 Bonds") maturing May 1, 2018 and thereafter; (ii) pay the accruedinterest and refund on a current basis on September 27, 2016 the outstanding Muhlenberg County School DistrictFinance Corporation School Building Revenue Bonds, Series of 2010 (Build America Bonds - Direct Pay toIssuer), dated November 1, 2010 (the "2010 Bonds") maturing November 1, 2016 and thereafter (collectively, the"Refunded Bonds"); and, (iii) pay the cost of the Bond issuance expenses (see "Plan of Refunding" herein). TheBoard has determined that the plan of refunding the Refunded Bonds will result in considerable interest costsavings to the Muhlenberg County School District (the "District") and is in the best interest of the District. The2007 Bonds maturing on May 1, 2017 will not be defeased and will remain payable under the terms of the PriorLease (the "Remaining Bonds").

The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds willbe secured by a statutory mortgage lien and a pledge of the rental income derived by the Corporation from leasingthe Projects (as hereinafter defined) to the Muhlenberg County Board of Education (the "Board") on a year to yearbasis (see "Security" herein).

All financial and other information presented in this Official Statement has been provided by theMuhlenberg County Board of Education from its records, except for information expressly attributed to othersources. The presentation of financial and other information is not intended, unless specifically stated, to indicatefuture or continuing trends in the financial position or other affairs of the Board. No representation is made thatpast experience, as is shown by financial and other information, will necessarily continue or be repeated in thefuture.

This Official Statement should be considered in its entirety, and no one subject discussed should beconsidered more or less important than any other by reason of its location in the text. Reference should be madeto laws, reports or other documents referred to in this Official Statement for more complete information regardingtheir contents.

Copies of the Bond Resolution authorizing the issuance of the Bonds, the Participation Agreement andthe Lease Agreement, dated September 1, 2016, may be obtained at the office of Steptoe & Johnson PLLC, BondCounsel, 700 Hurstbourne Parkway, Ste. 115, Louisville, Kentucky 40222.


The Bonds shall utilize the Book-Entry-Only-System administered by The Depository Trust Company("DTC").

The following information about the Book-Entry only system applicable to the Bonds has been suppliedby DTC. Neither the Corporation nor the Paying Agent and Registrar makes any representations, warranties orguarantees with respect to its accuracy or completeness.

2

DTC will act as securities depository for the Bonds. The Securities will be issued as fully-registeredsecurities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may berequested by an authorized representative of DTC.

DTC, the world's largest depository, is a limited-purpose trust company organized under the New YorkBanking Law, a "banking organization" within the meaning of the New York Banking Law, a member of theFederal 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 of1934. 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 85 countries that DTC's participants("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participantsof sales and other securities transactions in deposited securities, through electronic computerized book-entrytransfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement ofsecurities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of TheDepository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participantsof DTC and Members of the National Securities Clearing Corporation, Government Securities ClearingCorporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC,and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American StockExchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also availableto others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearingcorporations that clear through or maintain a custodial relationship with a Direct Participant, either directly orindirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable toits Participants are on file with the Securities and Exchange Commission. More information about DTC can befound at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which willreceive 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 Ownerswill not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected toreceive 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. Transfersof ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and IndirectParticipants acting on behalf of Beneficial Owners.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered inthe name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorizedrepresentative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or suchother DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actualBeneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whoseaccounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and IndirectParticipants 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 Participantsto Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governedby arrangements among them, subject to any statutory or regulatory requirements as may be in effect from timeto time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of noticesof significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendmentsto the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holdingthe 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 Paying Agent and Registrar and requestthat copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC's practiceis 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 Bondsunless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTCmails an Omnibus Proxy to the Corporation as soon as possible after the record date. The Omnibus Proxy assignsCede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on therecord date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., orsuch other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit DirectParticipants' accounts upon DTC's receipt of funds and corresponding detail information from the Corporation or

3

the Paying Agent and Registrar, on payable date in accordance with their respective holdings shown on DTC'srecords. Payments by Participants to Beneficial Owners will be governed by standing instructions and customarypractices, as is the case with Bonds 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 or its nominee, the Paying Agent and Registraror the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee asmay be requested by an authorized representative of DTC) is the responsibility of the Corporation or the PayingAgent and Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct and IndirectParticipants.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by givingreasonable notice the Corporation or the Paying Agent and Registrar. Under such circumstances, in the event thata successor depository is not obtained, Bond certificates are required to be printed and delivered. The Corporationmay decide to discontinue use of the system of book-entry transfers through DTC (or a successor securitiesdepository). In that event, Bond certificates will be printed and delivered.

The information in this section concerning DTC and DTC's Book-Entry system has been obtained fromsources that the Corporation believes to be reliable but the Corporation takes no responsibility for the accuracythereof.

THE CORPORATION

The Corporation has been formed in accordance with the provisions of Sections 162.120 through 162.300and Section 162.385 of the Kentucky Revised Statutes ("KRS"), and KRS Chapter 273 and KRS 58.180, as anon-profit, non-stock corporation for the purpose of financing necessary school building facilities for and on behalfof the Board. Under the provisions of existing Kentucky law, the Corporation is permitted to act as an agency andinstrumentality of the Board for financing purposes and the legality of the financing plan to be implemented bythe Board herein referred to has been upheld by the Kentucky Court of Appeals (Supreme Court) in the case ofWhite v. City of Middlesboro, Ky. 414 S.W.2d 569.

Any bonds, notes or other indebtedness issued or contracted by the Corporation shall, prior to the issuanceor incurrence thereon, be specifically approved by the Board. The members of the Board of Directors of theCorporation are the members of the Board. Their terms expire when they cease to hold the office and anysuccessor members of the Board are automatically members of the Corporation upon assuming their public offices.

KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION

The Kentucky School Facilities Construction Commission (the "Commission") is an independent corporateagency and instrumentality of the Commonwealth of Kentucky established pursuant to the provisions of KRSSections 157.611 through 157.640, as amended, repealed and reenacted (the "Act") for the purpose of assistinglocal school districts in meeting the school construction needs of the Commonwealth in a manner which will ensurean equitable distribution of funds based upon unmet need.

The Commission will enter into a Participation Agreement with the Board whereunder the Commission,will agree to continue to pay approximately $240,256 to be applied to the debt service of the Refunding Bondsthrough November 1, 2030; provided, however, that the contractual commitment of the Commission to pay theannual Agreed Participation is limited to the biennial budget period of the Commonwealth, with the first suchbiennial budget period terminating on June 30, 2018.

The Extraordinary Session of the General Assembly of the Commonwealth adopted the State's Budgetfor the biennium ending June 30, 2018. Inter alia, the Budget provides $121,610,900 in FY 2016-17 and$134,544,300 in FY 2017-18 to pay debt service on existing and future bond issues; $100,000,000 of theCommission's previous Offers of Assistance made during the last biennium; and authorizes $91,000,000 inadditional Offers of Assistance for the current biennium to be funded in the Budget for the biennium ending June30, 2018.

The 1986, 1988, 1990, 1992, 1994, 1996, 1998, 2000, 2003, 2005, 2006, 2008, 2010, 2012, 2014 and2016 Regular Sessions of the Kentucky General Assembly appropriated funds to be used for debt service ofparticipating school districts. The appropriations for each biennium are shown in the following table:

4

Biennium Appropriation1986-88 $18,223,2001988-90 14,050,7001990-92 13,542,8001992-94 3,075,3001994-96 2,800,0001996-98 4,996,0001998-00 12,141,5002000-02 8,100,0002002-04 9,500,0002004-06 14,000,0002006-08 9,000,0002008-10 10,968,0002010-12 12,656,2002012-14 8,469,2002014-16 8,764,0002016-18 23,019,400

Total $173,306,300

In addition to the appropriations for new financings as shown, appropriations subsequent to that for 1986included additional funds to continue to meet the annual debt requirements for all bond issues involvingCommission participation issued in prior years.

BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2016

The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium endingJune 30, 2016 which was approved and signed by the Governor. Such budget was effective beginning July 1, 2014.

OUTSTANDING BONDS

The following table shows the outstanding Bonds of the Board by the original principal amount of eachissue, the current principal outstanding, the amount of the original principal scheduled to be paid with thecorresponding interest thereon by the Board or the School Facilities Construction Commission, the approximateinterest range; and, the final maturity date of the Bonds:

Current Principal Principal Approximate Bond Original Principal Assigned to Assigned to Interest Rate Final Series Principal Outstanding Board Commission Range Maturity

2007-REF $4,015,000 $1,905,000 $2,982,996 $1,032,004 3.750% - 3.900% 20202007 $2,000,000 $1,285,000 $1,032,528 $967,472 3.750% - 4.000% 2027

2009-KISTA $362,851 $50,290 $0 $362,851 3.000% 20162010-BABs $12,670,000 $11,310,000 $10,217,888 $2,452,112 2.600% - 5.550% 20302011-REF $6,560,000 $4,940,000 $5,759,918 $800,082 1.500% - 2.125% 20232012-REF $8,775,000 $6,800,000 $1,608,013 $7,166,987 2.000% 2024

2012-Energy $1,100,000 $895,000 $1,100,000 $0 .900% - 2.125% 20252013 $6,000,000 $5,825,000 $4,869,040 $1,130,960 1.000% - 3.000% 20332014 $1,100,000 $1,010,000 $0 $1,100,000 1.000% - 4.000% 2034

2014B $3,325,000 $3,320,000 $3,325,000 $0 3.000% - 3.375% 2034

TOTALS: $45,907,851 $37,340,290 $30,895,383 $15,012,468

AUTHORITY

The Board of Directors of the Corporation has adopted a Bond Resolution which authorized among other

things:

5

i) the issuance of approximately $13,020,000 of Bonds subject to a permitted adjustment of

$2,605,000;

ii) the advertisement for the public sale of the Bonds;

iii) the Official Terms and Conditions for the sale of the Bonds to the successful bidder; and,

iv) the President and Secretary of the Corporation to execute certain documents relative to the sale

and delivery of the Bonds.

THE BONDS

General

The Bonds will be dated September 1, 2016, will bear interest from that date as described herein, payable

semi-annually on May 1 and November 1 of each year, commencing November 1, 2016 and will mature as to

principal on November 1, 2016 and each November 1 thereafter in the years and in the principal amounts as set

forth on the cover page of this Official Statement.

Registration, Payment and Transfer

The Bonds are to be issued in fully registered form (both principal and interest). Old National Trust

Company, Evansville, Indiana, the Bond Registrar and Paying Agent, shall remit interest on each semiannual due

date to each Registered Owner of record as of the 15th day of the month preceding the due date which shall be

Cede & Co., as the Nominee of The Depository Trust Company ("DTC"). Please see "Book-Entry-Only-System"

below.

Redemption

The Bonds scheduled to mature on and after November 1, 2027, are subject to redemption at the option

of the Corporation prior to their stated maturities on any date falling on or after November 1, 2026, in any order

of maturities (less than all of a single maturity to be selected by lot), in whole or in part, expressed in percentages

of the principal amount with respect to each redeemed Bond as set forth below, plus accrued interest to the date

of redemption:

RedemptionRedemption Dates (inclusive) Price

November 1, 2026 and thereafter 100%

Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to call the

Bonds in whole or in part on any date at par for redemption upon the total destruction by fire, lightning, windstorm

or other hazard of any building constituting the Project and apply casualty insurance proceeds to such purpose.

SECURITY

General

The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds are

payable as to both principal and interest solely from the income and revenues derived from the leasing of the

Projects acquired and constructed from the Bond proceeds from the Corporation to the Board.

6

The Lease; Pledge of Rental Revenues

The Board has leased the school Project securing the Bonds for an initial period from September 1, 2016,

through June 30, 2017, with the option in the Board to renew said Lease from year to year for one year at a time,

at annual rentals, sufficient in each year to enable the Corporation to pay, solely from the rental due under the

Lease, the principal and interest on all of the Bonds as same become due. The Lease provides further that so long

as the Board exercises its annual renewal options, its rentals will be payable according to the terms and provisions

of the Lease until November 1, 2030, the final maturity date of the Bonds. Under the lease, the Corporation has

pledged the rental revenue to the payment of the Bonds; provided, however, said liens and pledges rank on the

basis of parity with the lien and pledge securing the Series 2007 Bonds maturing May 1, 2017 (the "Remaining

Bonds").

STATE INTERCEPT

Under the terms of the 2016 Lease, and any renewal thereof, the Board has agreed so long as the Bonds

remain outstanding, and in conformance with the intent and purpose of Section 157.627(5) of the Act and KRS

160.160(5), in the event of a failure by the Board to pay the rentals due under the 2016 Lease, and unless sufficient

funds have been transmitted to the Paying Agent, or will be so transmitted, for paying said rentals when due, the

Board has granted under the terms of the 2016 Lease and Participation Agreement to the Corporation and the

Commission the right to notify and request the Kentucky Department of Education to withhold from the Board a

sufficient portion of any undisbursed funds then held, set aside, or allocated to the Board and to request said

Department or Commissioner of Education to transfer the required amount thereof to the Paying Agent for the

payment of such rentals.

COMMISSION'S PARTICIPATION

The Commission has determined that the Board is eligible for an average annual participation equal to

approximately $240,256 from the Commission's appropriation by the Kentucky General Assembly which will be

used to meet a portion of the debt service of the Bonds. The plan for financing the Project will require the

Commission to pay approximately twenty-three percent (23%) of the debt service of the Bonds.

The Participation Agreement to be entered into with the Board will be limited to the biennial budget

period of the Commonwealth of Kentucky, with the first such biennial period terminating on June 30, 2018. The

right is reserved in the Commission to terminate the commitment to pay the agreed participation every two years

thereafter. The obligation of the Commission to make payments of the agreed participation shall be automatically

renewed each two years thereafter unless the Commission gives notice to the Board of its intention not to

participate not less than sixty days prior to the end of the biennium. However, the Commission has expressed its

intention to continue to pay the agreed participation in successive biennial budget periods until the Bonds are

retired, but the Commission is not required to do so.

VERIFICATION OF MATHEMATICAL ACCURACY

AMTEC, will verify from the information provided to them the mathematical accuracy as of the date of

the closing of the Bonds of (1) the computations contained in the provided schedules to determine that the

anticipated receipts from the securities and cash deposits listed in the Financial Advisor's schedules, to be held in

escrow, will be sufficient to pay, when due, the principal, interest and call premium payment requirements, if any,

of the Prior Bonds, and (2) the computations of yield on both the securities and the Bonds contained in the

provided schedules used by Bond Counsel in its determination that the interest on the Bonds is not includable in

gross income for federal income tax purposes. AMTEC will express no opinion on the assumptions provided to

them, nor as to the exemption from taxation of the interest on the Bonds.

7

THE PLAN OF REFUNDING

A sufficient amount of the proceeds of the Bonds at the time of delivery will be deposited into the Prior

Bond Fund for the Refunded Bonds. The Prior Bond Fund deposit is intended to be sufficient to (i) pay the

accrued interest and refund in advance of maturity on May 1, 2017 the outstanding Muhlenberg County School

District Finance Corporation School Building Revenue Bonds, Series of 2007, dated May 1, 2007 (the "2007

Bonds") maturing May 1, 2018 and thereafter; (ii) pay the accrued interest and refund on a current basis on

September 27, 2016 the outstanding Muhlenberg County School District Finance Corporation School Building

Revenue Bonds, Series of 2010 (Build America Bonds - Direct Pay to Issuer), dated November 1, 2010 (the "2010

Bonds") maturing November 1, 2016 and thereafter (collectively, the "Refunded Bonds"); and, (iii) pay the cost

of the Bond issuance expenses (see "Plan of Refunding" herein). The Board has determined that the plan of

refunding the Refunded Bonds will result in considerable interest cost savings to the Muhlenberg County School

District (the "District") and is in the best interest of the District. The Series 2007 Bonds maturing on May 1, 2017

will not be defeased and will remain payable under the terms of the Prior Lease.

Any investments purchased for the Prior Bond Fund shall be limited to (i) direct Obligations of or

Obligations guaranteed by the United States government, or (ii) Obligations of agencies or corporations of the

United States as permitted under KRS 66.480(1)(b) and (c) or (iii) Certificates of Deposit of FDIC banks fully

collateralized by direct Obligations of or Obligations guaranteed by the United States.

The Plan of Refunding the Bonds of the Prior Issues as set out in the Preliminary Official Statement is

tentative as to what Bonds of the Prior Issues shall be refunded and will not be finalized until the sale of the

Refunding Bonds.

PURPOSE OF THE PRIOR BONDS

The Refunded Bonds were issued by the Corporation for the purpose of providing funds to finance

improvements at Central City Elementary School and construct a new elementary school (the “Project”).

8

ESTIMATED BOND DEBT SERVICE

The following table shows by fiscal year the current bond payments of the Board. The plan of financing

provides for the Board to meet 77% of the debt service of the Bonds.

Fiscal Current ----- Series 2016 Refunding Bonds ----- Total Year Local Local

Ending Bond Principal Interest Total SFCC LOCAL Bond June 30 Payments Portion Portion Payment Portion Portion Payments

2017 $2,133,423 $575,000 $168,243 $743,243 $168,716 $574,526 $2,085,6722018 $2,132,652 $590,000 $248,120 $838,120 $190,253 $647,867 $2,081,9532019 $2,128,813 $600,000 $241,570 $841,570 $191,036 $650,534 $2,083,2892020 $2,130,673 $605,000 $233,735 $838,735 $190,393 $648,342 $2,085,7482021 $2,132,548 $930,000 $222,293 $1,152,293 $261,570 $890,722 $2,085,4212022 $2,132,555 $950,000 $207,248 $1,157,248 $262,695 $894,552 $2,090,3262023 $2,130,003 $955,000 $191,054 $1,146,054 $260,154 $885,900 $2,082,8202024 $2,131,817 $990,000 $173,293 $1,163,293 $264,067 $899,225 $2,089,7922025 $1,817,042 $995,000 $153,689 $1,148,689 $260,752 $887,936 $1,770,1852026 $1,821,747 $1,020,000 $132,270 $1,152,270 $261,565 $890,705 $1,774,9542027 $1,818,717 $1,040,000 $109,090 $1,149,090 $260,843 $888,247 $1,772,5002028 $1,738,295 $920,000 $86,090 $1,006,090 $228,382 $777,708 $1,699,9672029 $1,740,520 $940,000 $63,300 $1,003,300 $227,749 $775,551 $1,701,7912030 $1,738,265 $965,000 $39,005 $1,004,005 $227,909 $776,096 $1,699,3822031 $1,739,351 $945,000 $13,230 $958,230 $217,518 $740,712 $1,699,9042032 $892,260 $892,2602033 $894,528 $894,5282034 $357,719 $357,7192035 $360,991 $360,991

TOTALS: $31,971,918 $13,020,000 $2,282,228 $15,302,228 $3,473,606 $11,828,622 $31,309,203

Notes: Numbers are rounded to the nearest $1.00. Estimates are based upon an Average Interest Rate of 2.245%

ESTIMATED USE OF BOND PROCEEDS

The table below shows the estimated sources of funds and uses of proceeds of the Bonds, other than any

portions thereof representing accrued interest:

Sources:

Par Amount of Bonds $13,020,000.00

Total Sources $13,020,000.00

Uses:

Deposit to Prior Bond Fund $12,733,120.00

Underwriter's Discount (1%) 195,300.00

Cost of Issuance 91,580.00

Total Uses $13,020,000.00

9

DISTRICT STUDENT POPULATION

Selected school census and average daily attendance for the Muhlenberg County School District is as

follows:

Average Daily Average DailyYear Attendance Year Attendance

1989-90 5,404.8 2003-04 4,560.11990-91 5,267.2 2004-05 4,567.11991-92 5,255.0 2005-06 4,663.41992-93 5,255.0 2006-07 4,674.51993-94 5,204.0 2007-08 4,666.41994-95 5,153.6 2008-09 4,636.51995-96 5,052.9 2009-10 4,543.91996-97 4,983.2 2010-11 4,745.01997-98 4,936.7 2011-12 4,669.01998-99 4,936.7 2012-13 4,621.71999-00 4,688.0 2013-14 4,601.12000-01 4,688.0 2014-15 4,622.72001-02 4,543.32002-03 4,503.6

______________

Source: Kentucky State Department of Education.

STATE SUPPORT

Support Education Excellence in Kentucky (SEEK). In determining the cost of the program to Support

Education Excellence in Kentucky (SEEK), the statewide guaranteed base funding level is computed by dividing

the amount appropriated by the prior year's statewide average daily attendance. The SEEK fund is a guaranteed

amount of money per pupil in each school district of Kentucky. The current SEEK allotment is $3,866 per pupil.

The $100 capital outlay allotment per each average daily attendance is included within the guaranteed amounts.

Each district's base funding from the SEEK program is adjusted for the number of at-risk students, the number and

types of exceptional children in the district, and cost of transporting students from and to school in the district.

Capital Outlay Allotment. The per pupil capital outlay allotment for each district from the public school

fund and from local sources shall be kept in a separate account and may be used by the district only for capital

outlay projects approved by the State Department of Education. These funds shall be used for the following capital

outlay purposes:

a. For direct payment of construction costs.

b. For debt service on voted and funding bonds.

c. For payment or lease-rental agreements under which the board will eventually acquire ownership

of the school plant.

d. For retirement of any deficit resulting from over-expenditure for capital construction, if such

deficit resulted from certain declared emergencies.

e. As a reserve fund for the above named purposes, to be carried forward in ensuing budgets.

The allotment for each school board of education in the Commonwealth for fiscal year 1978-79 was

$1,800 per classroom unit. The 1979 Session of the Kentucky General Assembly approved increases in this

allotment in 1979-80 to $1,900 per classroom unit. This rate remained unchanged in 1980-81. The 1981 Session

of the Kentucky General Assembly decreased the allotment per classroom to $1,800 and this allotment rate did

not change from the 1981-82 rate, until the 1990-91 school year. Beginning with 1990-91, the Capital Outlay

allotment for each district is based on $100 per average daily attendance.

10

The following table shows the computation of the capital outlay allotment for the Muhlenberg County

School District for certain preceding school years. Beginning 1990-91, the allotment is based on average daily

attendance as required by law.

Capital CapitalOutlay Outlay

Year Allotment Year Allotment

1990-91 526,720.0 2003-04 456,010.01991-92 525,500.0 2004-05 456,710.01992-93 525,500.0 2005-06 466,340.01993-94 520,400.0 2006-07 467,450.01994-95 515,360.0 2007-08 466,640.01995-96 505,290.0 2008-09 463,649.01996-97 498,320.0 2009-10 454,388.01997-98 493,670.0 2010-11 474,496.01998-99 493,670.0 2011-12 466,900.01999-00 468,800.0 2012-13 462,165.02000-01 468,800.0 2013-14 460,112.02001-02 454,330.0 2014-15 462,267.02002-03 450,360.0

If the school district has no capital outlay needs, upon approval from the State, the funds can be used for

school plant maintenance, repair, insurance on buildings, replacement of equipment, purchase of school buses and

purchase of modern technological equipment for educational purposes. If any district has a special levy for capital

outlay or debt service that is equal to the capital outlay allotment or a proportionate fraction thereof, and spends

the proceeds of the levy for eligible purposes, the State may authorize the district to use all or a proportionate

fraction of its capital outlay allotment for current expenses (school districts which use capital outlay allotments

to meet current expenses are not eligible to participate in the School Facilities Construction Commission funds).

Facilities Support Program of Kentucky. School districts may be eligible to participate in the Facilities

Support Program of Kentucky (FSPK), subject to the following requirements:

1) The district must have unmet needs as set forth and approved by the State Department of

Education in a School Facilities Plan;

2) The district must commit to establish an equivalent tax rate of at least 5 cents, in addition to the

30 cents minimum current equivalent tax rate; and,

3) The new revenues generated by the 5 cent addition, must be placed in a restricted account for

school building construction bonding.

LOCAL SUPPORT

Homestead Exemption. Section 170 of the Kentucky Constitution was amended at the General Election

held November 2, 1971, to exempt from property taxes $6,500 of value of single unit residential property of

taxpayers 65 years of age or older. The 1972 General Assembly amended KRS Chapter 132 to permit counties

and school districts to adjust their local tax revenues lost through the application of this Homestead Exemption.

The "Single Unit" qualification has been enlarged to subsequent sessions of the General Assembly to provide that

such exemption shall apply to such property maintained as the permanent resident of the owner and the dollar

amount has been construed to mean $6,500 in terms of the purchasing power of the dollar in 1972. Every two years

thereafter, if the cost of living index of the U.S. Department of Labor has changed as much as 1%, the maximum

exemption shall be adjusted accordingly. Under the cost of living formula, the maximum was increased to $36,900

effective January 1, 2015.

11

Limitation on Taxation. The 1979 Special Session of the Kentucky General Assembly enacted House

Bill 44 which provides that no school district may levy a general tax rate, voted general tax rate, or voted building

tax rate which would generate revenues that exceeds the previous years revenues by four percent (4%).

The 1990 Regular Session of the Kentucky General Assembly in enacting the "School Reform" legislative

package amended the provisions of KRS 160.470 which prohibited school districts from levying ad valorem

property taxes which would generate revenues in excess of 4% of the previous year's revenues without said levy

subject to recall to permit exceptions to the referendum under (1) KRS 160.470(12) [a new section of the statute]

and (2) an amended KRS 157.440.

Under KRS 160.470(12)(a) for fiscal years beginning July 1, 1990 school districts are required to levy

a "minimum equivalent tax rate" of thirty cents ($.30) for general school purposes. The equivalent tax rate is

defined as the rate which results when the income collected during the prior year from all taxes (including

occupational or utilities) levied by the district for school purposes divided by the total assessed value of property

plus the assessment for motor vehicles certified by the State Revenue Cabinet. Failure to levy the minimum

equivalent rate subjects the board of the district to removal.

The exception provided by KRS 157.440(1)(a) permits school districts to levy an equivalent tax rate as

defined in KRS 160.470(12)(a) which will produce up to 15% of those revenues guaranteed by the program to

support education excellence in Kentucky. Levies permitted by this section of the statute are not subject to public

hearing or recall provisions as set forth in KRS 160.470.

Local Thirty Cents Minimum. Effective for school years beginning after June 30, 1990, the board of

education of each school district shall levy a minimum equivalent tax rate of thirty cents ($0.30) for general school

purposes. If a board fails to comply, its members shall be subject to removal from office for willful neglect of duty.

Additional 15% Not Subject to Recall. Effective with the school year beginning July 1, 1990, each school

district may levy an equivalent tax rate which will produce up to 15% of those revenues guaranteed by the SEEK

program. Effective with the 1990-91 school year, the State will equalize the revenue generated by this levy at one

hundred fifty percent (150%) of the statewide average per pupil equalized assessment. For 1993-94 and thereafter,

this level is set at $225,000. The additional 15% rate levy is not subject to the public hearing or recall provisions.

Assessment Valuation. No later than July 1, 1994, all real property located in the state and subject to local

taxation shall be assessed at one hundred percent (100%) of fair cash value.

Special Voted and Other Local Taxes. Any district may, in addition to other taxes for school purposes,

levy not less than four cents nor more than twenty cents on each one hundred dollars ($100) valuation of property

subject to local taxation, to provide a special fund for the purchase of sites for school buildings and the erection,

major alteration, enlargement, and complete equipping of school buildings. In addition, districts may levy taxes

on tangible and intangible property and on utilities, except generally any amounts of revenues generated above that

provided for by House Bill 44 is subject to voter recall.

12

Local Tax Rates, Property Assessments and Revenue Collections

Combined Total PropertyTax Equivalent Property RevenueYear Rate Assessment Collections

1991-92 35 728,242,373 2,548,8481992-93 38.2 729,986,371 2,788,5481993-94 47 730,927,922 3,435,3611994-95 48.9 772,782,408 3,778,9061995-96 49.4 841,761,436 4,158,3011996-97 49 844,119,282 4,136,1841997-98 48.5 858,826,699 4,165,3091998-99 48.5 865,301,069 4,196,7101999-00 52.2 938,466,561 4,898,7952000-01 48.1 973,280,825 4,681,4812001-02 52.2 1,015,148,877 5,299,0772002-03 49.6 1,038,787,023 5,152,3842003-04 49.6 1,106,240,375 5,486,9522004-05 47.5 1,123,672,910 5,337,4462005-06 49.1 1,216,880,077 5,974,8812006-07 48.8 1,208,214,362 5,896,0862007-08 49.1 1,286,376,270 6,316,1072008-09 48.6 1,399,195,968 6,800,0922009-10 48.6 1,423,940,374 6,920,3502010-11 45 1,480,054,609 6,660,2462011-12 48.8 1,530,753,060 7,470,0752012-13 44.6 1,530,498,386 6,826,0232013-14 51.8 1,538,870,124 7,971,3472014-15 47.5 1,579,689,566 7,503,525

Overlapping Bond Indebtedness

The following table shows any other overlapping bond indebtedness of the Muhlenberg County School

District or other issuing agency within the County as reported by the State Local Debt Officer for the period ending

June 30, 2013.

Original Amount CurrentPrincipal of Bonds Principal

Issuer Amount Redeemed Outstanding

County of Muhlenberg General Obligation $7,343,883 $2,002,147 $5,341,736 Judicial Facility revenue $13,915,000 $4,490,000 $9,425,000 Pollution Control Refunding Revenue $7,200,000 $0 $7,200,000City of Central City Water & Sewer Revenue $3,706,000 $2,330,000 $1,376,000 Refinancing Revenue $3,000,000 $347,687 $2,652,313City of Drakesboro Water & Sewer Revenue $712,000 $279,000 $433,000City of Powderly Sewer Revenue $759,000 $93,000 $666,000Special Districts Muhlenberg County Airport $9,800,000 $0 $9,800,000 Muhlenberg County Water District #1 $17,400,568 $8,101,947 $9,298,621 Muhlenberg County Water District #3 $462,000 $323,000 $139,000Totals: $64,298,451 $17,966,781 $46,331,670

______________

Source: 2013 Kentucky Local Debt Report.

13

SEEK Allotment

The Board has reported the following information as to the SEEK allotment to the District, and as

provided by the State Department of Education. These receipts are compared to the 1989-90 fiscal year funding

prior to enactment of the Kentucky Education Reform Act:

Base Local Total State &Funding Tax Effort Local Funding

2014-15 SEEK 21,329,441 7,503,525 28,832,9662013-14 SEEK 20,938,218 7,971,347 28,909,5652012-13 SEEK 20,620,046 6,826,023 27,446,0692011-12 SEEK 21,082,836 7,470,075 28,552,9112010-11 SEEK 19,974,195 6,660,246 26,634,4412009-10 SEEK 19,158,754 6,920,350 26,079,1042008-09 SEEK 22,380,397 6,800,092 29,180,4892007-08 SEEK 22,485,540 6,316,107 28,801,6472006-07 SEEK 20,915,850 5,896,086 26,811,9362005-06 SEEK 20,327,959 5,974,881 26,302,8402004-05 SEEK 18,974,943 5,337,446 24,312,3892003-04 SEEK 18,441,383 5,486,952 23,928,3352002-03 SEEK 17,652,761 5,152,384 22,805,1452001-02 SEEK 17,238,102 5,299,077 22,537,1792000-01 SEEK 17,654,965 4,681,481 22,336,4461999-00 SEEK 16,675,017 4,898,795 21,573,8121998-99 SEEK 16,690,873 4,196,710 20,887,5831997-98 SEEK 16,434,148 4,165,309 20,599,4571996-97 SEEK 16,063,555 4,136,184 20,199,7391995-96 SEEK 15,261,642 4,158,301 19,419,9431994-95 SEEK 15,002,619 3,778,906 18,781,5251993-94 SEEK 13,767,860 3,435,361 17,203,2211992-93 SEEK 13,496,942 2,788,548 16,285,4901991-92 SEEK 13,723,529 2,548,848 16,272,377

(1) Support Education Excellence in Kentucky (SEEK) replaces the minimum foundation program and

power equalization funding. Capital Outlay is now computed at $100 per average daily attendance

(ADA). Capital Outlay is included in the SEEK base funding.

(2) The Board established a current equivalent tax rate (CETR) of $0.475 for FY 2014-15. The equivalent

tax rate" is defined as the rate which results when the income from all taxes levied by the district for

school purposes is divided by the total assessed value of property plus the assessment for motor vehicles

certified by the Commonwealth of Kentucky Revenue Cabinet.

State Budgeting Process

i) Each district board of education is required to prepare a general school budget on forms

prescribed and furnished by the Kentucky Board of Education, showing the amount of money

needed for current expenses, debt service, capital outlay, and other necessary expenses of the

school during the succeeding fiscal year and the estimated amount that will be received from all

sources.

ii) By September 15 of each year, after the district receives its tax assessment data from the

Department of Revenue and the State Department of Education, 3 copies of the budget are

forwarded to the State Department for approval or disapproval.

iii) The State Department of Education has adopted a policy of disapproving a school budget if it is

financially unsound or fails to provide for:

14

a) payment of maturing principal and interest on any outstanding voted school

improvement bonds of the district or payment of rental in connection with any

outstanding school building revenue bonds issued for the benefit of the school district;

or

b) fails to comply with the law.

POTENTIAL LEGISLATION

No assurance can be given that any future legislation, including amendments to the Code, if enacted into

law, or changes in interpretation of the Code, will not cause interest on the Refunding Bonds to be subject, directly

or indirectly, to federal income taxation, or otherwise prevent owners of the Refunding Bonds from realizing the

full current benefit of the tax exemption of such interest. In addition, current and future legislative proposals, if

enacted into law, may cause interest on state or local government bonds (whether issued before, on the date of, or

after enactment of such legislation) to be subject, directly or indirectly, to federal income taxation by, for example,

changing the current exclusion or deduction rules to limit the amount of interest on such bonds that may currently

be treated as tax exempt by certain individuals. Prospective purchasers of the Refunding Bonds should consult their

own tax advisers regarding any pending or proposed federal tax legislation.

Further, no assurance can be given that the introduction or enactment of any such future legislation, or

any action of the IRS, including but not limited to regulation, ruling, or selection of the Refunding Bonds for audit

examination, or the course or result of any IRS examination of the Refunding Bonds or obligations which present

similar tax issues, will not affect the market price for the Refunding Bonds.

CONTINUING DISCLOSURE

As a result of the Board and issuing agencies acting on behalf of the Board offering for public sale

municipal securities in excess of $1,000,000, the Corporation and the Board will enter into a written agreement

for the benefit of all parties who may become Registered or Beneficial Owners of the Bonds whereunder said

Corporation and Board will agree to comply with the provisions of the Municipal Securities Disclosure Rules set

forth in Securities and Exchange Commission Rule 15c2-12 by filing annual financial statements and material

events notices with the Electronic Municipal Market Access (EMMA) System maintained by the Municipal

Securities Rule Making Board.

The Board and Corporation have been late in making certain required filings under the terms of the

Continuing Disclosure Agreements between the Board and the Corporation executed in connection with previous

bond issues. The Board has filed Material Event Notices indicating its failure to file on a timely basis the

following information:

(1) An upgrade in Moody's rating of its bonds from "Aa3" to "Aa2";

(2) A downgrade in Moody's rating of its bonds from "Aa2" to Aa3";

(3) Failure to file Annual Operating Data on a timely basis; and

Operating Data for FYs ending June 30, 2009, 2010, 2011, 2012 and 2013 was filed on July 9, 2014.

The Board has adopted new procedures to assure timely and complete filings in the future with regard to

the Rule in order to provide required financial reports and operating data or notices of material events.

Financial information regarding the Board may be obtained from Superintendent, Muhlenberg County

School District Board of Education, 510 W. Main Street, Powderly, Kentucky 42367, Telephone 270-338-2871

15

TAX EXEMPTION; NOT BANK QUALIFIED

Bond Counsel is of the opinion that:

(A) The Refunding Bonds and the interest thereon are exempt from income and ad valorem taxation

by the Commonwealth of Kentucky and all of its political subdivisions.

(B) The interest income from the Refunding Bonds is excludable from the gross income of the

recipient thereof for Federal income tax purposes under existing law; provided, that the corporate entities noted

below are advised of certain tax consequences as follows:

(1) In the computation of the corporate minimum tax, earnings and profits may include

otherwise tax-exempt interest on the Refunding Bonds; this provision applies to corporations only.

(2) Property and casualty insurance companies may be denied certain loss reserve deductions

to the extent of otherwise tax-exempt interest on the Refunding Bonds.

(C) As a result of designations and certifications by the Board and the Corporation, indicating the

issuance of more than $10,000,000 of tax-exempt obligations during the calendar year ending December 31, 2016,

the Refunding Bonds are NOT "qualified tax-exempt obligations" within the meaning of the Internal Revenue

Code of 1986, as amended.

(D) The interest income from the Refunding Bonds is excludable from the gross income of the

recipient thereof for Federal income tax purposes under existing law for individuals; however, said income must

be included in the calculation of "modified adjusted gross income" in the determination of whether and to what

extent Social Security benefits are subject to Federal income taxation.

Original Issue Premium

Certain of the Bonds are being initially offered and sold to the public at a premium (“Acquisition

Premium” from the amounts payable at maturity thereon. "Acquisition Premium" is the excess of the cost of a

bond over the stated redemption price of such bond at maturity or, for bonds that have one or more earlier call

dates, the amount payable at the next earliest call date. The Bonds that bear an interest rate that is higher than the

yield (as shown on the cover page hereof), are being initially offered and sold to the public at an Acquisition

Premium (the "Premium Bonds"). For federal income tax purposes, the amount of Acquisition Premium on each

bond the interest on which is excludable from gross income for federal income tax purposes ("tax-exempt bonds")

must be amortized and will reduce the bondholder's adjusted basis in that bond. However, no amount of amortized

Acquisition Premium on tax-exempt bonds may be deducted in determining bondholder's taxable income for

federal income tax purposes. The amount of any Acquisition Premium paid on the Premium Bonds, or on any of

the Bonds, that must be amortized during any period will be based on the "constant yield" method, using the

original bondholder's basis in such bonds and compounding semiannually. This amount is amortized ratably over

that semiannual period on a daily basis.

Holders of any Bonds, including any Premium Bonds, purchased at an Acquisition Premium should

consult their own tax advisors as to the actual effect of such Acquisition Premium with respect to their own tax

situation and as to the treatment of Acquisition Premium for state tax purposes.

Original Issue Discount

Certain of the Bonds (the "Discount Bonds") are being initially offered and sold to the public at a discount

("OID") from the amounts payable at maturity thereon. OID is the excess of the stated redemption price of a bond

at maturity (the face amount) over the "issue price" of such bond. The issue price is the initial offering price to the

public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers)

at which a substantial amount of bonds of the same maturity are sold pursuant to that initial offering. For federal

income tax purposes, OID on each bond will accrue over the term of the bond. The amount accrued will be based

16

on a single rate of interest, compounded semiannually (the "yield to maturity") and, during each semi-annual

period, the amount will accrue ratably on a daily basis. The OID accrued during the period that an initial purchaser

of a Discount Bond at its issue price owns it is added to the purchaser's tax basis for purposes of determining gain

or loss at the maturity, redemption, sale or other disposition of that Discount Bond. In practical effect, accrued OID

is treated as stated interest, that is, as excludible from gross income for federal income tax purposes.

In addition, original issue discount that accrues in each year to an owner of a Discount Bond is included

in the calculation of the distribution requirements of certain regulated investment companies and may result in

some of the collateral federal income tax consequences discussed above. Consequently, owners of any Discount

Bond should be aware that the accrual of original issue discount in each year may result in an alternative minimum

tax liability, additional distribution requirements or other collateral federal income tax consequences although the

owner of such Discount Bond has not received cash attributable to such original issue discount in such year.

Holders of Discount Bonds should consult their own tax advisors as to the treatment of OID and the tax

consequences of the purchase of such Discount Bonds other than at the issue price during the initial public offering

and as to the treatment of OID for state tax purposes.

ABSENCE OF MATERIAL LITIGATION

There is no litigation presently pending against the Corporation or the District, nor to the knowledge of

the officials of the Corporation or the District is there any litigation threatened, which questions or affects the

validity of the Bonds or any proceedings or transactions relating to the issue, sale and delivery thereof.

APPROVAL OF LEGALITY

Legal matters incident to the authorization and issuance of the Bonds are subject to the approving legal

opinion of Steptoe & Johnson PLLC, Bond Counsel. The form of the approving legal opinion of Bond Counsel

will appear on each printed Bond.

NO LEGAL OPINION EXPRESSED AS TO CERTAIN MATTERS

Bond Counsel has reviewed the information contained in the Official Statement describing the Bonds and

the provisions of the Bond Resolution and related proceedings authorizing the Bonds, but Bond Counsel has not

reviewed any of the financial data, computations, tabulations, balance sheets, financial projections, and general

information concerning the Corporation or District, and expresses no opinion thereon, assumes no responsibility

for same and has not undertaken independently to verify any information contained herein.

BOND RATING

As noted on the cover page of this Official Statement, Moody’s Investors Service has given the Bonds

the indicated rating. Such rating reflects only the respective views of such organization. Explanations of the

significance of the rating may be obtained from the rating agency. There can be no assurance that such rating will

be maintained for any given period of time or will not be revised or withdrawn entirely by the rating agency, if in

their judgement circumstances so warrant. Any such downward revision or withdrawal of such rating may have

an adverse effect on the market price of the Bonds.

FINANCIAL ADVISOR

Prospective bidders are advised that Ross, Sinclaire & Associates, LLC ("Ross Sinclaire") has been

employed as Financial Advisor in connection with the issuance of the Bonds. Ross Sinclaire's fee for services

17

rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery thereof. Bidders may

submit a bid for the purchase of the Bonds at the time of the advertised public sale, either individually or as a

member of a syndicate organized to submit a bid for the purchase of the Bonds.

APPROVAL OF OFFICIAL STATEMENT

The Corporation has approved and caused this "Official Statement" to be executed and delivered by its

President. In making this "Official Statement" the Corporation relied upon information furnished to it by the Board

of Education of the Muhlenberg County School District and does not assume any responsibility as to the accuracy

or completeness of any of the information in this Official Statement except as to copies of documents denominated

"Official Terms and Conditions" and "Bid Form." The financial information supplied by the Board of Education

is represented by the Board of Education to be correct. The Corporation deems this preliminary Official Statement

to be final for purposes of Securities Exchange Commission Rule 15c2-12(b)(1) as qualified by the cover hereof.

No dealer, broker, salesman, or other person has been authorized by the Corporation, the Muhlenberg

County Board of Education or the Financial Advisor to give any information or representations, other than those

contained in this Official Statement, and if given or made, such information or representations must not be relied

upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to

sell or the solicitation of any person in any jurisdiction in which it is unlawful for such person to make such offer,

solicitation or sale. Except when otherwise indicated, the information set forth herein has been obtained from the

Kentucky Department of Education and the Muhlenberg County School District and is believed to be reliable;

however, such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a

representation by the Financial Advisor or by Counsel. The delivery of this Official Statement at any time does

not imply that information herein is correct as of any time subsequent to the date hereof.

This Official Statement does not, as of its date, contain any untrue statement of a material fact or omit to

state a material fact which should be included herein for the purpose for which the Official Statement is to be used

or which is necessary in order to make the statements contained herein, in the light of the circumstances under

which they were made, not misleading in any material respect.

By /s/

President

By /s/

Secretary

APPENDIX A

Muhlenberg County School District Finance CorporationSchool Building Refunding Revenue Bonds

Series of 2016

Demographic and Economic Data

(A-1)

MUHLENBERG COUNTY, KENTUCKY

Muhlenberg County lies in the Western Coal Field Region of Kentucky and encompasses a land area of

475 square miles. The estimated population of Muhlenberg County in 2015 was 31,183. Greenville, the county

seat, had an estimated population of 4,395 persons in 2015. Greenville is located 133 miles southwest of

Louisville, Kentucky; 93 miles north of Nashville, Tennessee; and 265 miles southeast of St. Louis, Missouri.

Central City is located eight miles north of Greenville and is Muhlenberg County's largest city with an

estimated population of 5,892 in 2015.

The Economic Framework

Muhlenberg County firms employed 9,430 persons in 2013. Manufacturing firms in the county reported

932 employees; trade, transportation, and utilities provided 1,967 jobs; 1,098 people were employed in service

occupations; public administration accounted for 724 employees; contract construction firms provided 492 jobs;

financial activities accounted for 269 jobs; and 99 people were employed in information.

Transportation

Major highways serving Muhlenberg County include the multi-lane Western Kentucky Parkway, U.S.

Highways 62 and 43 1, and Kentucky Routes 176 and 189. All are AAA-rated (80,000-pound gross load limit)

trucking highways. Nineteen trucking companies provide interstate and/or intrastate service to Muhlenberg

County. Paducah and Louisville Railway provides main line rail service to Greenville and Central City. CSX

Transportation operates a branch line in Central City and Drakesboro. The nearest scheduled commercial airline

service is available at the Evansville Regional Airport near Evansville, Indiana, 77 miles north of Greenville. The

Nashville International Airport is located 88 miles south of Greenville. The Muhlenberg County Airport in

Greenville maintains a paved 4,200-foot runway. The nearest navigable waterway is the Green River near

Rochester, 18 miles east of Greenville.

LABOR MARKET STATISTICS

Power and Fuel

Kentucky Utilities Company serves Greenville, Central City, Drakesboro, and northern Muhlenberg

County. The remainder of Muhlenberg County receives electric power from the Pennyrile Rural Electric

Cooperative Corporation. Western Kentucky Gas Company provides natural gas service to Greenville and Central

City, and Drakesboro Natural Gas provides natural gas service to Drakesboro.

Population

The Muhlenberg County labor market area includes Muhlenberg County and the following additional

counties: Butler, Christian, Daviess, Hopkins, Logan, McLean, Ohio and Todd.

Population2013 2014 2015

Labor Market Area 348,871 348,376 348,761

Muhlenberg County 31,261 31,243 31,183

Central City 5,911 5,899 5,892

Greenville 4,414 4,402 4,395

____________

Source: U.S. Department of Commerce, Bureau of the Census.

(A-2)

Population Projections2020 2025 2030

Muhlenberg County 31,466 31,254 30,858

_______________

Source: Kentucky State Data Center, University of Louisville and Kentucky Cabinet for Economic Development.

LOCAL GOVERNMENT

Structure

The cities of Greenville, Central City, and Drakesboro are served by a mayor-city council form of

government. Greenville and Central City also employ city administrators. Muhlenberg County is served by a

county judge/executive and five magistrates.

Planning and Zoning

Joint agency - Muhlenberg Joint City - County Planning Commission

Participating cities - Central City, Greenville, Drakesboro, Powderly

Zoning enforced - Within the corporate limits of Greenville and Central City

Subdivision regulations enforced - Within the corporate limits of Greenville and

Central City and five miles beyond

Local codes enforced - Building and housing in Greenville and Central City

Mandatory state codes enforced - Kentucky Plumbing Code, National Electric Code, Kentucky Boiler

Regulations and Standards, Kentucky Building Code (modeled after BOCA code)

Fees and Licenses

The City of Greenville levies a business license fee on businesses within the city which range from $5 to

$120 per year. The fee for manufacturers with 25 employees or less is $50 annually. Firms with more than 25

employees are charged $75 annually. An unloading license is required in Greenville. The fee is $7.50 to $25,

depending on vehicle capacity.

Business license fees in Central City range from $10 to $750 per year. An unloading license fee is also

required by the city. The fees are $10 and $25, depending on vehicle capacity. An eight percent insurance

premium tax is also levied in Central City.

Property Taxes

The Kentucky Constitution requires the state to tax all classes of taxable property, and state statutes allow

local jurisdictions to tax only a few classes. All locally taxed property is subject to county taxes and school district

taxes (either a county school district or an independent school district). Property located inside the city limits may

also be subject to city property taxes.

Special local taxing Jurisdictions (fire protection districts, watershed districts, and sanitation districts) levy

taxes within their operating areas (usually a small portion of community or county).

Property assessments in Kentucky are at 100% fair cash value. Accounts receivable are taxed at 85% of

face value.

(A-3)

EDUCATION

Public Schools

Muhlenberg CountyTotal Enrollment (2014-2015) 4,935

Pupil-Teacher Ratio 13.0 - 1

Vocational-Technical Training

Kentucky Tech secondary schools (Sec), called area technology centers, are operated by the Cabinet for

Workforce Development and the postsecondary schools (P/S), called technical colleges, are governed by the

Kentucky Community and Technical College System (KCTCS).

EnrollmentTechnical Institution Location (2014-2015)Muhlenberg County CTC Greenville, KY 188

Ohio County ATC Hartford, KY 464

Butler County ATC Morgantown, KY 267

Webster County ATC Dixon, KY 317

Russellville ATC Russellville, KY 603

Christian County CTC Hopkinsville, KY 356

Caldwell County ATC Princeton, KY 379

Henderson County ATC Henderson, KY 1,716

Grayson County AVEC Leitchfield, KY 734

Breckinridge County ATC Harned, KY 534

Warren ATC Bowling Green, KY 165

Union County CTC Morganfield, KY 455

Area Colleges and Universities

EnrollmentInstitution Location (Fall 2014)

Brescia College Owensboro, KY 1,056

Kentucky Wesleyan College Owensboro, KY 709

Western Kentucky University Bowling Green, KY 20,171

Madisonville Community College Madisonville, KY 4,433

Daymar College Owensboro, KY 94

Owensboro Community & Tech College Owensboro, KY 4,156

Brown Mackie College Hopkinsville, KY 222

Hopkinsville Community College Hopkinsville, KY 3,566

Southcentral Community & Tech College Bowling Green, KY 4,014

Henderson Community College Henderson, KY 2,000

Customized Training

The Kentucky Tech system, through its training and development coordinators, will provide technical

assistance and will identify and develop low-cost customized training programs and services for both established

and prospective businesses. Businesses wanting to establish a customized training program should contact a

training and development coordinator located at the Madisonville Technical College.

(A-4)

Assessment Services

Kentucky Tech Career Connections offers to business, education and government agencies testing

packages for evaluating job applicants, selecting employees for promotional consideration and developing training

programs within the organization. A Career Connections Assessment Center is located at the Madisonville

Technical College.

Adult Education Services

Adult education programs are available to adults who want to develop new academic skills, improve basic

skills or earn a high school equivalence diploma. In Muhlenberg County, adult education and adult literacy classes

are administered through the Muhlenberg County Board of Education and the Muhlenberg County Literacy

Council.

Bluegrass State Skills Corporation

The Bluegrass State Skills Corporation (BSSC) was established in 1984 by the General Assembly of The

Commonwealth of Kentucky as an independent, de jure corporation to stimulate economic development through

customized business and industry specific skills training programs. The BSSC works with business and industry

and Kentucky's educational institutions to establish programs of skills training. The BSSC is attached to the

Cabinet for Economic Development for administrative purposes, in recognition of the relationship between

economic development and skills training efforts.

The BSSC is comprised of two economic development tools: matching grants and the newly authorized

Skills Training Investment Credit Act. The BSSC grant program is available to new, expanding and existing

business and Industry. Eligible training activities include pre-employment skills training and assessment; entry

level, skills upgrade and occupational upgrade training; train-the-trainer travel; and capacity-building. The Skills

Training Investment Credit Act provides credits to existing businesses for skills upgrade training.

FINANCIAL INSTITUTIONS

Institution Total Assets Total DepositsCentral City:The First National Bank of Muhlenberg County $148,317,000 $112,637,000

__________________

Source: McFadden American Financial Directory, July-December 2016.

(A-5)

EXISTING INDUSTRY

TotalFirm Product Employment

Bremen:Cal-Maine Foods Inc. Egg production 69

Central City:Andy Anderson Corp. Newspaper publishing 13

Brewco, Inc. Sawmill, spray booth, carpet cutting & furniture

making equipment

43

Brewco Marketing Group Headquarters - provides national mobile marketing 52

Brewer Machine and Parts LLC Steel fabricating, gang rip saws & woodworking

machinery

40

Central Pallet Mills, Inc. Pallets 30

Con-Way Freight Inc. Trucking, except local 30

Irving Materials Inc. Ready-mix concrete 9

Piper’s Saw Shop, Inc. Saw blades & sharpening service 30

Re-Tek Rubber products – buffings, granules, powders 19

Vaught Brothers Lumber Company Sawmill: rough lumber & wood chips 9

Drakesboro:Harsco Minerals/Plt 12 Boiler slag processing: roofing granules &

sandblasting materials

18

Graham:Dyno Nobel Explosives manufacturer for the mining, quarry and

construction industries and military applications

70

Ensign-Bickford Explosives & energetic systems 86

Greenville:Gourmet Express LLC Manufacture frozen skillet meals 135

Greenville Quarry & Quality

Blacktopping

Crushed limestone & asphalt 65

Muhlenberg County Opportunity

Center

Sheltered workshop; hand packaging of

manufactured goods

9

Plastic Products Company, Inc. Plastic injection molding 72

South Carrollton:Associated Pallet Inc. Wood pallets, hardwood & dimension lumber 70

Premium Hardwoods Inc. Furniture blanks, dimension lumber & flooring 37

______________

Source: Kentucky Cabinet for Economic Development (8/10/2016).

APPENDIX B


Series of 2016

Audited Financial Statement ending June 30, 2015

Muhlenberg County School District

Financial Statements

June 30, 2015

TAB: REPORT

I ndependent Auditors' Report

TAB: Fl NANCIAL STATEM ENTS

Required Supplementary I nformation :

Management's Discussion and Analysis

Basic Financial Statements:

Government-Wide Financial Statements

Statement of Net Position

Statement of Activities

Errn¡l Ein¡n¡ial (+r+aman+c.I gllq I lllq¡l!¡gt JlqlLl¡lL¡llJ.

Balance Sheet - Governmental Funds

Reconciliation of the Governmental Funds Balance Sheet to theStatement of Net Position

Statement of Revenues, Expenditures anci Changes in Funci

Balances - Governmental Funds

Reconciliation of the Governmental Funds Statement of Revenues,Evnon¡lilrr¡ac an¡l fhrnoac in Errn¡l El¡lrn¡ac *n iha Qfr*oman* nf Â¡Ìir¡iliac

Statement of Net Position - Proprietary Funds

Statement of Revenues, Expenses and Changes in Fund Net Position -Proprietary Funds

Statement of Cash Flows - Proprietary Funds

Statement of Fiduciary Net Position - Fiduciary Funds

Notes to the Financial Statements

Required Supplementary lnformation:

Budgetary Comparison Schedule for the General Fund

Muhlenberg County School DistrictTable of Contents

June 30, 201"5

t2

L

4

L4

L6

18

19

)1

22

24

25

29

2A

59

6LBudgetary Comparison Schedule for the Special Revenue Fund


June 30, 2Ot5

Schedule of the District's Proportionate Share of the Net Pension Liability andSchedule of District's Contributions - Kentucky Teachers' Retirement System

Schedule of the District's Proportionate Share of the Net Pension Liability andSchedule of District's Contributions - County Employees Retirement System

Su pplementary lnformat¡on :

Combining Balance Sheet - Nonmajor Governmental Funds

Combining Statement of Revenues, Expenditures and Changes inFund Balances - Nonmajor Governmental Funds

Combining Statement of Net Position - Nonmajor Proprietary Funds

Combining Statement of Revenues, Expenses and Changes in Fund NetPosition - Nonmajor Proprietary Funds

Combining Statement of Cash Flows - Nonmajor Proprietary Funds

Combining Statement of Fiduciary Net Position - SchoolActivity Funds -Agency Funds

Statement of Fiduciary Net Position - SchoolActivity Funds - Muhlenberg CountyHigh School- West Campus

Statement of Fiduciary Net Position - SchoolActivity Funds - Muhlenberg CountyHigh School- East Campus

Schedule of Expenditures of FederalAwards

Notes to the Schedule of Expenditures of Federal Awards

Summary Schedule of Prior Year Audit Findings

lndependent Auditors' Report on lnternal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards

lndependent Aud¡tors' Report on Compliance for Each Major Program and on lnternalControl over Compliance Required by OMB Circular A-L33

Schedule of Findíngs and Questioned Costs

63

64

65

66

67

68

69

70

7L

75

79

81

82

83

85

88

92Management Letter


June 30, 2015

TAB: THOUGHT LEADERSHIP

Join Our eonversation

,å ffiffigcARRg -W H RIûGS &äggää,.wsss tHhKAtvt

CP,As and Aclvisors

Carr, Riggs & lngram, LLC

927 College Street

Bowling Green, Kentucky 4210'1

P0 Box 104

Bowling Green, Kentucky 42102-0104

(270) 182-0100

1270\182-0932 ('rax)

167 South lvlain Slreel

Russellv¡lle, Kenlucky 4227 6

(270) 726-7 151

(270) 726-31 55 (fax)

www.cricpa.com

lndependent Auditors' Report

Kentucky State Committee for School District AuditsMembers of the Board of EducationMuhlenberg County School DistrictPowderly, Kentucky

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, thebusiness-type activities, each major fund and the aggregate remaining fund information of theMuhlenberg County School District (the "District") as of and for the year ended June 30, 2015, and

the related notes to the financial statements, which collectively comprise the District's basicfinancial statements as listed in the table of contents.

Management's Responsibility Íor the Financial Stotements

Management is responsible for the preparation and fair presentation of these financial statements:^ ^^^^-l^^^^ ..,:tL ^-^^..-!:-- .^-:-^:-l^^ -^^^-^11.. ^^^^-t^l :- !L^ r r.^:¡^J at^r^^ ^a ^-^-:^^-

!L:^lll dLLUlUcl¡lLC Wltl I dLLUUlltlllË, pl ¡llLlplC5 B,ellCldlly dLLCpLCu lll tllC U¡llleu JtdtC5 Ul AlllCllLd, Llll5

includes the design, implementation and maintenance of internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error.

Au dito rs' R es pon si bi I ity

Or-lr resoonsibilitv is to exoress ooinions on these financial statements based on our ar-rdit. Weconducted our audit in accordance with auditing standards generally accepted in the United Statesof America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States; and the audit requirementsprescribed by the Kentucky State Committee for School District Audits in the Independent Auditor'sContract. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditors' judgment,including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. ln making those risk assessments, the auditor considers internal controlrelevant to the entity's preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of

-1-

Kentucky State Committee for School District AuditsMembers of the Board of EducationMuhlenberg County School District

expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express

no such opinion. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of significant accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinions.

Opinions

ln our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, the business-type activities, each majorfund and the aggregate remaining fund information of the District as of June 30, 2015, and therespective changes in financial position and, where applicable, cash flows thereof for the year thenended in accordance with accounting principles generally accepted in the United States of America.

Emphosis of Matter

As described in Note 1- to the financial statements , in 2OI5, the District adopted new accountingguidance, GASB Statement No.68, Accounting and Financial Reporting for Pensions - an

amendment of GASB Statement 27 and GASB Statement No. 71" Pension Transition forContributions Made Subsequent to the Measurement Date - an amendment of GASB Statement 68.

Our opinion is not modified with respect to this matter.

Other Matters

Re q u i red Su p pl e m e nto ry I nform oti o n

Accounting principles generally accepted in the United States of America require that themanagement's discussion and analysis, budgetary comparison, and select pension information onpages 4 through 11 and 59 through 64 be presented to supplement the basic financial statements.Such information, although not a part of the basic financial statements, is required by theGovernmental Accounting Standards Board, who considers it to be an essential part of financialreporting for placing the basic financial statements in an appropriate operational, economic, orhistorical context. We have applied certain limited procedures to the required supplementaryinformation in accordance with auditing standards generally accepted in the United States ofAmerica, which consisted of inquires of management about the methods of preparing theinformation and comparing the information for consistency with management's responses to ourinquires, the basic financial statements, and other knowledge we obtained during our audit of thebasic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to express

an opinion or provide any assurance.

2-


Other lnformation

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the District's basic financial statements, The combining and individualnonmajor fund financial statements and other information are presented for purposes of additionalanalysis and are not a required part of the basic financialstatements. The schedule of expendituresof federal awards is presented for purposes of additional analysis as required by U.S. Office ofManagement and Budget Circular A-l-33, Audits of States, Local Governments and Non-ProfitOrganizotions, and is also not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and other information, and theschedule of expenditures of federal awards are the responsibility of management and were derivedfrom and relate directly to the underlying accounting and other records used to prepare the basicfinancial statements. Such information has been subjected to the auditing procedures applied inthe audit of the basic financial statements and certain addítional procedures, including comparingand reconciling such information directly to the underlying accounting and other records used toprepare the basic financial statements or to the basic financial statements themselves, and otherr¡l¡li+innal nrn¡or{rrrac in o¡¡nrrlrn¡o .r'ifh r"¡li+i^- .f--.1-".1. ñ^hârâll" a¡¡nn+n¡l i^ +h^ I l^i+^¡uuur!rv¡¡q¡ yrvvLsu¡LJ rr¡ sLLvrvqr¡Ls vvr!rr uqurl¡r¡6 Jlq¡¡uqtuJ óc¡tctqtty qLlçP(gu ¡¡r lt¡ç vt¡¡tçw

States of America. ln our opinion, the combining and individual nonmajor fund financial statementsand other information and the schedule of expenditures of federal awards are fairly stated in allmaterial respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Stondards

ln accordance with Government Auditing Standards, we have also issued our report dated October29, 2015 on our consideration of Muhlenberg County School District's internal control over financialreporting and our tests of its compliance with certain provisions of laws, regulations, contracts andgrant agreements and other matters. The purpose of that report is to describe the scope of ourtesting of internal control over financial reporting and compliance and the results of that testing,and not to provide an opinion on internal control over financial reporting or on compliance. Thatreport is an ìntegral part of an audit performed in accordance with Government Auditing Standardsin considering the District's internal control over financial reporting and compliance.

C*, RW i J^X"Ð, L¿.e


Bowling Green, KentuckyOctober 29,20'J,5

3-

MUHLENBERG COUNTY SCHOOL DISTRICT

MANAGEMENT',S DTSCUSSTON AND ANALyStS (MD&A)

FOR THE YEAR ENDED JUNE 30, 201.5

As management of the Muhlenberg County School District (District), we offer readers of the District's financialstatements this narrative overview and analysis of the financial activities of the District for the fiscal year ended

June 30, 2015. We encourage readers to consider the information presented here in conjunction wlth additionalinformation found within the body of the audit.

FINANCIAL HIGHLIGHTS

Key financial highlights for fiscal year 2015 are as follows:

ln total, net position decreased S12,880,530. Net position of governmental activities decreased

51L,320,789 from fiscal year 2014. Net position of the business-type activity, which represents food service,

decreased 51,,559,74'J- from fiscal year 2014. These decreases are the result of new GASB rules 68 and 71.

General revenues accounted for SSt.Z+Vl in revenue or 83 percent of all revenues. Program specific

revenues, in the form of charges for services and sales, grants, and contributions, accounted for StO.gZlVt

or 17 percent of total revenues of 562.66M. General revenues were up by S4.21-M and the program

specific revenues decreased by SSZt<.

a

o

a

a

a

a

Total revenue was S0Z.00lVt, an increase of 54,15M from FY 2OL4.

The Board had S5B.3M in total governmental expenses, including Sz.OfV in the construction fund.Compared to last year governmental expenses were S64.9M in FY201-4 while the construction fundexpenses were 59 M.

lnvestment income was a loss of S111-K, a sharo decrease of S290K, due to market forces as well as theliquidation of all other investment assets and the costs associated with the action.

SEEK net generai funciing was 520.9M, which was an increase of S389K when compared to the prior year.

Although the SEEK base increased from 53,827 to 53,911-, there was a slight decrease in enrollment from20L4.

Total salary and benefit costs decreased by SSOOX from 201-3-1-4, down to S46.4M. This includes the state

contributions to health insurance and state retirement matches.

Total general fund current operating expenses were S47M decreasing by $715K from 20L3-l-4, dueprimarily to the salary and retirement match increases.

The General Fund ending balance was 55.Blvl compared to 54.2M the prior year, a S1.6M increase. This

increase can be primarily attributed to the receipt of additional bonding funds forthe Tech Wing as well as

an advance payment from the Martin Foundation for building assistance that were not otherwise budgeted

for the 2015 fiscal year. Contingency fund was reduced to 51.6M which is 3%.

a

a

a

-4-


MANAGEMENT',S DTSCUSSTON AND ANALYSTS (MD&A) (CONT',D)


Overview of the Annual Financial Report (AFR)

This annual report consists of a series of financial statements and notes to those statements. These statements are

organized so the reader can understand Muhlenberg County School District as a financial whole, an entire

operating entity, in a manner similar to a private-sector business. The annual report consists of three parts: (A)

management's discussion and analysis (th¡s section), (B) the basic financial statements, and (C) required and other

supplemental information. The statements then proceed to provide an increasingly detailed look at specific

financial activities. The District's basic financial statements comprise three components: (1) district-wide financial

statements, (2)fund financialstatements, and (3) notes to the financial statements. This report also contains other

supplementary information in addition to the basic financial statements themselves,

District-Wide Financial Statements

The District-Wide Financial Statements have two sections (L) the Stotement of Net Position and (2) the Statement

of Activities. The Sfotement of Net Position and Stotement of Activities provide information about the activities of

the whole School District, presenting both an aggregate view of the School 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 School District's major funds with all other nonmajor funds presented in total

in one column. The notes provide additional information that is essential to a full understanding of the data

provided in the government-wide and fund financial statements.

Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in the

government-wide and fund financial statements. Notes to the financial statements can be found on pages 28 to

58.

Reporting the School District as a Whole

One of the most important questions asked about the School District is "How did we do financially during the

currentfiscalyear?"TheStatementof NetPosition andthe Stotementof Activities,whichappearfirstintheSchoolDistrict's financial statements, report information on the School District as a whole and its activities in a way that

helps answer this question. These statements include all assets and liabilities using lhe accrual basis of accounting,

which is similar to the accounting used by most private-sector companies. This basis of accounting takes into

account allof the currentyear's revenues and expenses regardless of when cash is received or paid.

These two statements report the School District's net positíon and changes in those positions. This change in net

position is important because it tells the reader that, for the School District as a whole, the financial position of the

School District has improved or diminished. However, the School District's'goal is to provide services to our

students, not to generate profits as commercial entities do. One must consider many other non-financial factors,

such as Kentucky's SEEK funding formula and its adjustments, the School District's property tax base, required

educational programs and other factors.

-5-


rvrANAG E tvt ENT',S D TSCUSStON AN D ANALyStS ( M D&A) (CONT', D)


ln the Statement of Net Position and the Statement of Activities, the School District is divided into two distinctkinds of activities:

Governmental Activities - Most of the School District's programs and services are reported here includinginstruction, support services, operation and maintenance of plant, pupil transportation and extra-curricularactivities. The government-wide financial statements outline functions of the District that are principallysupported by property taxes and intergovernmental revenues (governmental activities). Fixed assets andrelated debt is also supported by taxes and intergovernmental revenues.

a

a Business-Type Activities -These services are provided on a charge for goods or services basis to recover allof the expenses of the goods or services provided. The School District's food service is reported as businessactivities. These activities are funded through fees, federal grants, and federal commodities.

Net position may serve over time as a useful indicator of a government's financial position. ln the case of theDistrict, assets exceeded liabilities by 543,222,723 as of June 30,2OL5. This was a decrease of 512,880,530 overthe previous year. This was caused by a change in reporting, as districts must now record the net pension liability(s11,242,000)

The largest portion of the District's net position reflects its investment in capital assets (e.g., land andimprovements, buildings and improvements, vehicles, and furniture and equipment), less any related debt used toacquirethoseassetsthatisstill outstanding. Theamountof capital assets,netof relateddebtwas$48,867,276(andecrease of 52,6!5,252 over the previous year). The District uses these capital assets to provide services to itsstudents; consequently, these assets are not available for future spending. Although the District's investment in itscapital assets is reported net of related debt, it should be noted that the resources needed to repay this debt mustbe provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

The District's financiai position is the product of severalfinancialtransactions including the net results of activities,the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capitalassets.

The government-wide financialstatements can be found on pages 12 to 15

Reporting the School District's Most Significant Funds

Fund Financial Statements

After looking at the District as a whole, an analysis of the School District's major funds follows. Fund financialreports provide detailed information about the School District's major funds. The School District uses many funds

to account for a multitude of financial transactions. A fund is a grouping of related accounts that is used tomaintain control over resources that have been segregated for specific activities or objectives. Fund accounting is

a state mandated uniform system and chart of accounts for all Kentucky public school districts utilizing the MUNIS

administrative software. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into three categories: governmental,proprietary fund and fiduciary fund. Fiduciary funds are assets that belong to others. The school's activity funds

-6-




are reported as fiduciary funds. The only proprietary fund is the school food fund. A proprietary fund is

sometimes referred to as an enterprise fund. lt is a fund that operates like a business with sales of goods and

services. All other activities of the district are included in the governmental funds. The major governmental funds

for the Butler County School District are the generalfund and special revenue (grants)fund.

Governmentql Funds - Most of the School 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 occruolaccounting, which measures

cash and all other finoncial ossefs that can readily be converted to cash. The governmental fund statements

provide a detailed short-term view of the School District's general government operations and the basic services itprovides. Governmental fund information helps determine whether there are more or fewer financial resources

that can be spent in the near future to finance educational programs. The relationship (or difference) between

governmenf.al octivities (reported in the Statement of Net Position and the Statement of Activities) and

governmental funds is reconciled in the financial statements.

Proprietory Fund - Proprietary fund uses the same basis of accounting as business-type activities; therefore, the

statements for the proprietary fund will essentially match. The only proprietary fund is our food service

operations.

Fiduciary Funds -The schools'activity funds (or agency funds) is the District's only fiduciary fund. The schools'

activity fund cash balances at year-end totaled 5734,815 (an increase of 550,044 from the previous year).

The fund financial statements are on page 1-6 to 29

7


MANAGEMENT',S DTSCUSSTON AND ANALYS|S (MD&A) (CONT',D)

FOR THE YEAR ENDED JUNE 30, 2015

DISTRICT WIDE FINANCIAL ANALYSIS

The perspective of the statement of net position is of the District as a whole. The following table provides a

summary of the District's net position for 201-5 compared to 2014:

Current assets

Noncurrent assets

Total assets

Deferred outflows of resources

Current liabilitiesNoncurrent liabilitíes

Total liabilities

Deferred inflows of resources

îrlet positionNet investment in capital assets

RestrictedU nrestricted fund balance

T^¡-l -^4 -^-:¡!--I uLd¡ lleL pusr¡.ruil

20t45 8,736,944

S 88,723,395

20L5

5 7,7B0,ggB

S 88,l_68,834

5 97,460,339

5 r,274,863

95,949,832

2,543,294

5

5

S 2,33r,960S 40,299,989

5 'L,o26,i,s7

5 s2,999,246

5

5

42,63L,949 s

$

54,O15,4O3

1,255,0000

5 sL,4Bz,szB

5 2,t74,1,r0

5 2,446,61.s

5 48,867,276

5 978,694

s 623 24è ?f) JO,rU5,Z)J A ¡aÞ +5,¿¿2,I 25

Total net position decreased SL2,880,530. Net position of the District's governmental activities decreased51.1.,320,789. The net position of the District's business-type activity decreased 52,0'1,4,304.

8-




DISTRICT WIDE FINANC]AL ANALYSIS ICONT'D)

The statement of activities reflects the cost of program services and the charges for services and sales, grants, andcontributions offsetting those services. The following table presents a summary of revenue and expense for thefiscal years ended June 30, 2O1,4 and 2OL5.

20L4 20L5Revenues:Program Revenues

Charges for servicesOperating Grants and ContributionsCapital Grants and Contributions

General Revenue

Taxes

Other localgovernment units (TVA)

Other taxesState Aid

lnvestment Earnings

Other Revenue

TransfersTotal Revenue

Expenses:

I nstructio na I

Student SupportlnstructionalSupportDistrict AdministrationSchool AdministrationBusiness SupportPlant Operation & MaintenanceStudent TransportationOtherDebt Services

Food Services-GovtFood Services

Day Care

Community EducationBond issuance costLoss on Disposal of Assets

S 58,50i.,852 5 62,656,436

Total Expenses S 60,200,699 S 63,939,966

S(1,698,847)

5 844,934

5 7,oo3,7o9

5 3,r23,84s

S 7,310,853

S 9,541,31-B

5 tsg,zlt5 29,420,717

5 193,446

S 903,859

So

S 570,843

5 1,219,774

5 3,rzs,rs4

5 7,s51,692

s 7,695,955

S 38g,zs+

5 35,101_,364

S ( i.09,408)

5 l_,11_5,408

So

5 36,841,7635 L,76t,s4g5 gga,ul5 1,507,908

5 z,426,ggï5 1,467,937

5 5,343,206

5 4,447,o1,4

$ 6t8,9szS 1,356,840

5 86,0:tS 2,B54,BBo

5 229,1.69

S ogo

So5 z7L,sgo

5 4o,67s,r2o

S 1,879,381

5 t,ogg,gz4

5 1.,642,909

s 2,936,896

5 i-,391,30i_

S 4,g07,o8g

5 4,072,764

S 6st,gsg5 L,447,424

s 75,888

5 z,g91.,7zs

5 234,i525 goo

S s3,6+o

5o

Excess/Loss of revenue over expenditures

-9-

$(1,283,530)


MANAGEMENT',S DTSCUSSTON AND ANALYS|S (MD&A) (CONT',D)


BUSI N ESS-TYPE AETIVITY

The major business-type activity of the District is the food service operation. This program had revenues of 52.82Mand expenses of 52.BBM for fiscal year 201-5. The food service operation is mainly self-operating with minimalassistance from the General Fund.

THE DISTR¡CT'S FUNDS

The District's governmental funds are accounted for using the modified accrual basis of accounting. Totalgovernmental funds had revenues and other financing sources of 559.72M and expenditures and other financinguses of S5S.32M. lncluded in the S58.32M is 52.6M in construction fund expenditures. The General Fund balanceincreased Sf.6Vt. This was primarily due to the additional bonding received for the tech wing.

GENERAL FUND BUDGETING HIGHLIGHTS

The District's budget is prepared according to Kentucky law and is based on accounting for certain transactions ona basis of cash receipts, disbursements and encumbrances. ln Kentucky, the public school fiscal year is July l- - June30; other programs, i.e. some federal, operate on a different fiscal calendar but are reflected ín the overall budget.By law the budget must have a minimum 2 percent contingency. The D¡str¡ct adopted a budget w¡th S1.6M incontineencv l3 nercentl. The besinnins fund balance for" the fiscal vear ''¡¡as S4 ?44?n4 Thp mnçt cisnifi¡ant.---.---.o-..-, \- r-. --..-t. ...- --o..'.""o . r¡vv y

budgeted fund is the General Fund.

During the course of fiscal year 2015, the District amended its General Fund budget as needed. The District uses a

centralized budget. The budgeting system is designed to control budgets but allow flexibility for management.

For the General Fund, actual revenues and other financing sources, including state contribution (on-behalf)payments were S4B.6M. Budgeted revenues were S+S.ZVI. The continued poor economy has had negative effectson the primary revenue sources to the district-- state SEEK,IVA in lieu, localtaxes, and state and federalgrants.

Originai generai fund budgeiecì expencìitures were 549.i-M, exciuding on-behaif payments macie by the State ofKentucky. Actual expenditures were 547.1M.

r^ÞlT^l ^cç,FTç ^Nrì

nFRT ^rìn/t

tNilç,TÞ^TrnNr

CapitalAssets

lnvestment in capital assets for governmental activities ended at SB7.7M and capital assets in business-typeactivities ended at approximately S+SSX.

Debt

AtJune 30,2015, the District had S53.9M (principal and interest) in outstanding bonds. This amount does includean estimated 52.1M that the federal government will pay thru the build America bond series. Bond payments areprimarily paid from the Capital Outlay and Building funds. The district paid 53.ZVl (including federal rebate) forbond payments for FY 2015. However, this includes Sf .+V from the state for on-behalf paid through the SFCC.

During FY 2015 the District issued 5f .f U and 53.325M in General Obligation bonds totaling 54.425M for additionalcosts relating to the Tech Wing. These bonds have interest rates that range from 1".0O%-4.0O% and 3.00%-3.375%respectively.

_L0_


MANAGEMENT',S DTSCUSS¡ON AND ANALYSTS (MD&A) (CONT',D)

FOR THE YEAR ENDED JUNE 30, 2015

CURRENT ISSUES

The local environment of the community can significantly impact the finances of the District. Total local generatedproperty taxes slightly increased from 56.SVl to S6.8M from FY 2014lo FY 2015. Other revenue sources, such as

SEEK are impacted by the average daily attendance in the District's schools. ln FY 2015, these numbers increasedslightly from 4,601,to 4,623. The District must maintain a view that continues to look to the future.

The District remains committed to remaining competitive in the educational environment. The beginning teachersalary remained nearly the same at 536,790 while the top end of the 1-85 day salary schedule for teachers stands at

559,237. Employee contracts remain at L85 days for FY20L5. The 1% payroll increase was negligible as manyteachers and staff left the district upon hearing the news of impending cuts to be made. Muhlenberg CountySchool District staff salaries still remain competitive in comparison to other Western Kentucky school districts.Attrition and staffing levels will continue to be scrutinized during the next fiscal year due to budget concerns. State

revenue projections continue to look very bleak and will require that the budget be closely monitored and newinitiatives will be closely reviewed. ln preparation, the contingency balance was set at 53M. The district is alwaysreviewing for cost savings in transportation, administration, facility maintenance and energy. Debt refinancing is

always monitored as some issues mature. At the same time, services and supports have been continued at theschools. This will change if state budget cuts continue. The District will be closely monitoring ways to save moneyover the next fiscal year due to the general fund balance dropping significantly.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overviewof the District's finances and to reflect the District's accountability for the monies it receives. Questions about thisreport or additional financial information needs should be directed to Mr. Eric Bletzinger, Treasurer, at 270-338-287I, or by mail at 51-0 W. Main St., Powderly, KY 42367.

-LL-

Muhlenberg County School DistrictStaternent of Net Position

June 30, 20L5

GovernmentalActivities

Business-Type

Activities Total

Assets

Cash

lnvestments

Accounts receivable:

Taxes

Accounts

lntergove rnmenta I

lnventory

Prepaid expenses

Nondepreciable capital assets

Depreciable capital assets

Less: accumulated depreciation

s 4,340,466 5

519,348

756,606 s 5,097,072

- 519,348

340,5I1,

277,495

585,723

137,519

786,772

2,39L,197

126,804,594(41,,481,52O)

36,558

340,51"1"

277,495

585,723

174,O77

786,772

2,391,197

r28,446,4I2(42,668,775\

L,64L,gr9(L,187,255)

Total assets 94,702,LOs L,247,727 95,949,832

Deferred Outflows of Resources

Deferred loss on debt refundings

Pension related1,139,339

1,227,828 176,r27

1",139,339

1,403,955

Total deferred outflows of resources 2,367,L67 176,127 2,543,294

Liabilities

Aceounts payable

Accrued liabilities

Unearned revenue

Accrueci interestLong-term obligations:

Due within one year:

Outstanding bonds

Compensated absences

Due beyond one year:

Outstanding bonds

Compensated absences

Net pension liability

16') 12,q

84,303

477,470

3û0,670

2,608,533

252,382

37,832,364

l_,036,833

9,83'J.,r2g

1 q7q

3,I7I

13,963

L,4IO,B7I

1Ã?, 71^

84,303

477,470

30C),670

2,608,533

255,553

37,832,364

1,,O50,796

1,1,,242,OO0

Total liabilities

See accompanying notes to the financial statements.

-t2-

52,585,823 L,429,58O 54,015,403

Muhlenberg County School DistrictStatement of Net Position

June 30, 201.5

Governmental

ActivitiesBusiness-Type

Activities Total

Deferred lnflows of Resources

Pension related 1,,097,497 157,503 L,255,000

Total deferred inflows of resources L,097,497 1_57,503 1,255,000

Net Position

Net investment in capital assets

Restricted for:

Capital projects

Greenville Library

U nrestricted

48,412,713

459,377

519,3L7(6,005,455)

454,563 48,867,276

2)(617,79

459,377

5r9,317(6,623,2471

Total net position s 43,385,952 s (163,229) 5 43,222,723

See accompanying notes to the financial statements

-13-

i.t::- -:t- :u: -: \ -.--

Muhlenberg County School DistrictStatement of Activities

Net (Expense) Revenue andChanges in Net Position

Yeor Ended June 30, 201-5

Governmental Activities:I nstructio n

Support services:

Studentlnstructional staffDistrict administrationSchool administrationB usi ness

Plant operations and

maintenanceStudent tra nsportation

OtherFood service operationlnterest on long-term debtBond issuance cost

Total governmental activities

Business-Type ActivitiesFood services

Community educationDay care

5 40,67s,r20 S 7,380 S 3,79'r,726 5 170,569 S (36,705,445) S

Charges forServices

Progranr Rrevenues

OperatingGrants and

Contributüons

CapitalGrants and

ContributionsGovernmental

Activitles

Business-Type

Activities

(62,060)

10

19,553

Expenses

L,879,38r1,,Ct88,924

L,642,8O9

2,9t36,8961,3;91_,301_

4,9t07,O89

4,C172,764

€;51,953

75,888r,4.47,424

53 640

2,88L,725300

234,752

Total

s (36,705,445)

(1,954,999)(r,026,334)(1,642,8O9)(2,833,539)(L,2L4,753)

(4,897,355)(3,955,672)

(228,42s)(75,888)

1",507,L61_

(53,640)

(52,981,698)

(62,060)

10

l_9,553

FÞ 6,644

336,rO2310

220,411,

24,38262,590

l_03,357176,548

3,O94'J.L7,O92

423,528

2,483,563

2,954,585

(1,854,999)(1.,026,334)(1.,642,9O9)

(2,833,539)(1,,21,4,753)

(4,897,355)(3,955,672)

(228,425)(75,888)

1,507,1_61-

(53,640)

60,8i23,189 14,020 4,702,317 3,125,L54 (52,981,698)

Total business-type activities

Total school district

33,894

3,1..16,777 556,823 2,5LV,457 (42,497) (42,497\

S 63,9,39,966 S 570,843 S 7,2!9,774 5 3,tzs,rsl (s2,991,,698) (42,497) (53,02 4,195)


..:

Muhlenberg County School DistrictStatement of Activities

Net (Expense) Revenue andChanges in Net Position

Business-

TypeActivities Total

GovernmentalActivities

F(JlI

Yeqr Ended June 30, 201"5

General Revenues

Taxes:

PropertyMotor vehicle

Unmined minerals

Fra nchise taxRevenue in lieu of taxesOther

State aid

I nvestment earnings (loss)

OtherTra nsf e rs

Total general revenues and transfers

Change in net position

Net position - beginning of year

Effect of adoption of GASB 68

Net position - beginning of year, as restated

Net

51,802,48s (61,820) 51",740,665

(L,r79,2L31 (1,04,3L7) (1,283,530)

54,706,74L !,396,5!2 56,103,253

(r0,1.41.,576) (t,455,424) (11,597,000)

44,565,165 (58,912) 44,506,253

5,246,6L6985,544295,790

1,029,7427,685,855

389,75435,10L,364

(111,823)

1,,1,15,408

64,235

2,415

(64,235)

5,246,616985,544295,790

1,029,7427,695,955

389,75435,1_01_,364

(109,408)

1-,LL5,40B


ition - end of af $ 43,38s,es2 s 163 229 5 43,222,723

Muhlenberg County School Districttsalance Sheet

Governmental Funds

lune 30, 201-5

Assets

Cash

lnvestmentsAccounts receivable:

Taxes

Acco u nts

I nte rgove rn m e nta I

Due from other funds

I nve nto ry

Prepaid expenses

Total assets

SpecialGeneral Fund Revenue Fund

5 3,761,120 $

5!9,3X7

340,511_

277,495585,723

102,325

L37,5r9786,7V2

ConstructionFund

OtherGovernmental

Funds

TotalGovernmental

Funds

s 1.19,969 s31

459,377 5 4,340,466- 51,9,348

340,5'J-1-

277,495585,723

1,02,325

1,37,519

786,772FO)

$ s,gzs,osg S sas,zzs S 120,000 5 +sg,ztt S 7,090,1s9

See accompanying notes to the financial stertements

Muhlenberg County School DistrictBalance Sheet

Governmental Funds

Generat Fund *".i"l"rltJr"o

36,21,1, s84,303

102,325

477,470

120,5L4 585,723

924,29L5r9,3I75l_5,982

3,844,955

5,928 5 L20,000 S

120,000

ConstructionFund

OtherGovernmental

Funds

TotalGovernmental

FundsJune 30, 20L5

Liabilities and Fund Balances

LiabilitiesAccounts payable

Accrued liabilitiesDue to other funds

Unearned revenue

Total liabilities

Fund Balances

Nonspenda ble

Restricted

Assigned

U nassigned

Total fund balances

Total liabilities and fund balances

ss L62,L39

84,303

102,325

477,470

826,237

924,29L978,694515,982

3,844,955

P

459,377

5,804,545 459,377 6,263,922

5 5,925,059 S sss 723 5 tzo,ooo 5 4s9,371 S 7,o9o, i-59


Muhlenberg County School DistrictReconciliation of the Governmental Funds

Balance Sheet to the Statement of Net Position

June 30, 2015

Total fund balances - governmental funds

Amounts reported for governmental activíties in the statement of net positionare different because:

Capital assets used in governmental activities are not financial resources

and, therefore, are not reported as assets in governmental funds. The cost

of the assets is 5129,195,791, and the accumulated depreciation is(/ 1 ,4 ai q,ln\J-LtlvLtJLV.

Governmental funds record losses on debt refundings as other financing

uses when the issues are refunded. Unamortized losses on refundings are

included on the government-wide financial statements as a deferredoutflow.

Deferred outf lows and inf lows or resoure es related to pensions are

applicable to future periods, therefore, are not reported in the funds

statements.

Long-term liabilities, including bonds payable, are not due and payable inthe current period and, therefore, are not reported as liabilities in thefunds. Long-term liabilities at year-end consists of:

Bonds payable

Accrued interest on outstanding bondsNet pension liabilityCompensated absences

5 6,263,e22

a-7 -71 /1 )-719t tt L-rL' ¿

.l 4)õ )a)^L,LJJ,JJJ

130,331

(4O,440,897)(300,670)

(9,831.,1.29)

(1,289,2L5)

Total net position - governmental activities S 43,385,952


-18-

Muhlenberg County School DistrictStatement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds

Special

General Fund Revenue Fund

ContructionFund

OtherGovernmental

Funds

TotalGovernmental

FundsYear Ended June i 20L5

Revenues

From local sources:

Taxes:

PropertyMotor vehicleUnmined mineralsFranchise taxRevenue in lieu of taxes

OtherEarnings on investmentsOther local revenue

I ntergovernmental - stateI ntergovernmental - federa I

Total revenues

ExpendituresCu rre nt:

I nstructio nSupport services:

Studentlnstructional staffDistrict adm i nistrationSchool administration

45,813,502 4,972,996 900,023 3,744,407 55,330,919

30,144,720 4,L00,g47 34,245,567

5 4,4s6,7ir 5

985,544295,790

1,029,742

7,685,855389,754

(11.1.,823)

91_5,336

29,952,441,

21,4,092

1,703,239933,902

L,596,2422,613,312

688

r,4g2,2gg3,3Bg,g0g

24,38262,590

S zgg,g+s

2,78r,9!9172,643

$ 5,246,616985,544295,790

1,029,7427,685,855

389,754(1_1.1.,1"1,2)

l-,81_5,336

34,21,6,649

3,776,644

r,727,620996,492

1,596,2422,71,6,669

$

Pro 23

900,000


103,357

'" : !i-_ _: -. . .. .: :.:. ..

Muhlenberg County School DistrictStatement of Revc'¡nues, Expenditures and Changes in Fund Balances

Governmental Funds

o

Year Ended June 30, 2015Busi ness

Plant operations and maintenanceStudent tra nsportation

OtherFood service operation

Debt service:

Principal

I nterestBuilding acquisition and constructionBond issuance costs

Total expenditures

Excess (deficiency) of revenues over expenclitures

Other Financing Sources (Uses)

Bond proceeds

Operating transfers in

Operating tra nsfers o ut

Total other financing sources (uses)

Net change in fund balances

Fund balances - beginning of year

Fund balances - end of year

Special

General Fund Rever¡ue Fund

1,,178,242

4,944,2543,71-9,509

245,08477,241

3,6!7,722(815,140)

2,802,592

l_,560,341

4,244,204

ContructionFund

176,5483,094

1,1,7,092

423,528

2,500,75353,640

138,552

4,387,1,20

676,588(3,553,487)

l_38,552 !,5L0,22L

(144,1.49)

'J,44,r49

OtherGovernmental

Funds

2,476,7351",2l_8,095

2,1-43,969(2,1,43,868)

49,587

409,790

llotalGovernmental

Funds

1-,354,790

4,947,3493,836,600

668,61_2

77,241

2,476,7351,2L8,O85

2,500,75353,640

4,387,120

6,576,730(6,512,495\

4,451,,355

1,465,779

4,799,1_43

47,055,743 5,01_l_,438 2,554,393 3,694,820 58,31_6,394

(1,242,24'J.) (138,552) (1,654,370) 49,587 (2,985,576)

See accompanying notes to the financial st¿rtements

S 5,804,545 $ s 5 459,377 5 6,263,922

Year Ended June 30,

Muhlenberg County School DistrictReconciliation of the Governmental Funds

Statement of Revenues, Expenditures and Changes in

Fund Balances to the Statement of Activities

2015

Total net change in fund balances - governmental funds

Amounts reported for governmental activities in the statement of activitiesare different because:

Capital outlays are reported in governmental funds as expenditures.

However, in the statement of activities, the cost of those assets is allocated

over their estimated useful lives as depreciation expense. This is the amountby which depreciation expense (53,041,115) exceeds capital outlay(52,52'J.,666) in the period.

Repayment of bond principal is an expenditure in the governmentalfunds, butthe repayment reduces long-term liabilities in the statement of net position.

The issuance of a bond is shown as an other financíng source in thegovernmental funds, but the proceeds increase long-term liabilities in thestatement of net position.

Pledges received are recognized in the governmental funds as revenue, butthe receipt reduces the pledge receivable on the statement of net position.

Governmental funds report district pension contributions as expenditures.

However, in the statement of activities, the cost of pension benefits earned

net of employee contributions is reported as pension expense.District pension contibutionsCost of benefits earned net of employee contributions

Expenditures reported in the fund financial statements are recognized when

the current financial resource is used. However, expenses in the statement ofactivities are recognized when they are incurred.

5 '1",465,779

(519,449)

2,476,735

(4,387,r2r)

(900,000)

'J.,227,828

(787,O50)

244,065

Change in net position - govermental activities 5 0,L79,2r3)


-2L-


Proprietary Funds

June 30, 20L5

EnterpriseFund Food

Service

OtherEnterprise

Funds Total

Assets

Current Assets

Cash

lnventorys 696,052 s

36,55860,554 s 756,606

36,558

Total current assets 732,610 60,554 793,'l-64

Non-Current Assets

Fixed assets - net 454,563 454,563

Total assets 1,L87,T73 60,554 L,247,727

ñ^f^--^¡ ^..+fl^..,- ^f D^-^..--^-

Pension related 154,063 22,064 176,127

Total deferred outflows of resources 1,54,063 22,064 176,127

Liabilities

Current LiabilitiesAccounts oayableCompensated absences

'1,,512

3,17L63 1,,575

3,r71

Tnt¡l rr rrrpnt liehilitieq A ^9?

Â? A -7 AÊ,

Long-Term LiabilitiesCompensated absences

Net pension liability13,963

1-,233,247 r77,62413,963

L,4rO,87]"

Total long-term liabilities 1",247,21O 177,624 1_,424,834


-22-


Proprietary Funds

June 30, 20L5

EnterpriseFund Food

Service

OtherEnterprise

Funds Total


Pension related 137,674 19,829 r57 503

Total deferred inflows of resources r37,674 19,829 r57,503

Net PositionNet investment in capital assets

Unrestricted454,563

(502,894)454,563

6L7,7921(114,89B)

Total net position S (48,331) S (114,898) S (163,229)


-23-

Muhlenberg County School DistrictStatement of Revenues, Expenses änd Changes in Fund Net Position

Proprietary Funds

Year Ended June 30, 20L5Enterprise Fund

Food Service

OtherEnterprise

Funds Total

Operating RevenuesLunchroom sales

Tuition and feesS 336,102 S

220,72'J"

336,rO2220,72L

s

Total operating revenues 336,r02 220,721 556,823

Operating Expenses

Salaries and wages

Contract services

Materials and suppliesOther operating expenses

Depreciation expense

L,3I8,637L4,504

L,477,O!04,264

67,3r0

2!3,625

2L,I27300

L,532,26214,504

1_,498,L37

4,56467,3rO

Total operating ex penses 2,881",725 235,052 3,LL6,777

Operating loss (2,545,623) (14,331) (2,559,954)

Non-Operating Revenues ( Expenses)

State operating grantsFederal operating grants

Donated commoditieslnterest revenue

)?.7 ?^1Lr t t¿vL

2,O79,46LL66,74L

2,4L5

33,894 )71 1\\

2,O79,461t66,74t

2,415

Totai non-operating revenues (expenses) 2,485,978 33,894 2,519,872

lncome (loss) before transfers (59,645) 19,563 (40,082)

Transfers (64,235\ (64,235\


Net position - beginning of yearEffect of adoption of GASB 68

(123,880) 19,563 (L04,317)

L,347,740(r,272,19r\

48,772( 183,233)

1,396,5I2(1,,455,424\

Net position - beginning of year, as restated 75,549 (1.34,461.) (58,912)

Net position - end of year 5 (48,331) S (1L4,898) 5 (1.63,229)


-24-

Muhlenberg County School DistrictStatement of Cash Flows

Proprietary Funds

Year Ended June 30, 20L5

EnterpriseFund Food

Service

OtherEnterprise

Funds Total

Cash Flows From Operating ActivitiesCash received from user charges

Cash payments to employees forservices

Cash payments for contract servicesCash payments to suppliers for goods

and servicesCash payments for other operating expenses

5 ggz,ogo 5 22o,72't 5 aot,Btt

(1_,168,388)

(L4,5O4)

(l-,308,945)(4,264)

(1.87,575)

(21.,r27)(237)

(1,355,963)(L4,5O4)

(r,33O,O72)

(4,501)

Net cash provided by (used in) operating activites (2,L09,005) 11,,782 (2,097,223)

Cash Flows From Noncapital Financing ActivitiesOperating transfer from the general fundNonoperating grants received

(64,235)2,L06,733

(64,2351

2,106,733

Net cash provided by noncapital financing activities 2,O42,498 2,O42,498

Cash Flows From Capital and Related Financing

ActivitesAcquisition of capital assets (32,198) (32,198)

Net cash used in capital and related financing activities (32,r98) (32,198)

Cash Flows From lnvesting Activitieslnterest on investments 2,4L5 2,415

Net cash provided by investing activities 2,415 2,415

Net increase (decrease) in cash

Cash - beginning of year

(96,290)

792,342

1_1_,782

48,772

(84,508)

841,,1,1,4

Cash - end of year 5 696,052 5 6o,ss+ S 756,606


-25-

Muhlenberg County School DistrictStatement of Cash Flows

Proprietary Funds

Yeor Ended June 30, 201"5

Fund

Food Service

Enterprise

Funds Total

Reconciliation of Operating Loss to Net Cash ProvidedBy (Used ln) Operating Activities

Operating loss

Adjustments To Reconcile Operating Loss To Net Cash

Provided By (Used ln) Operating ActivitiesDepreciation

On-behaif paymentsCommodities used

Pension contributions in excess of pension expense

Changes in assets and liabilities:Receivables

lnventoriesAccounts payable

Accrued bcnefits

5 (2,s4s,623) S (14,331) S (2,559,954)

67,31_0

2L0,089166,741

(55,333)

50,994110

1_,214I A EA1\\''trJv; j

-3'3,894

(7,844)

63

67,3L0243,9831,66,741,

(63,177)

50,9941L0

L,277!A E^-?\

Net cash provided bv (used in) operating activities S (2,109,005) 5 L1.,782 5 Q,097,223\

Noncash Activities. The food service fund received 51-66,lqt of donated commodities from the federal

government.. The District received on-behalf pavments of 5243.983 relating to insurance benefits.. The District reclassified 5U6,tZl related to pension expense to deferred outflows of

resou rces.


-26-

June 30, 201-5

Muhlenberg County School DistrictStatement of Fiduciary Net Position

Fiduciary Funds

AgencyFunds

AssetsCash and investments S 734,8i_5

Total assets S z3+,gts

LiabilitiesDue to student rou

Total liabilities


5 734,8L5

5 734,8'J.S

-27-

Muhlenberg County School DistrictN!otes to the Finane ial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Eì¿nnt|ínn Ên|í*ttttLt¿vt.tttg LttLt.tt

The Muhlenberg County Board of Education (the "Board"), a five member group, is the level ofgovernment which has oversight responsibilities over all activities related to public elementary andsecondary school education within the jurisdiction of the Muhlenberg County School District (the"District"). The District receives funding from local, state and federalgovernment sources and mustcomply with the commitment requirements of these funding source entities. However, the Districtis not included in any other governmental "reporting entity" as defined in Section 2IOO, Codificationof Governmental Accounting ond Financial Reporting Stondards, as Board members are elected bythe public and have decision making authority, the power to designate management, theresponsibility to develop policies which may influence operations and primary accountability forfiscal matters.

The District, for financial purposes, includes all of the funds relevant to the operation of theMuhlenberg County School District. The financial statements presented herein do not include fundsof groups and organizations which, although associated with the school system, have not originatedwithin the Board itself such as Band Boosters, Parent-Teacher Associations, etc., except for thef..-^l- ^J.-^:.^:^!^.--i -- -.- -^t:--:r.

:.- rl-- .J--.--l-lu¡¡us dul¡liíi15tCíeU d5 dl¡ dCtlV¡Ly lf ¡ tíie ci!,eí¡Uy lUllU5.

For financial reporting purposes, the accompanying financial statements include all of theoperations over which the District is financially accountable. The District is financially accountablef¡r ¡roanizetinnc thef maþa t n iic loorl ontiirr rc rrroll rc loorllrr canrrrlo nrornizrÌinnc fhrf moot-v,¡r,!t, y JL|Jvi 6urrr¿srrv'rJ rrrur ¡¡rlLr

certain criteria. ln accordance with GASB 14, "The Financial Reporting Entity," as amended by GASB

39, "Determining Whether Certain Organizations Are Component Units," the criteria for inclusion inthe reporting entity involve those cases where the District or its officials appoint a voting majorityof an organization's governing body, and is either able to impose its will on the organization andthere is a potential for the organization to provide specific financial benefits to or to impose specificfinancial burdens on the District or the nature and significance of the relationship between theDistrict and the organization is such that exclusion would cause the District's financial statements tobe incomplete.

Based on the foregoing criteria, the financial statements of the following organization are includedin the accompanying financial statements as a blended component unit:

Muhlenberg County School District Finance Corporation - The Muhlenberg County Boardof Education resolved to authorize the establishment of the Muhlenberg County SchoolDistrict Finance Corporation (a nonprofit, nonstock, public and charitable corporationorganized under the School Board Act and KRS 273 and KRS 58.180) as an agency of theBoard for financing the costs of school building facilities. The Board members of theMuhlenberg County Board of Education also comprise the Corporation's Board of Directors.

"28-

Muhlenberg County School DistrictNotes to the Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Bosis of Presentation

Government-Wide Financial Statements - The statement of net position and the statement ofactivities display information about the District as a whole. These statements include the financialactivities of the District, except for fiduciary funds. Eliminations have been made to minimize thedouble counting of internal activities. The statements distinguish between those activities of theDistrict that are governmental and those that are considered business-type activities. Governmentalactivities generally are financed through taxes, intergovernmental revenues and other nonexchange

transactions. Business-type activities are financed in whole or in part by fees charged to externalparties.

The government-wide statements are prepared using the economic resources measurement focus.

This is the same approach used in the preparation of the proprietary fund financial statements butdiffers from the manner in which governmental fund financial statements are prepared. Governmentalfund financial statements, therefore, include reconciliations with brief explanations to better identifythe relationship between the government-wide statements and the statements for governmental

funds.

The government-wide statement of activities presents a comparison between direct expenses andprogram revenues for each segment of the business-type activities of the District and for each functionor program of the District's governmental activities. Direct expenses are those that are specificallyassociated with a service, program or department and are, therefore, clearly identifiable to a particularfunction. Program revenues include charges paid by the recipient of the goods or services offered by

the program and grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular program. Revenues that are not classified as program revenues arepresented as general revenues of the District, with certain limited exceptions. The comparison of directexpenses with program revenues identifies the extent to which each business segment orgovernmental function is self-financing or draws from the general revenues of the District.

Fund Financial Statements - Fund financial statements report detailed information about theDistrict's funds, including fiduciary funds. Separate statements for each fund categorygovernmental, proprietary and fiduciary - are presented. The focus of governmental and proprietaryfund financial statements is on major funds rather than reporting funds by type. Each major fund is

presented in a separate column. Nonmajor funds are aggregated and presented in a single column.Fiduciary funds are reported by fund type.

29.



The District has the following funds

Governmenta! Fund Types

The General Fund is the primary operating fund of the District. lt accounts for financialresources used for general types of operations. This is a budgeted fund and any unassignedfund balances are considered as resources available for use. The general fund is a major fund.

The Speciol Revenue Fund accounts for proceeds of specific revenue sources that are restricted,committed or assigned to expenditures for specified purposes other than debt service orcapital projects. lt includes federal financial programs where unused balances are returned tothe grantor at the close of specified project periods as well as the state grant programs.Project accounting is employed to maintain integrity for the various sources of funds. Theseparate projects of federally-funded grant programs are identified in the schedule ofexpenditures of federal awards. The special revenue fund is a major fund,

Capital Projects Funds are used to account for and report financial resources that arer^-+-:^e^,J ^^--:L!-.J ^- ^-.^:^-^J s^ ^..-^-l:s..-^- C^.- -^-:!^l ^..!!^..^ :--t..J:.--:L-rË)Lr rLrcu, LUililfiil.Lcu ut d55rE,llcu tu c^Frgiluttutc) tuf Ldpttdt uuudy5, iltLtuuiltg Lt tc

acquisition or construction of capital facilities and other capital assets. Capital projectsfunds exclude those types of capital-related outflows financed by proprietary funds or forassets that will be held in trust for individuals, private organizations or other governments.

The Support Education Excellence in Kentucky (SEEK) Capital Outloy Fund receivesthose funds designated by the state as capital outlay funds and is restricted for use infinancing projects identified in the District's facility plan and certain operating costs.

fhe Facility Support Progrom of Kentucky (FSPK) Fund accounts for funds generatedby the building tax levy required to participate in the School Facilities ConstructionCommission's construction funding and state matching funds, where applicable.Funds are restricted for use in financing projects identified in the District's facilityplan.

The Construction Fund accounts for proceeds from sales of bonds and other revenuesto be used for authorized construction. The construction fund is a major fund.

The Debt Service Fund is used to account for and report financial resources that arerestricted, committed or assigned to expenditures for principal and interest and other debtrelated costs.

.30



Proprietary Fund Types

Enterprise Funds

fhe Food Service Fund is used to account for school food service activities, including theNational School Lunch Program, which is conducted in cooperation with the U.S. Departmentof Agriculture (USDA). Amounts have been recorded for in-kind contributions of commoditiesfrom the USDA. The food service fund is a major fund.

The Community Education Fund is used to account for local community education activities.

fhe Day Care Fund is used to account for day care services offered to the general public.

To the proprietary activities, the District applies all GASB pronouncements as well as theFinancial Accounting Standards Board pronouncements issued on or before November 30,

l-989, unless those pronouncements conflict with or contradict GASB pronouncements.

Fiduciary Fund Types (includes agency funds)

Fiduciary funds account for assets held by the District in a trustee's capacity or as an agent onbehalf of others.

Agency Funds

The Activity Fund accounts for activities of student groups and other types of activitiesrequiring clearing accounts. The student funds are accounted for in accordance with UníformProgram of Accounting for School Activity Funds.

Meosurement Focus and Bosis of Accounting

Government-Wide, Proprietary and Fiduciary Fund Financial Statements - The government-wide,proprietary and fiduciary fund financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting. . With this measurement focus, all assets

and liabilities associated with the operation of these funds are included on the balance sheet.Proprietary and fiduciary fund-type operating statements present increases (i.e., revenues) and

decreases (i.e., expenses) in net position. Revenues are recorded when earned and expenses arerecorded at the time liabilities are incurred, regardless of when the related cash flow takes place.

Governmental Fund Financial Statements - Governmental funds are reported using the currentfinancial resources measurement focus and the modified accrual basis of accounting. This approachdiffers from the manner in which the government-wide financial statements are prepared. Thegovernmental fund financial statements, therefore, include reconciliations with brief explanations to

-3L-


NOTE L: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

better identify the relationship between the government-wide statements and the statements forgovernmental funds. With this measurement focus, only current assets and current liabilitiesgenerally are included on the balance sheet. Operating statements of these funds present increases(i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financinguses) in the fund balance. On this basis of accounting, revenues are recognized when they becomemeasurable and available as assets. Expenditures are generally recognized under the modifiedaccrual basis of accounting when the related fund liability is incurred. An exception to this generalrule is interest on general long-term debt, which is recognized as expenditure when paid.

The records of the District and the budgetary process are based on the modified accrual basis ofaccounting, This practice is the accounting method prescribed by the Committee for School DistrictAudits. The District is required by state law to adopt annual budgets for the general fund, specialrevenue fund and capital projects funds.

Estimotes

The preparation of financial statements in conformity with accounting principles generally accepted:-- sL.^ ! !..:r.^-J C+^!.^- ^'' ^

*^-:^^ -^^..:--.- : :^ ---l-- --!:.-^-!-- -.-l ---...-^.-::^.-- !!-^!ilr Lilc LrtilLsu JLdrc) ut i.\rilgtrLd rÉtlultË5 tildildB,ciltettt ru iltdKc e5Ulildte5 dftu d55utftfJUUils Utdt

affect reported amounts of assets, liabilities, designated fund balances and disclosure of contingentassets and liabilities at the date of the financial statements, and the reported amounts of revenuesand expenditures during the reporting períod. Actual results could differ from those estimates.

lnvestments

lnvestments are reported at fair value which is determined using selected bases. Short- terminvestments are reported at cost, which approximates fair value. Securities traded on a national orinternational exchange are valued at the last reported sales price at current exchange rates, andinvestments that do not have an established market are reported at estimated fair value. Cash

deposits are reported at carrving amount, which reasonablv estimates fair value,

lnventory

Supplies and materials are charged to expenditures when purchased (purchases method) with theexception of the proprietary funds and transportation supplies in the General Fund, which recordinventory at the lower of cost, determined by first-in first-out ("FlFO") method, or market.

.32.



CapitolAssets

General capital assets are those assets not specifically related to activities reported in the proprietaryfunds. 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 butare not reported in the fund financial statements. Capital assets utilized by the proprietary funds are

reported both in the business-type activities column of the government-wide statement of net position

and in the respective funds.

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and

retirements during the year. Donated fixed assets are recorded at their fair market values as of thedate received. The District maintains a capitalization threshold of SS,0OO with the exception ofcomputer workstations and laptops for which there is a $t,000 threshold. The District does notpossess any infrastructure. lmprovements are capitalized; the cost of normal maintenance andrepairs that do not add to the value of the asset or materially extend an asset's life are notcapitalized.

All reported capital assets are depreciated. lmprovements are depreciated over the remaininguseful lives of the related capital assets. Depreciation is computed using the straight-line methodover the following useful lives for both general capital assets and proprietary fund assets:

Description Estimated Lives

Buildings and improvements

Land improvements

Technology equipment

Vehicles

Audio-visua I equipment

Food service equipment

Furniture and fixtures

Rolling stock

Other

25-50 years

20 years

5 years

5-L0 years

15 years

10-12 years

7 years

1-5 years

1-0 years

ln the fund financial statements, fixed assets used in governmental fund operations are accountedfor as capital outlay expenditures of the governmental fund upon acquisition. Fixed assets are notcapitalized and related depreciation is not reported in the fund financialstatements.

-33-




The District reports decreases in net position that relate to future periods as deferred outflows ofresources in a separate section of its government-wide and proprietary funds statements of netposition. The only deferred outflows of resources reported in this year's financial statements are a

deferred amount arising from the refunding of bonds and a deferred outflow of resources forcontributions made to the District's defined benefit pension plan between the measurement dateof the net pension liabilities from the plan and the end of the District's fiscal year. The deferredrefunding amount is being amortized over the remainíng life of the refunding bonds as part ofinterest expense. No deferred outflows of resources affect the governmental funds financialstatements in the current year.


The District's statements of net position and its governmentalfund balance sheet report a separatesection for deferred inflows of resources. This separate financial statement element reflects an

increase in net position that applies to a future period(s). Deferred inflows of resources are-^^^-!^-J:-- r.L^ n:-r-;*sr-. -.^-i^..- -f .^-¡ ---:!:^.- J-.- --!..^!.-^.--:-.-.-!^.-:.-.¡cpLrrcLr ilr Lils L/r5LlrLr,5 vdf ruLrs )r.dLcilrcr il.5 ur ¡rct pu5tttuil rur dLtudt pcf t5tul¡ fJtdil iltvc5tf ftcf tL

earnings in excess of the expected amounts included in determining pension expense. This deferredinflow of resources is attributed to pension expense over a total of 5 years, including the currentyear. ln its governmental funds, the only deferred inflow of resources is for revenues that are not¡nnciriorod rr¡riirhia Tho ñiclri¡t r¡rili nnù ro¡naniza tha ralara¡i r¡c ¡ rn+ii +h^., -.^ -',-ii-h¡^rrvr r!9v6rrr¿L llrL rLrq(Lu tLvLtrqgJ qtt!tt tttçy qtg qvqilqwtç

(collected not later than 60 days after the end of the District's fiscal year) under the modifiedaccrual basis of accounting. No deferred inflows of resources affect the governmental fundsfinancial statements in the current year.

Unearned Revenue

Unearned revenue arises when assets are recognized before revenue recognition criteria have beensatisfied. Grants and entitlements received before the eligibility requirements are met arerecorded as unearned revenue.

Compensated Absences

The District uses the vesting method to compute compensated absences for sick leave. Sick leavebenefits are accrued as a liability as the benefits are earned if the employees' rights to receivecompensation are attributable to services already rendered and it is probable that the District willcompensate the employees for the benefits at termination. The District records a liability foraccumulated unused sick leave when earned for all employees with more than five years of service.

The entire compensated absences liabilitystate me nts.

IS

-34-

reported on the government-wide financial

Muhlenberg County School DistrictNotes to the FinancialStatements


For governmental fund financial statements, compensated absences are reported as liabilities and

expenditures as payments come due each period upon the occurrence of employee resignationsand retirements. These amounts are recorded in the funds from which the employees will be paid.

Accrued Liobílities and Long-Term Obligotions

All payables, accrued liabilities and long-term obligations are reported in the government-widefinancial statements. ln 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. Bonds are recognized as a liability on the fund financial statements whendue.

Net Position

The District classifies its net position into the following three categories

Net investment in capital ossefs - This represents the District's total investment in capitalassets, net of accumulated depreciation, reduced by the outstanding balances of bonds thatare attributable to the acquisition, construction, or improvement of those assets. Deferredoutflows of resources and deferred inflows of resources that are attributable to theacquisition, construction, or improvement of those assets or related debt also should be

included in this component of net position.

Restricted - The restricted component of net position consists of restricted assets reduced by

liabilities and deferred inflows of resources related to those assets. Generally, a liabilityrelates to restricted assets if the asset results from a resource flow that also results in therecognition of a liability or if the liability will be liquidated with the restricted assets reported,

Unrestricted - The unrestricted component of net position is the net amount of the assets,

deferred outflows of resources, liabilities, and deferred inflows of resources that are notincluded in the determination of net investment in capital assets or the restricted componentof net position,

When an expense is incurred that can be paid using either restricted or unrestricted resources, theDistrict's policy is to first apply the expense towards restricted resources, and then towardsu nrestricted resou rces.

-35.

Muhlenberg County School DistrictNotes to the Financial Staternents


Dtaaav+tt T^.'^-rtvPçtLy tq^EJ

Property taxes collected are recorded as revenues in the fund for which they were levied. Theassessment date of the property taxes is January l- of each year. The levy is normally set during theSeptember board meeting. Assuming property tax bills are timely mailed, the collection date is theperiod from September 15 through December 31. Collections from the period September 1-5

through November l- receive a two percent discount. The due date is the period from November 2through December 31 in which no discount is allowed. Property taxes received subsequent toDecember 31 are considered to be delinquent and subject to a lien being filed by the CountyAttorney.

Revenues - Exchange snd Nonexchange Tronsactions

Revenues resulting from exchange transactions are where each party receives equal value. On themodified accrual basis of accounting, revenues are recorded in the fiscalyear in which the resourcesare measurable and available. Available means that the resources will be collected within thecurrent fiscal year or are expected to be collected soon enough thereafter to be used to payl:^!-:!:+:^.. ^f +L.-- ^..----*L C:^^^! .,^-- T--- r!-^ n:^r-:^! ^..^:l^Ll^ i r^ L- .-^--:.--J ...:gL:.-ilduilrLrEr ur rilc LtlrrertL il)Ldr ycdf . rur Utc L.,l51ÍLt, dvdildutc iltcdil5 eÃfJeLtcu !u uc f cLetvcu wtUilf I

60 days of the fiscal year-end.

Nonexchange transactions, in which the District receives value without directly giving equalvalue inraittrn in¡l¡rÀa ñr^ñôrfr/ lrwac crrntc anfiliomontc rn¡i ¡innclinnc Accafc fr^- ^.^^^rt'\, +-vôc -r^¡!rq¡¡r, |\/rvl/Lrly lq^lJr 6'rqrr(J, !rrr¡rrLrrrLrrLJ qrrq svrrullvrrJ, nJJ!lJ ¡rvr¡r v¡vvLrly Lq^LJ qlL

normally recognized when an enforceable legal claim arises. However, for the District, an

enforceable legal claim arises after the period for which taxes are levied. Property taxes receivableare recognized in the same period that the revenues are recognized. The property taxes arenormally levied in September.

On the modified accrual basis of accounting, assets and revenues from property taxes arerecognized in the fiscal vear for which the taxes are levied. Revenue from grants, entitlements anddonations ís recognized in the fiscal year in which all eligibility requirements have been satisfied.Eligibility requirements include timing requirements, which specify the year when the resources arerequired to be used or the fiscal year when use is first permitted; matching requirements, in whichthe District must provide local resources to be used for a specified purpose; and expenditurerequirements, in which the resources are provided to the District on a reimbursement basis.

Revenues from nonexchange transactions must also be available before they can be recognized.

lnterfund Activity

Exchange transactions between funds are reported as revenues in the seller funds and as

expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to anotherwithout a requirement for repayment are reported as interfund transfers. lnterfund transfers arereported as other financing sources/uses in governmental funds and as nonoperatingrevenues/expenses in proprietary funds.

.36.



lnterfund Balances

On fund financial statements, receivables and payables resulting from short-term interfund loans

are classified as interfund receivables/payables. These amounts are eliminated in the governmental

and business-type activities columns of the statements of net position, except for the net residual

amounts due between governmental and business-type activities, which are presented as internalbalances.

Contributions of Capitol

Contributions of capital in proprietary fund financial statements arise from outside contributions offixed assets or from grants or outside contributions of resources restricted to capital acquisition and

construction.

Operoting Revenues ond Expenses

Operating revenues are those revenues that are generated directly from the primary activity of theenterprise fund. For the District, these revenues are sales for food service, Operating expenses are

necessary costs incurred to provide the service that is the primary activity of the enterprise fund.

Subsequent Events

The District has evaluated any recognized or unrecognized subsequent events for consideration in

the accompanying financial statements through October 29,2OI5, which was the date the financialstatements were made available.

Recentlv lssued and Adopted Accounting Pronouncements

GASB issued Statement No. 68, Accounting and Financiol Reporting for Pensions - an amendment ofGASB Statement 27 improves accounting and financial reporting by state and local governments forpensions. lt also improves information provided by state and local governmental employers aboutfinancial support for pensions that is provided by other entities. This statement results from a

comprehensive review of the effectiveness of existing standards of accounting and financialreporting for pensions with regard to providing decision-usef ul information, supportingassessments of accountability and inter-period equity, and creating additional transparency. The

District has implemented the new requirements of this statement for the fiscal year ended June 30,

201-5. The implementation of GASB 68 resulted in the reduction of beginning net position by

51i-,597,000.

-37

Muhlenberg County School DistrictNotes to the Finaneial Statements


GASB issued Statement No. 7l-, Pension Transition for Contributions Made Subsequent to theMeosurement Date - an omendment of GASB Stotement 68 improves financial accounting andfinancial reporting by addressing an issue in GASB Statement No, 68 concerning tr"ansitionprovisions related to pension contributions made by employers and nonemployer contributingentities to defined benefit pension plans after the measurement date of the government'sbeginning net pension liability and prior to implementation of Statement No. 68. The provisions ofthis Statement are required to be applied simultaneously with the provisions of Statement No. 68.The District has implemented the new requirements of this statement for the fiscal year ended June30, 2015. The implementation of GASB 71 resulted in the recording of deferred outflows ofresources of Sl-,403,955 from the current year pension contributions.

NOTE 2: CASH AND INVESTMENTS

Deposits

At June 30,2OI5, the carrying amounts of the District's cash in deposits were 55,831,887 and thehihl- hâl-^ C7 ono 7no ..,!-;-!^ -^,J ,.., f^r^--! -J^^^-:+^.,, :--.-..-^*-^ --- L..sorl\ úqrút¡LrJ úvc¡ç atr ruwortvo, vvt ilLrr vvctc L(/vcrcu tJy tcucldt ucpu5ttuty lil)utdiltg Lr¡ IJY

collateral held by the bank's agent in the District's name.

The carrying amounts are reflected in the financial statements as follow:

June 30, 201,5

Governmental fundsProprietary fundsFiduciary funds

5 4,340,466756,606734,815

S 5,831,897

Custod i a I Credit Ri s k- D e posits

Custodial credit risk is the risk that, in the event of a bank failure, the District's deposits may not bereturned to it. The District does not have a formal deposit policy for custodial credit risk. However,the District is required by state statute that bank deposits must be collateralized. The District's bankbalance of ST,s0s,T08wasnotexposedtocustodial creditriskasof June30,2Ol-5.

38"


NOTE 2: CASH AND INVESTMENTS (CONTINUED)

lnvestments

The District's investments, which are stated at fair market value, at June 30,2015 are as follow

June 30, 20L5lnvestment Rating Maturities Fair Value

Chevron Corp StockExxon Mobile Corp

NA

NA

l_31,006388,342

5 519,348

lnterest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means

of managing its exposure to fair value losses arising from increasing interest rates.

Credit Risk

Under Kentucky Revised Statutes Section 66.48O, the District is authorized to invest in obligations ofthe United States and its agencies and instrumentalities, obligations and contracts for futuredelivery or purchase of obligations backed by the full faith and credit of the United States or of itsagencies, obligations of any corporation of the United States government, certificates of deposit,commercial paper rated in one of the three highest categories by nationally recognized ratingagencies and securities in mutual funds shall be eligible investments pursuant to this section. The

District has no investment policy that would further limit its investment choices.

Concentrotion of Credit Risk

The District's investment policy places no limit on the amount the District may invest in any oneissuer. More than five percent of the District's investments are in stock. These investments are

1,00% of the District's total investments.

39


NOTE 3: INTERFUND RECEIVABLES AND PAYABLES

lnterfund balances at June 30,2OL5 consist of the following

lrrno ?O 2O1Ç-s.tv -Yt -vL¿

Receivable Fund Payable Fund AmountGeneral Fund Special Revenue Fund S ro2,325

The amounts represent interfund loans between the generalfund and special revenue fund.

NOTE 4: CAPITAL ASSETS

Capital asset activity for the year ended June 30, 201-5 was as follows:

ital Cost

June i0,20L5BeginningBalance Additions

Retirements/Reclassifications

EndingBalance

n^¡,^ehm^á+^l ^ ^+:..:+:^-.

Capital assets that are not depreciatedLa nd

Construction in progress 10,954 ,286 2,498,804 13,453,090s 2,391,197 s s 5 2,39r,197

Total non-depreciable historical cost 13,345,483 2,498,804 13,453,090 2,39'i.,197

Capital assets that are depreciatedLand improvementsBuildings and improvementsTechnology equipmentVe hicles

General

2,403,29995,596,5104,977,6537,329,9603,r2r,220

13,453,0906,862

75,686

59,6862,403,299

108,989,9144RR4s15

7,329,9603,196,906

Totai ciepreciabie historica i cost it3,328,642 13,535,6J8 5e,686 L26,804,594

Less accumulated depreciation for:Land improvementsBuildings and improvementsTechnology equipmentVehiclesGeneral

1,,366,323

24,890,8454,309,7375,546,8692,326,63L

82,7892,205,7O9

242,707369,895140,01.6

1,449,',J,12

27,096,5534,552,4445,91,6,764

2,466,647

Total accumulated depreciation 38,440,405 3,O41.,115 41,481,,520

Total depreciable historical cost, net 74,888,237 10,494,523 59,686 8s,323,074

Govern menta I activities,capital assets, net 5 88,233,720 5 12,993,327 5 r3,5r2,1i6 $ gl,ltq,zlt

.40-

NOTE 4: CAPITAL ASSETS (CONTINUED)

June i0, 2015


Capital CostBeginningBalance Additions

Retirements/Reclassifications

EndingBalance

Busi ness-Type Activities:Capital assets that are depreciated

Buildings and improvementsTechnology equipmentGeneral

) s $24,1.96

2,1,66

7,583,268 32,1.98

5 24,1.96

2,1661,6L5,466

Total depreciable historical cost 1,609,620 32,198 1,641,,818

Less accumulated depreciation for:Buildings and improvementsTechnology equipmentGeneral

L9,8192,13O

7,097,996

2,0'1,5

65,295

21,8342,130

1.,163,291

Total accumulated depreciation 'J,,1I9,945 67,31_0 7,197,255

Busi ness-type activities,capital assets, net S 489,675 S (35,112) S $ 454,563

Depreciation expense was charged to governmental functions as follows

Yeor ended June 30 20L5

I nstructio n

Support services:Student supportlnstructional staffDistrict admin istrationSchool administrationBusiness supportFacilities operationsStudent tra nsportationOther

5 2,490,555

6,249L,554

L3,1_87

4251,872

l_65,91_6

361,028329

Total depreciation expense 5 3,04L,1"1"5

-4I-


NOTE 5: LONG-TERM OBLIGATIONS

The original amount of each issue, the issue date and interest rates are summarized below

lssue Date Proceeds Rates

2003 Bond

2007 Bond

2007R Bond

2009R Kista

2010 Bond

2011R Bond

2012R Bond

2012 Bond

2013 Bond

201-4 Bond

2014(2) Bond

s l_,1_35,000

2,000,0004,015,000

362,95112,670,O006,560,0008,775,OO0

1,1"00,000

6,000,000l-,1-00,000

3,325,000

2.OO%-450%

3.63%-4.00%3.40%-3.90%1'OO%-3.OO%

0.70%-5.55%1,.25%-2.I25%

2.OO%

0.90%-2.125%1..00%-3.OO%

1,.O0%-4.OO%

3.OO%-3.375%

On July 1-,2OL4, the District issued 51,1-00,000 General Obligation Bonds with interest rates rangingfrom 1,.0O% - 4.0O% for additional cost related to the construction of a new Technology Wing atMuhlenberg County High School - West Campus,

On November L,2014, the District issued 53,325,000 General Obligation Bonds with interest ratesranging from 3.00% - 3.375% for additional cost related to the construction of a new TechnologyWing at Muhlenberg County High School - West Campus.

The District, through the General Fund, including utility taxes and the SEEK Capital Outlay Fund, is

obligated to make payments in amounts sufficient to satisfy debt service requirements on bondsissued bv the Muhlenberg Countr¡ School District Finance Corporation to construct school fae ilities.The District has an option to purchase the property under lease at any time by retiring the bondsthen outstanding.

The District has entered into "participation agreements" with the School Facility ConstructionCommission (SFCC). The Commission was created by the Kentucky General Assembly for thepurpose of assisting local school districts in meeting school construction needs. The table belowsets forth the amount to be paid by the District and the Commission for each year until maturity ofall bond issues. The liability for the total bond amount remains with the District and, as such, thetotal principal outstanding has been recorded in the financial statements. The District has US

Treasury Build America Bonds outstanding which requires the US Treasury to subsidize the Districtfor 35% of the interest cost for the outstanding bonds.

"42.


NOTE 5: LONG-TERM OBLIGATIONS (CONTINUED)

The bonds may be called prior to maturity and redemption premiums are specified in each issue.

Assuming no bonds are called prior to scheduled maturity, the minimum obligations of the District,including amounts to be paid by the Commission and US Treasury, atJune 30, 2015 for debt service(principal and interest) are as follows:

Muhlenberg CountySchool District

School FacilityConstruction Commission

US TreasuryBuild

AmericaBonds Total Debt

Year Principal lnterest Principal lnterest lnterest Service

2Ors-2OL6 s201.6-20!72017-20L82018-20192019-20202020-2021,202r-20222022-20232023-20242024-20252025-20267026-20272027-2028

2028-20292029-20302030-20312031,-20322032-20332033-20342034-203s

1,500,223 sL,538,O97

1",574,343

L,6O9,6161,653,518L,709,4961-,750,864

L,7gL,4O7

L,843,2601",576,827

1_,491_,553

L,53O,542L,494,OrO

r,539,L41"1_,582,526

L,63r,922822,L43850,106340,000355,000

900,596 s866,280829,726790,240746,964693,r77643,945592,035537,348483,'1,1"6

426,18L368,894308,586

248,241"

T84,2IB1_1,6,947

70,L1744,422

17,7L95,991

1,108,310 sL,132,r93L,100,657L,r25,384'J-,r5L,482

1,050,504L,O79,1361,103,593L,106,740

303,17331,8,447

329,458275,990

285,859302,47427B,O7B

r37,857I39,89475,00060,000

5 183,5s5 5

L80,r'J.4

176,252!7r,958L66,872158,7631,47,641,

r35,927123,478I10,14095,98880,71964,302

46,86228,479

9,51-B

4,O22,9124,022,s783,962,3543,953,3523,948,4Lt3,8r3,2243,798,L21,

3,773,8653,735,4052,571,3422,4L8,4O5

2,383,L902,202,8L6

2,L68,2r32,133,0062,058,827l-,043,8501_,043,3r9

436,619422,r92

330,228305,89428I,376256,L54229,57520L,284176,5351_50,903

r24,5799B,OB6

86,23673,57759,928

48,1_LO

35,30922,362]-3,7338,8973,9001,20r

5 28,i.84,594 5 8,874,743 5 12,464,229 5 2,so7,867 5 l_,880,568 S 53,912,001

-43


NOTE 5: LONG-TERM OBLIGATIONS (CONTINUED)

Changes in long-term obligations are as follows

Balance Balance

June 30, 2015

Amounts DueWithin One

YearJune 30, 2015 Julv L,2O!4 lncreases Decreases

Govern mental Activities:Bonds and notes payable:

General obligation debr S 38,700,558 5 4,425,OO0 5 Q,476,735) S 40,648,823 S

Less (discounts)/premiums (18 4,828) (37,879\ 'J.4,78'J. (2O7,926)2,608,s33

Total bonds and notes payable 38,515,730 4,387,1,21" (2,461,954) 40,440,997 2,608,533

Other liabilities:Compensated absences L,762,618 323,783 (797,1,86) 1,289,215 252,382

Total other liabilities 7T 618 323 783 97 18 289 21"5 252,382

T^+-l l^ lia bilities

Business-Type Activities:

Other liabilities:Compensated absences

q¿n ) no 9C4 /?1cô1¡n\ ê nlia^411 ê 1oá^ôrtr,Lr' Jvr¿¿L f Lr!evrJlr

$ 2r,641. 5 s (4,s07) 5 17,1.34 5 3,1.7r

Total long-term liabllties S zr,o+r 5 $ (4,s07) S 17,1.34 5 3,r7'J-

NOTE 6: FUND BALANCES

The Board follows GASB Statement Number 54. Under this statement, fund balance is separatedinto five categories, as follows:

Nonspendable fund balances are amounts that cannot be spent because they are either notin a spendable form (such as inventories and prepaid amounts) or are legally orcontractually required to be maintained intact. At June 30,201"5, the District had 5924,291,nonspendable in the general fund related to inventory and prepaid expenses.

-44-


NOTE 6: FUND BALANCES (CONTINUED)

Restricted fund balonces arise when constraints placed on the use of resources are eitherexternally imposed by creditors (such as through debt covenants), grantors, contributors orlaws or regulations of other governments or imposed by law through constitutionalprovisions or enabling legislation. AtJune 30,2O!5, the District had 551-9,317 restricted in

the general fund for Greenville Library, S3lLqZB restricted for prior year SFCC offer and

58l,gqg restricted for capital projects in the FSPK Fund.

Committed fund balances are those amounts that can only be used for specific purposespursuant to constraints imposed by formal action of the government's highest level ofdecision-making authority, which for the District is the Board of Education. The Board ofEducation must approve by majority vote the establishment (and modification orrescinding) of a fund balance commitment. The District did not have any commitments in

the general fund at June 30, 201-5.

Assigned fund bolonces are amounts that are constrained by the government's intent to be

used for specific purposes, but are neither restricted nor committed. The District has

assigned 5q6+,t22 in the general fund for site-base carry forward and Sst,860 forencumbrances at June 30,2015. Assigned fund balances also include (a) all remainingamounts (except for negative balances) that are reported in governmental funds, other thanthe general fund, that are not classified as nonspendable and are neither restricted norcommitted and (b) amounts in the general fund that are intended to be used for a specificpu rpose.

Unassigned fund balance is the residual classification for the general fund. This

classification represents fund balance that has not been assigned to other funds and thathas not been restricted, committed or assigned to specific purposes within the generalfund,

It is the Board's practice to liquidate funds when conditions have been met releasing these fundsfrom legal, contractual, Board er managerial obligations using restricted funds first, followed by

committed funds, assigned funds and then unassigned funds. Encumbrances are not liabilities and,

therefore, are not recorded as expenditures until receipt of material or service. Encumbrances

remaining open at the end of the fiscal year are automatically rebudgeted in the following fiscalyear. Encumbrances are considered a managerial assignment of fund balance at June 30, 201-5 in

the governmental funds balance sheet.

.45

Muhlenberg County School DistrictNotes to the Financiai Statements

NOTE 7: PENS]ON PLANS

Da^-i^^-r gt tJtvl lJ

l\,/lrthlpnhprs Cnuntrr Srhnol Dictrirt nerfirinrtoc in thp To¡rhorc' Rotiramanf (rrctam nf tho (frfo nfvvJ!ç¡

Kentucky (KTRS), a component unit of the Commonwealth of Kentucky and the County Employees'Retirement System (CERS), a component unit of the Commonwealth of Kentucky. For purposes ofmeasuring the net pens¡on liability, deferred outflows of resources and deferred inflows of resourcesrelated to pensions, and pension expense, information about the fiduciary net position of the KTRS

and the CERS and additions to/deductions from KTRS's and CERS's fiduciary net position have beendetermined on the same basis as they are reported by KTRS and CERS. For this purpose, benefitpayments (including refunds of employee contributions) are recognized when due and payable inaccordance with the benefit terms. lnvestments are reported at fair value.

Generol lnformation About the KTRS Pension PIan

Plan Description

The KTRS was created by the L938 General Assembly and is governed by Chapter 161 Section 220' '.r ^l ^-4 a^^ti^^

^n^ ^J eL- t/-.-:..-1,.- n^..:-^-l a!-!--t^- ,r/i-l - t-t- --t- !tí¡íougíì Lnaple¡" Itri 5eclion rvu OI Ine i(enIUCKy äeViSeO statutes (KK5). KiK5 ¡S A iliencje(icomponent unit of the Commonwealth of Kentucky and therefore is included in theCommonwealth's financial statements. KTRS is a cost-sharing multiple-employer defined benefitplan with a special funding situation established to provide retirement annuity plan coverage forlocal school Cistricts and other public educational asencies in the state,

KRS 161.250 provides that the general administration and management of KTRS, and theresponsibility for its proper operation, is vested in a board of trustees. The board of trusteesconsists of the chief state school officer, the State Treasurer, and seven elected trustees. Four ofthe elected trustees are active teachers, two are not members of the teaching profession, andone is an annuitant of the retirement system.

Any regular or special teacher or professional employed by a local school district or a regionaleducational cooperative and occupying a position requiring certification or graduation from a fouryear college or university is eligible to participate in the plan. KTRS issues a publicly availablefinancial report that can be found on the KTRS website.

Benefits Provided

KTRS provides retirement, medical, disability, annualcost of living adjustments, and death benefits toplan members. Plan members are divided into the following two categories:

.46


NOTE 7: PENSION PLANS (CONTINUED)

For Members Hired Before July l-. 2008:

Members become vested when they complete 5 years of credited service. To qualify for monthlyretirement benefits, payable for life, members must either:

1.) Attaln age 55 and complete 5 years of Kentucky service, or2.) Complete 27 years of Kentucky service.

Members receive monthly payments equal to 2% (service prior to July 1, 1983) and 2.5% (service

after July 1, 1983) of their final average salaries for each year of credited service. Members hired on

or after July 1-, 2002 will receive monthly benefits equal to 2% of their final average salary for eachyear of service if, upon retirement, their total service is less than 10 years. New members hired afterJuly 1, 2002 who retire with l-0 or more years of total service will receive monthly benefits equal to2.5% of their final average salary for each year of service, including the first 1-0 years. ln addition,members who retire July 1, 2004 and later with more than 30 years of service will have theirmultiplier increased for all years over 30 from 2.5%to 3% to be used in their benefit calculation.

The final average salary is the member's 5 highest annual salaries except members at least age 55

with 27 or more years of service may use their 3 highest annual salaries. For all members, the annual

allowance is reduced by 5% per year from the earlier of age 60 or the date the member would have

completed 27 years of service. The minimum annual service allowance for all members is S++O

multiplied by credited service.

For Members Hired On or After Julv 1, 2008:

Members become vested when they complete 5 years of credited service. To qualify for monthlyretirement benefits, payable for life, members must either:

1.) Attain age 60 and complete 5 years of Kentucky service, or2.) Complete 27 years of Kentucky service, or3.) Attain age 55 and complete L0 years of Kentucky service.

The annual retirement allowance for members is equal to: (a) 1".7% of final average salary for eachyear of credited service if their service is 1-0 years or less; (bl2.0% of final average salary for each year

of credited service if their service is greater than 1-0 years but no more than 20 years; (c) 2.3% of finalaverage salary for each year of credited service if their service is greater than 20 years but no morethan 26 years; (d) 2.5% of final average salary for each year of credited service if their service is

greater than 26 years but no more than 30 years; (e) 3.0% of final average salary for years of creditedservice greater than 30 years.

The final average salary is the member's 5 highest annual salaries except members at least age 55

with 27 or more years of service may use their 3 highest annual salaries. For all members, the annual

allowance is reduced by 6% per year from the earlier of age 60 or the date the member would have

completed 27 years of service.

-47-



KTRS also provides disability benefits for vested members at the rate of 60% of the final averagesalary. A life insurance benefit, payable upon the death of a member, is 52,000 for active contributingmembers and 55.000 for retired of disabled members.

Cost of living increases are l-.5% annually. Additional ad hoc increases and any other benefitamendments must be authorized by the General Assembly.

Contributions

Contribution rates are established by KRS. KTRS members are required to contribute 11.355% oftheir salaries to the KTRS. For members employed by local school districts, the State, as a non-employer contributing entity, contributes 13.105% of salary for those who joined before July 1, 2008and 1,4.1O5% for those who joined thereafter.

Other participating employers are required to contribute the percentage contributed by membersplus an additional L.50 percent of members' gross salaries.

n--^--..'-- * t : * t- t t !! ! -- -" - - J D^- -"'^ - Í" " - ^ * - -r Étt5,utt LtuutttatcJ utru rcltJ,vrt L^PClrJÉ

At June 30, 2015, the amount recognized by the District as its proportionate share of the netpension liability, the related Commonwealth of Kentucky (State) support, and the total portion ofthe net pension iiabiiity that was associateci with the District were as follows:

District's proportionate share of the net pension

lia bilityState's proportionate share of the net pension

liability associated with the DistrictTotal

5

170,334,850S 170,334,850

The net pension liability was measured as of June 30, 2OI4, and the total pension liability used tocalculate the net pension liability was determined by an actuarial valuation as of June 30,2013rolled forward to June 30,201,4 using standard update procedures.

For the year ended June 30,2015, the District recognized pension expense of 58,346,754 andrevenue of 58,346,754 for support provided by the State in the government wide financialstatements.

ActuarialAssumptions

The total pension liability in the June 30,2013 actuarial valuation was determined using thefollowing actuarial assumptions:

"48"


Valuation Date

Actuarial Cost MethodActua rial Assumptions:

lnvestment rate of return

Projected salary increases

lnflation rate

Municipal bond index rateDiscount rate

Asset Class


June 30, 201-3

Entry Age

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as

appropriate, with adjustments for mortality improvements based on a projection of Scale AA to2020 with a setback of 1 year for females. The last experience study was performed in 2OLL and thenext experience study is scheduled to be conducted in 2016.

The long-term expected rate of return on pension plan investments was determined using a log-

normal distribution analysis in which best-estimate ranges of expected future real rates of return(expected returns, net of pension plan investment expense and inflation) are developed for each

major asset class. These ranges are combined to produce the long-term expected rate of return by

weighting the expected future real rates of return by the target asset allocation percentage and by

adding expected inflation. The target allocation and best estimates of arithmetic real rates of returnfor each major asset class, as provided by KTRS's investment consultant, are summarized in thefollowing table:

7.50% net of pension plan investmentexpense, including inflation

4.00 - 8.20%, including inflation350%4.35%

5.23%

Long-Term Expected

Real Rate of Return

TargetAllocation

U.S. EquityNon U.S. EquityFixed lncomeHigh Yield Bonds

Real Estate

AlternativesCash

Total

45.O%

17.O%

24.O%

4.O%

4.O%

4.O%

2.0%

6.4%

6.5%

1,.6%

3.r%5.8%

6.8%

1,.s%

LO1.O%

Discount Rate

The discount rate used to measure the total pension liability was 5.23%. The projection of cash

flows used to determine the discount rate assumed that plan member contributions will be made atthe current contribution rates and the employer contributions will be made at statutorily requiredrates. Based on those assumptions, the pension plan's fiduciary net position was projected to be

available to make all projected future benefit payments of current plan members until the 2036

-49.

Muhlenberg County School DistrictNotes to the Finane ial Statements


plan year. Therefore, the long- term expected rate of return on pension plan investments wasapplied to all periods of projected benefit payments through 2035 and a municipal bond index rateof 4.35% was applied to all periods of projected benefit payments after 2035. The Single Equivalentlnterest Rate (SEIR) that discounts the entire projected benefit stream to the same amount as thesum of the present values of the two separate benefit payments streams was used to determinethe total pension liability.

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separatelyissued KTRS financial report.

Medical lnsurance Plan

Plan Description

ln addition to the pension benefits described above, KRS 161.675 requires KTRS to provide post--.-r l---l!l---.-- l--.--f:!- r- -l:-:l-t- -----l---, ---l l- I r Ylret¡f eííteíìi í¡eci¡tíiUijíe íJelìeilL5 tU e¡¡g,lÍJie íI¡efi¡ijel5 iifìU Uepeílûelìi5. ¡ fle ¡\¡i{i ffìeüiCai inSU¡'anCe

benefit is a cost-sharing, multiple employer defined benefit plan. Changes made to the medical planmay be made by the KTRS Board of Trustees, the Kentucky Department of Employee lnsurance andthe General Assembly.

To be eligible for medical benefits, the member must have retired for service or disability. The KTRS

medical insurance fund offers coverage to members under the age of 65 through the KentuckyEmployees Health Plan administered by the Kentucky Department of Employee lnsurance. Onceretired members and eligible spouses attain age 65 and are Medicare eligible, coverage is obtainedthrough the KTRS Medicare Eligible Health Plan.

Contributions

ln order to fund the post-employment healthcare benefit, active member contributions arematched by the state at .75% of members' gross salaries. Member contributions are 2.25% ofsalary. Also, the premiums collected from retirees as described in the plan description andinvestment interest help meet the medical expenses of the plan. Additionally, under the SharedResponsibility Plan, the local school district employers pay 2.25% of members'salary for the 201,4-

2015 fiscal year.

.50



Generol lnformation About the CERS Pension Plan

Plan Description

All regular full-time members of each participating county, city, and school board, and any

additional eligible local agencies electing to participate in the plan are covered by the CERS - a cost-sharing multiple-employer defined benefit pension plan administered by the Board of Trustees ofthe Kentucky Retirement System, under the provisions of KRS Section 6L.645. CERS issues a publiclyavailable financial report that can be found on the CERS website.

Benefits Provided

CERS provides retirement, disability, and death benefits to plan members. Retirement benefits maybe extended to beneficiaries of plan members under certain circumstances. Prior to July L,2009,Cost of Living Adjustments (COLAs) were provided annually equal to the percentage increase in theannual average of the consumer price index for all urban consumers for the most recent calendaryear, not to exceed 5%in any plan year. Effective July 1-, 2009, and on July 1of each year thereafter,the COLA is limited to 1.5% provided the recipient has been receiving a benefit for at least l-2months prior to the effective date of the COLA. lf the recipient has been receivíng a benefit for less

than 12 months prior to the effective date of the COLA, the increase shall be reduced on a pro-ratabasis for each month the recipient has not been receiving benefits in the 12 months preceding theeffective date of the COLA. The Kentucky General Assembly reserves the right to suspend or reducethe COLA if, in its judgment, the welfare of the Commonwealth so demands. On July 1,,201.3, theCOLA was not granted.

Contributions

Plan members who began participating prior to September 1,,2OO8, were required to contribute 5%

of their annual creditable compensation. The participating employers were required to contributeat an actuarially determined rate. Per Kentucky Revised Statute Section 78.545(33), normalcontribution and past service contribution rates shall be determined by the Board on the basis of an

annual valuation last proceeding the July 1 of a new biennium. The Board may amend contributionrates as of the first day of July of the second year of a biennium, if it ¡s determined on the basis of a

subsequent actuarial valuation that amended contribution rates are necessary to satisfyrequirements determined in accordance with actuarial bases adopted by the Board. For the fiscalyear ended June 30, 201-5, participating employers contributed L7.67% of each employee'screditable compensation. The actuarially determined rate set by the Board for the fiscal year endedJune 30, 7015, was 17.67%. Administrative costs of KRS are financed through employercontributions and investment earnings.

.51.

Muhlenberg County School DistrictNotes to the Finaneial Statements


ln accordance with House Bill 1, signed by the Governor on June 27,2008, plan members whobegan participatíng on, or after, September 1-, 2008, were required to contribute a total of 6% oftheir annual creditable compensation. Five percent of the contribution was deposited to themember's account while the I% was deposited to an account created for the payment of healthinsurance benefits under 26 USC Section 401(h) in the Pension Fund (see Kentucky AdministrativeRegulation 105 KAR 1,:420f).lnterest is paid each June 30 on members'accounts at a rate of 2.5%.lfa member terminates employment and applies to take a refund, the member is entitled to a fullrefund of contributions and interes! however, the I% contribution to the 401(b) account is non-refundable and is forfeited. For plan members who began participating prior to September 1, 2008,their contributions remain at 5% of their annual creditable compensation.

lnaccordancewithSenateBill 2,signedbytheGovernoronApril 4,2013, planmemberswhobeganparticipating on, or after, January 1,201,4, were required to contribute to the Cash Balance Plan.

The Cash Balance Plan is known as a hybrid plan because it has characteristics of both a definedbenefit plan and a defined contribution plan.

ñt--...-.l-.^.--:.^ rl^-.-l--- ----r.-:l-. - ,1\t¡v¡eil¡uers ¡f i Lí¡e ii¡¡jil í-uÍirf ¡uure ii ser peíceírtd8,e û¡ Úteií 5a¡ijry eacfì íïì()íìtí¡ Io tnet¡'ovvn accûunI.Non-hazardous members contribute 5% of their annual creditable compensation and 1% to thehealth insurance fund which is not credited to the member's account and is not refundable. Theemployer contribution rate is set annually by the Board based on an actuarial valuation. Theomnlnrror rnnirihr rfoc a cot norroniroo nf lha momharlc crlrrrr Fr¡h mnnfrh rr¡han amninrrar

tr Lulr r, vvrrLrr rr¡rl/¡vtLr

contributions are received, an employer pay credit is deposited to the member's account. For non-hazardous members, their account is credited with a 4%o employer pay credit. The employer pay

credit represents a portion of the employer contribution.

Pension Liobilities, Pension Expense, and Deferred Outflows of Resources ond Deferred lnflows ofResources Related to Pensions

At June 30,2OI5, the District reported a liability of 51.1.,242,000 for its proportionate share of thenet pension liability. The net pension liability was measured as of June 30, 2OI4, and the totalpension liability used to calculate the net pension liability was determined by an actuarial valuationas of that date. The District's proportion of the net pension liability was based on the District'sshare of 201-4 contributions to the pension plan relative to the 20L4 contributions of allparticipating employers, actuarially determined. At june 30, 2014, the District's proportion was.346s06%.

.52"



For the year ended June 30, 201-5, the District recognized pension expense of 5900,000. At June 30,

201-5, the District reported deferred outflows of resources and deferred inflows of resources relatedto pensions from the following sources:

Deferred Outflowsof Resources

Deferred lnflows ofResources

Net difference between projected & actual

earnings on pension plan investments S L,255,ooo

District contributions subsequent to the

measurement dateTotal

1,403,955

5 r,403,955 5 r,255,ooo

S1,403,955 reported as deferred outflows of resources related to pensions resulting from Districtcontributions subsequent to the measurement date will be recognized as a reduction of the netpension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows ofresources and deferred inflows of resources related to pensions will be recognized in pension

expense as follows:

Year ended June 30

s

201"6

201720TB

201,9

Thereafter

s 313,7503r3,7503t3,75031,3,750

53

Muhlenberg County School DistrictNotes to the Financíal Statements


Actua¡'ial Assurrnptions

The total oension liabilitv was determined bv an actuarial valuation as of June 30.2A1.4. usins the-- f- - t "-- -'---'

following actuarial assumptions, applied to all periods included in the measurement:

Valuation Date

Actuarial Cost MethodActua rial Assumptions:

lnvestment rate of return

Projected salary increases

lnflation rateDiscount rate

June 30, 2014Entry Age

7.75% net of pension plan investmentexpense, including inflation

4.5O%;o, average, includ ing inflation350%7.75%

Mortality rates were based on the 1983 Group Annuity Mortality Table for all retired members andbeneficiaries as of June 30, 2006, and the 1994 Group Annuity Mortality Table for all othermembers. The Group Annuity Mortality Table set forward five years is used for the period after thel:-^L:l:+,, -^+i-^*^^ru¡)duil¡Ly ¡ ËU¡ gi t¡gt ¡t.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an

actuarial experience study for the period July 1", 2005 - June 30, 2008.

The long-term expected return on plan assets is reviewed as part of the regular experience studiesprepared every five years for CERS. The most recent analysis, performed for the period coveringfiscal years 2005 through 2008, is outlined in a report dated August 25,2OO9. Several factors areconsidered in evaluating the long-term rate of return assumption including long-term historicaldata, estimates inherent in current market data, and a log - normal distribution analysis in whichbest-estimate ranges of expected future real rates of return (expected return, net of investmentexpense and inflation) were developed by the investment consultant for each major asset class.

These ranges were combined to produce the long-term expected rate of return by weighting theexpected future real rates of return by the target asset allocation percentage and then addingexpected inflation. The capital market assumptions developed by the investment consultant areintended for use over a 10-year horizon and may not be useful in setting the long-term rate ofreturn for funding pension plans which covers a longer timeframe. The assumption is intended tobe a long-term assumption and is not expected to change absent a significant change in the assetallocation, a change in the inflation assumption, or a fundamental change in the market that altersexpected returns in future years. The target allocation and best estimates of arithmetic real rates ofreturn for each major asset class are summarized in the following table:

54"


Asset Class


Long-Term NominalRate of Return

TargetAllocation

U.S. Equity

Non U.S. EquityEmerging Market EquityPrivate EquityReal Estate

Core U.S. Fixed lncomeHigh Yield U.S. Fixed lncomeNon U.S. Fixed lncomeCommoditiesTIPS

Cash

Total

30.o%

22.O%

s.o%

7.O%

5.O%

ro.o%5.O%

5.O%

5.O%

5.0%

1..O%

8.45%8.85%

1050%1,1.25%

7.00%

s.25%7.25%

5.50%7.75%

5.OO%

3.25%I00.o%

Discount Rate

The discount rate used to measure the total pension liability was 7.75%o. The discount ratedetermination does not use a municipal bond rate. The projection of cash flows used to determinethe discount rate assumed that local employers would contribute the actuarially determinedcontributÌon rate of projected compensation over the remaining2g year amortization period of theunfunded actuarial accrued liability. The actuarial determined contribution rate is adjusted toreflect the phase in of anticipated gains on actuarial value of assets over the first four years of theprojection period. Projected future benefit payments for all current plan members were projectedthrough 2L16.

Sensitivity of the District's Proportionate Share of the Net Pension Liability to Changes in theD¡scount Rate

The following presents the District's proportionate share of the net pension liability calculated usingthe discount rate of 7.75%o, as well as what the District's proportionate share of the net pensionliability would be if it were calculated using a discount rate that is 1"-percentage-point lower (6.75%)

or L-percentage-point higher (8.75%) than the current rate:

55.



1% DecreaselÂ 7\o/^l

frrrranl

Discount Rate11 lqo/^l

1% lncrease/,9, -tco/^l

District's proportionate sha re

of the net pension liability 5 t4,794,000 5 tt,z+z,ooo S B,to4,ooo

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separatelyissued CERS financial report.

Deferred Compensation Plans

The District offers its employees to defer compensation in accordance with lnternal Revenue Code

Sections 457, OL(k) and 403(b). The Plans, available to all employees, permit them to defer a

portion of their salary until future years. This deferred compensation is not available to employeesufltll terlflllldLlOfl, leLlrerfleflt, UedIfl Of ufllUfe5ee¿JrJle efrlefgellCy. t]AJÞ )l.ijtefflefìt l\U.52,Accounting and Financial Reporting for lnternol Revenue Code Section 457 Deferred CompensationPlans, allows entities with little or no administrative involvement who do not perform the investingfunction for these plans to omit plan assets and related liabilities from their financial statements.The District, therefore, does not show these assets and liabilities in the financial statements.

NOTE 8: CONTINGENCIES

The District receives funding from federal, state and local government agencies and private

contributions. These funds are to be used for designated purposes only. For government agencygrants, if the grantor's review indicates that the funds have not been used for the intendedpurpose, the grantors may request a refund of monies advanced or refuse to reimburse the Districtfor its disbursements. The amount of such future refunds and unreimbursed disbursements, if any,is not expected to be significant. Continuation of the District's grant programs is predicated uponthe grantors'satisfaction that the funds provided are being spent as intended and the grantors'intent to continue their programs.

NOTE 9: CONCENTRATIONS

For the year ended June 30,20L5, the District received 57,685,855 from the Tennessee ValleyAuthority (TVA) as payment in-lieu-of-tax, which represented 13.9% of the total governmental fundrevenues.

-56"


NOTE 10: R]SK MANAGEMENT

The District is exposed to various forms of loss of assets associated with the risks related to torts;theft of, damage to and destruction of assets; fire, personal liability, vehicular accidents; errors and

omissions; injuries to employees; fiduciary responsibility; and natural disasters. Each of these risk

areas are covered through the purchase of commercial insurance. The District has purchasedcertaín policies which are retrospectively rated which include workers' compensation insurance.

The District purchases unemployment insurance through the Kentucky School Boards lnsuranceTrust Unemployment Compensation Fund; however, risk has not been transferred to such fund. ln

addition, the District continues to carry commercial insurance for all other risks of loss. Settledclaims resulting from these risks have not exceeded commercial insurance coverage in any of thepast three fiscal years.

NOTE 11: LITIGATION

The District is subject to various other legal actions in various stages of litigation, the outcome ofwhich is not determinable at this time. Management of the District and its legal counsel do notanticipate that there will be any material effect on the financial statements as a result of the casespresently in progress.

NOTE 12: EXCESS EXPENDITURES OVER APPROPRIATIONS

The District has two funds with a deficit fund balance, Food service (S4S,33L) and Daycare(S1-1-5,367). Also, the following funds had excess current year expenditures over current yearappropriated revenues:

Year ended June 30 20L5Fund Amount

ConstructionFood service

144,r49123,880

-57-

¡ ;:::r' :;.: ::.:. . li i : r'

NOTE 13: FUND TRANSFERS

Fund transfers for the year ended June 30, 2015 consist of the following

Trrno. t r- Êrnm Errn¡l Tn Elln¡l


Dr r rnnco Âmnrrnt

OperatingOperating

Operating

Operating

OperatingOperating

General Fund Special Revenue Fund

General Fund Construction Fund

Construction Fund General Fund

SEEK Debt Service

FSPK Debt Service

Foodservice General Fund

MatchingConstructionConstructionDebt Service

Debt Service

lndirect Cost

138,552

676,588

3,553,487462,267

L,68L,60L6,¿. )1\v ttlrJ

5

NOTE 14: ON-BEHALF PAYMENTS

The District receives on-behalf payments from the State of Kentucky and the US Treasury for itemsincluding pension, technology, health care costs, operating costs and debt service. The amountreceived for the fiscalyear ended June 30, 20L5, was $10,787,852. These payments were recordedin the funds as follows:

Year ended June 30, 201-5

Fund Amount

Generai Fund

Debt Service Fund

Food Service FuncJ

Day Care Fund

S 8,992,9L7L,550,952

2ro,Q8933,894

Tn+al ê rn 7oz oE')I LVttOt,OJL

Year ended June 30, 2015Technology S

Health lnsurance less Federal ReimbursementsLife lnsuranceAdministrative Fees

H RA/Denta l/Vision lnsu rance

SFCC Debt ServiceFederal Rebate - BuÌld American BondsKTRS

73,8705,496,106

Lr,07975,55L

382,463L,378,309

!72,6433,197,83L

Total

-58-

5 10,787,852

'"- -'r''1-.- .

s-r;**...^".......... . .- . .

Muhlenberg County School DistrictBudgetary Comparison Schedule for the General Fund

Budgeted AmountsOriginal Final

Variances

Favorable(Unfavorable)

Final to Actual

ul(o

Yeor Ended June 30, 20L5

Revenues

Local and intermediate sources

State programs

Federal programs

Total revenues

ExpendituresCu rre nt:

I nstru ctio n

Support services:

Student

lnstructional staffDistrict ad m i nistratio n

School administrationB usi ness

Plant operations and maintenance

Student tra nsportationOtherFood service operationsCo nti nge ncy

Total expenditures

5 1-5,i05,74829,8L6,686

1g0,000

5 1.5,705,i4829,8L6,686

l_90,000

Actual

S l_5,646,969 529,952,44I

21,4,092

(58,779)

1,35,755

34,092

6,66L

90,886

296,692(2,066)

(s6e)

38,495

1_39,800

38,1543,463

l_,598,843

2,018,026

45,702,434 45,702,434 45,913,502 l_l_l_,068

29,952,387 29,952,397 30,1,44,720 ( 192,333)

'J,,7Og,ggg

L,024,799t,gg2,g342,6L1-,246

r,r77,6734,882,7493,859,308

283,23980,704

L,598,843

1-,70g,ggg

L,024,79g1_,892,934

2,6Lt,2461,,177,673

4,992,7493,859,308

283,23990,704

l_,599,943

1_,703,239

933,902

L,596,242

2,613,3121,178,242

4,844,2543,719,508

245,O84

77,24I

49,073,769 49,073,769 47,055,743

iiti;ii,,rtt:ìla:j.:Ii..'.,, ',ì't.r;lrri'l:ìi:.,ì:rl'.,,.,, ' ..rlì:..,r' ri ì , .,

Muhlenberg County School DistrictBudgetary Comparison Schedule for the General Fund

Budgeted AmountsOriginaI

Variances


Finan to Actual

Olo


Excess (deficiency) of revenues over expenditures


Operating transfers - net


Net change in fund balance

Fund balance-beginning of year

Fund balance- end of year

Final Actual

(3,371,335) (3,371_,335) (1,242,24L) 2,129,094

(74,317\ (74,317) 2,902,592 2,g76,ggg

(74,31-7]l (74,317\ 2,802,582 2,876,899

(3,445,652) (3,445,652) L,56O,34t 5,005,993

3,445,652 3,445,652 4,244,204 798,552

s s s,so+,s+s s s,ao+,s+s$

Muhlenberg County School DistrictBudgetary Comparison Schedule for the Special Revenue Fund


Revenues

Local and intermediate sources

State programs

Federal programs

Total revenues

ExpendituresCu rrent:

I nstructio n

Support services:

Stude nt

lnstructional staffSchool administrationB usi ness

Plant operations and maintenance

Stude nt tra nsportationOther

Total expenditures


55

Budgeted AmountsOriginal Final

5

L,703,740

2,84r,592

Actual

688 s

L,482,289

3,389,909

24,38262,590

ro3,357176,548

3,094

L17,O92

423,528

Variances


Final to Actual

688

(22r,451)548,317

258

206,1-59

(12,506)

( 173,198)

l_5,599

79,3581,

4,545,332 4,545,332 4,872,886 327,554

3,630,01-5 3,630,01_5 4,tO0,947 (470,832)

24,640268,749

90,851

3,350

l_8,693

1_96,450

423,529

1,703,7402,84L,592

24,640268,749

90,851

3,350

18,693

196,450

423,529

ql

4,656,277 4,656,277 5,01L,438 (355,161)

(11_0,945) (110,945) (138,552) (27,607)

t-

Yeor Ended June 30, 2075


Operating transfers - net


Net change in fund balance

Muhlenberg County School DistrictBudgetary Comparison Schedule for the Special Revenue Fund

Budgeted Amounts

Variances


Finalto ActualOriginal Final Actual

r'.1D,945 tro,945 138,552 27,607

yra,945 tro,945 138,552 27,607

Fund balance- nnt of ar

otN Fund balance-end of 5)s $

Muhlenberg County School DistrictSchedule of the District's Proportionate Share of the

Net Pension Liability and Schedule of District's ContributionsKentucky Teachers' Retirement System

Schedu¡e of the D¡str¡ct's Proportionate Share of the Net Pens¡on Liability-

KTRS

As of June 30, 2015District's proportion of the net pension liabilityDistrict's proportionate share of the net pension

liabilityState's proportionate share of the net pension

liability associated with the District

District's covered - employee payroll


liability as a percentage of its covered-employeepayroll

Plan fiduciary net position as a percentage of thetotal pension liability

Schedule of the District's Contributions-KTRS

0.o%

s

5 170,334,8s0

5 24,s79,636

o.o%

45.6%

For the Yeor Ended June 30, 20LsContractually required contributionContributions in relation to the contractuallyrequired contributionContribution deficiency (excess)

District's covered-employee payroll

Contributions as a percentage of covered-

employee payroll

5

s

3,r97,83L

3,L97,83L

5 26,2os,ooz

12.20313%

Þ

Changes of Benefit Terms

None noted

Changes of Assumptions

ln the 20Ll valuation and later, the expectation of retired life mortality was changed to the RP-2000

Mortality Tables rather than the L994 Group Annuity Mortality Table, which was used prior to 201-1-.

ln the 2011 valuation, rates of withdrawal, retirement, disability and mortality were adjusted tomore closely reflect actual experience. ln the 201-1 valuation, the Board adopted an interestsmoothing methodology to calculate liabilities for purposes of determining the actuariallydetermi ned contributions.

,63-

.

Muhlenberg County School DistrictSchedule of the District's Proportionate Share of the

Net Pension Liability and Schedule of District's ContributionsCounty Employees Retirement System

Schedule of the District's Proportionate Share of the Net Pension Liability-CERS

As of June 30, 201,5

District's proportion of the net pension liability


liability

District's covered - employee payroll


liability as a percentage of its covered-employeepayroll

Plan fiduciary net position as a percentage of thetotal pension liability

Schedute of the District's Contributions-CERS

o.346506%

5 t1,,24z,ooo

5 7,Bg3,2so

70.2r%

66.8%

For the Year Ended June 3

Contractually required contributionContributions in relation to the eontractuallyrequired contributionContribution deficiency (excess)

District's covered-employee payroll

Contributions as a percentage of covered-

employee payroll

Changes of Benefit Terms

None noted.

Changes of Assumptions

20ts1,403,955

S L,403,955

s

5 7,94s,41,6

17.67%

None noted

-64-

Muhlenberg County School DistrictCombining Balance Sheet

Nonmajor Governmental Funds

June i0, 20L5SEEK CapitalOutlay Fund

Debt ServiceFund

Total OtherGovernmental

FundsFSPK Fund

459,377 s

Assets

Cash 459,377

Total assets 459,377 5 459,377

s

s

s

s

)

5

Fund BalancesRestri ctedCapital projects

Prior year SFCC offerss5 87,949 s

371_,428

87,949

371,,428O)(tl

Total fund balances 5 s 4se 77s 5 459,377

t.: :

SEEK CapitalOutlav Fund

Muhlenberg County School DistrictCombining Statement of Revenues, Expenditures and Changes in Fund Balances

Nonmajor Governmental Funds

Yeor Ended June 30, 2015

Revenues

From local sources:

Taxes:

Propertylntergovernmental - stateI ntergovernmental - federal

Total revenues

ExpendituresDebt service

Principal

I nterest

Total expenditures



Operating transfers in

Operati ng transfers out


Net change in fund balances

Fund balances - beginning of year

s s

Debt Service

Fund

Total OtherGovernmental

FundsFSPK Fund

789,845 s941,,343

(462,267 r,378,309

172,643

2,476,735t,ztg,og5

789,8452,78r,919

177,643

2,476,7351,,218,085

462,267 1,731,L88 1,550,952 3,744,407

OrOt

s

462,267 !,731,188 (2,1.43,868)

2,143,868(462,267) (L,681,601)

(462,267) (r.,681,601) 2,1.43,868

49,587

409,790

3,694,820 3,694,820

49,587

2,143,868(2,L43,96g]t

49,597

409,790

Fund balances - end ofyear 5 qsg,zll S 5 4s9,377

,:.::::t:.:.a:a:..a;;a:;::Lal..:: :

Muhlenberg County School Distr:íct

Combining Statement of Net PositionNonmajor Proprietary Funds

June 30, 20L5CommunityEducation Day Care

Total OtherEnterprise

Funds

Assets

Cash s 469 s 6O,O8S s 60,554

Total assets 469 60,085 60,554


Pension related 22,064 22,064

Total deferred outflows of resources 22,064 22,064

Liabilities

Accounts payable 63 63

Total liabilities 63 63

Long-Term LiabilitiesNet pension liability L77,624 177,624

Total long-term liabilities 177,624 177,624

Deferred Outflows of ResourcesPension related 19,829 19,829

Total deferred outflows of resources T9,829 L9,829

Net PositionU n restricted 469 (115,367) (114,898)

Total net position s 469 5 (115,367)S (114,B9B)

-67-

Muhlenberg County School DistrictCombining Statement of Revenues, Expenses and Changes in Fund Net Posítion

Nonmajor Proprietary Funds

Year Ended June 30, 2015

CommunityEducation Day Care


Funds

Operating Revenues

Tuition and fees s 310 5 ZZj,qtt5 220,72!

Tota I operating revenues 310 220,4Lt 220,721

Operating Expenses

Salaries and wages

Materials and supplies

Other operating expenses 300

213,625

21,I27213,625

2L,127

300

Total operating expenses 300 234,752 ??q oq?

Operating income (loss) L0 (1.4,341) (1_4,331)

Non-operating Revenues

State operating grants 33,894 33,894

Total non-operating revenues 33,894 33,894


iriet posiiion - beginning of year

Effect of adoption of GASB 68

10

459

19,553 19,563

48,313(183,233)

48,772(1-83,233)

Net position - beginning of year, as restated 459 (134,920) (134,461)

Net position - end of year s 469 $ (1_1s,367) s (114,398)

-68-

Muhlenberg County School DistrictCombining Statement of Cash Flows

Nonmajor Proprietary Funds

Yeor Ended June 30, 20L5Community

Education Day Care


Funds

Cash Flows From Operating ActivitiesCash received from user charges

Cash payments to employees for servicesCash payments to suppliers for goods

and servicesCash payments for other operating

expenses

s 310 5 22O,41,L S

- (187,575)

(21,,L27)

(237)

220,721-

(1.87,575)

(21,,r27)(237ll

Net cash provided by operating activities 73 '1,1",709 LL,782

Net increase in cash

Cash - beginning of year

73 I1-,709 1,1_,782

459 48,3L3 48,772

Cash - end of ar

Reconciliation Of Operating lncome (Loss)To NetCash Provided By Operating Activities

Operating incomeAdjustments To Reconcile Operating Loss To Net Cash

Provided By (Used ln) Operating ActivitiesOn-behalf paymentsPension contributions in excess of pension expenseChanges in assets and liabilities:

5325 A0,OZZ S 60,554

10 s (14,341) 5 (14,331)

5

$

33,894(7,844)

33,894(7,844)

Accounts ble

Net cash provided by operating activities

63

735 11,,7095 11,,782

63

s

-69-

Muhlenberg County School DistrictCombining Statement of Fiduciary Net Position

School r\ctivity Funds

Agency Funds

June 30, 2015Bremen Elementa ry SchoolCentral City Elementa ry

School

Greenville Elementary SchoolLongest Elementa ry SchoolMuhlenberg South

ElementarySchoolMuhlenberg North Middle

SchoolMuhlenberg South Middle

Schoo I

Muhlenberg County WestCampusMuhlenberg County East

Campus

ReceiptsCash

Disbursernents June 30, 2015

34,384 s 66,617 s 58,334 5 42,667 s

Cash

July t,2014AccountsReceivable

AccountsPayable

Due to StudentGroups

June 30, 2015

5 s $ 42,667

76,L51.

28,92431,527

41,130

1.1_3,847

64,94r

220,213

109,415

62,36930,64537,294

76,72864,379

104,819

62,94666,100

L0,1,586

76,1_5r

28,92437,527

o

42,975 89,262

106,996 126,016

54,379 1_1.1.,753

224,470 506,956

91.,259 309,859

9:L,tO7 4t,130

119,L65 1,1,3,847

L0 1, L91 64,941

5r'.1,2r3 220,213

29'.1,703 1.09,41.5

Tota I 5) 684,771 s 1,456,389 5 1,406,345 s 734,815 s 734 15


School Activity FundsMuhlenberg County High School - West Campus

Cash

Year ended June 30, 2015 July 0L,2014 ReceiptsCash

Disbursements June 30, 2015Accounts

ReceivableAccountsPayable


June 30, 2015

GeneralHigh School Fees

LibraryTeachers'MaterialsStudent Snacks

Extra Work to Board

Ath leticsFootba I I

Tennis

Co ncessio ns

Boys'BasketballGirls'BasketballAthletic BoostersGirls' GolfBoys' Soccer

Track TeamGirls'SoccerDevelopmental BasketballBand

Chorus

Guitar/Piano Lab

JROTC College CreditFFA

l_5,593

3,6532,7L66,906

95

3,03513,t785,682

4252,31,3

7542,095

555

127

154r77502

1,310

1,22,969

l-3,93 L

2,22028,1.20

16,893l-5,1-01_

41,,679

2,990128

2,3r3754

3,983

4,5221,,179

512,491, $15,909 S

91

2,6031,310

1,22,949

1,1,670

4,54029,44217,36712,23028,5002,025

1,,952

4,OOt1,308

350

8,880 6,361

64

34

256350

tI5,224

64

34256350

fi.5,224

S 13,469476

4,2723,8632,044

l-0,051 s476

4,2093,7364,'1,45

t-0,05l_

4764,2093,7364,1_45

s s

P

15,463I,3925,0368,228

5791.64

15,4631,,392

5,0368,228

5791.64

4,717297

4,717297

IT2,705

Muhlenberg County School DistrictStatement of Fiduc¡¿¡ry Net Position

School ,Activity Funds

Muhlenberg County High School - West Campus

t:ash

luly 0t,2OL4 ReceiptsCash

Disburser¡'rents June 30, 2015i3,301_

641

591_

6271,84

'.L,1-43

9,505275

',1_,373

2'I,467I¿X,843

254875

5

:[,695

68445

1-,7,804

2,172398

1,04426

l_0,814",7,663

27,442408

12,L235,600

6061,923

AccountsReceivable

AccountsPayable


June 30, 2015

l\)

Yeor ended June 30, 20L5Family and Consumer Science- SharFCCLA

lndustrialArtsFamily and Consumer Science- PaytEngineering ClubFFA Jerky

Music DepartmentFFA Field TripsFFA BanquetLady Mustangs Basketball Classic

Bass Fishing Team

STLP Club

Dual Credit Fees AidFelix Martin Hall ActivitiesFFA National ConventionMath DepartmentFFA FruitScience DepartmentArt DepartmentYea rbookSocial Studies

Drama DepartmentDance Team

Mythology Class

Cheerleaders

l_85

282'1,,587

1,,143

2,713626

56

r,645298

l_,398

7,609939

l_,061

190

l_,01_6

7,046524

2,32221,46714,796

60

2,739686

45

23,077

17,1631-2,852

953

5961,398

470190

389

t282

1,587

953

5961,398

474190

3891

2821,587

254875

5

2,172

398

L,O44

26

27,442408

12,1_23

5,600606

1,923

2,21_9

338

24

22,169408

5,774411,

606

L4,385 24,O73 3{i,535

''ftli!¡l*;rßí[iil!íu;,,1t-n;,,'':"1i,;,;',,,,,1;,.,,.ì,'',iiii;;i..':,..'': , . :


School Activity Funds


Cash

July OL,2OL4

747

2341,043

1,,623

70

503

5,242

3,2639

6,5732,307

555

1,853

23,42420

737

3906,000

30,86522

19,555

L2,6093,450

3,671

4,008

1,005

306

7,000

27,47622

775

16,7976,234

1_1-,341_

3,279

2,31_8

234298

9

5,5683,930

500'J,,424

L0,852

1_,097

55

359

6,527

94

6,300

3,4415,908

2,318234298

9

5,5683,930

500

r,424l_0,852

1,O97

55

3s9

6,527

94

6,300

3,4415,908

70

558

429l_8,513

2922Bs

Cash

Receipts Disbursements June 30, 2015Accounts



June 30, 2015

(,^)

Year ended June 30, 20L5

Drama Club

Cedar GrantNational Honor SocietyAcademic Team

HOSA

Spirit Club

FBLA Club

Art Club

Skills USA Club

Senior Beta Club

STLP Club

Math Club

Science and Technology ClubStudent Council

Scholarship Fund

Bill Gatton Foundation ScholarshipJROTC

Backpack ProgramKYA

JROTC Air Rifle TeamFreshma n 2009/l nterve ntionsClass of 201.5/2016Class of 201,3/201,4

Class of 201,4/201,5

Youth Service Center

5,94L272

64555

275l_,000

3,138

94775

3,5426,2342,r735,737

.. .............-.....-".........-..1




Þ

Year ended lune 30, 201-5

Guidance DepartmentRelay for Life

YSC-Ch¡ld Abuse AwarenessMCHS Recycling CommitteeSpecial Education AccountAnime Club"Denise Baker Scholarship" Fund

MCHS NewspaperDECA Club

Swim ïeamProject Prom

Student CelebrationsG ree n ho use

FFA GrantWildlife ManagementMulticultural ClubFuture Educators of AmericaGeorge Taylor Classic

Spanish Honor SocietyTra nsf e rs

Total

Cash

July L,2OL42,697

9B

150

30091

196

l_,890

523

4,'J,51

4,2891_,9O2

4491,1",I06

28

6,472655

1_63

14,088917

ReceiptsAccounts



June 30, 20151,0,978

29

13

50

6,285

r0,978500

6,995

6,556

2,675

3,406127

163

300

91

196

l_,380

198

4,663

Cash

Disbursernents .nune 30, 20151C,259 3,406

1,27

163

300

9t_

196

l_,380

198

4,663

500375

:;,773,t!,289

1,0,571

557-,1 ,Ig9

746,;1,000

96(5,ll,250)

,!1,724

2,309392

10,9r228

8,304655

2,49212,488

821

2,309392

10,9r228

8,304655

2,092l_2,088

82r

213

(54,2501

5 224,470 5 506,9s6 $ sr l 213 $ ZZO 213 $ s 5 zzo



Muhlenberg County High School - East Campus

Cash

July L,2OL4 ReceiptsAccounts



June 30, 2015

s

Cash

Disbursements June 30, 2015Yeor ended lune 30, 2015

General Fund

Watson Family Fund

Memorial Fund/Flower Fund

Skills USA

FRYSC

KYA

Class TripsRelay for Life

Stand

RewardsExtra Salary /BoardAthletic Store Sales

09/10 Band

AP Test Fees

G u ida nce

Teacher's LoungeG reenhouselntro Shop MaterialsEquine ScienceFarm Machinery ShowBreathitt Vet CenterState Fair AccountMeat Stick AccountFFA Banquet

ss L5,232 $

10

t

s 1_L

101

8

5,971

153

75

4,549

103

75

5114,540

17,564 s10

51

110

8

6,077

176

17048

83915,0202,106

1,52

39

91

L,352130

17,564L0

51

110

8

6,077

17617048

83915,0202,106

1,52

7L,7L0 5 69,¡Zg S

(tl

659

20

840100

2,0522,392

659

20

734100

2,0522,31094

170216123

1_4,969

2,2L8335

39

39

2

2,24660

518

3,5184,449

347

1,,240

2,946

1,060

3,88870

686

2,8024,299

4591,,423

2,985

97r4,782

39

91_

1_,352

130

Muhlenberg County School DistrictStatement of Fiduciarr¿ Net Position


Muhlenberg County High School - East Campus

Cash

July 1, 2014188

400

-!-

3,310485

t4L

55

1,,778

20048

591

2,310215266

t5229

70

L,tr7100

3,079

Receipts575

1,91_0

7,6872,080

28

5,3241_,51_t

1,965

5,9L5

2,2536,958

555

1-,34O

8822,027

100

6,695

12,5L4L,ggg

355

420l_,000

9tr

"ì!-,0971_00

t;,090t'.ì!.,514

'1_,L22

877100

:].,385

Cash

Disbursennents June 30, 2AL5667125

9

4,381

3,15l_

.11,265

.;l_,740

tä,1,'J,5

42

2,L74301

903

'.;t-,370

i3,393

4B

47487521,5

40I492

AccountsReceivable

AccountsPayabrle


June 30, 2015Yeor ended lune 30, 201"5

FFA T-Shirt/HoodiesFFA POLOs

FFA Jackets

FFA FruitFFA Camp

Recycling FundLand Judging Fund

AG

FFA Dues

National ConventionMedical ExplorersFamily/ConsumerFCCLA

SADD

Mustang AnglersArt Club

Art/ScatesArtlMidkiffFMD

Academic Team

JROTC FundraiserJROTC Rifle Team

JROTC DrillTeamCrafting Club

Freshman Academy

96

275

"L,go26,6L6.;1,565

667

1,25

9

4,38L

Ot

42

2,174301903

4B

474875215401492

605

766

595

605

766

595

737 2,431 2,431


School Activity FundsMuhlenberg County High School - East Campus

Cash

luly L,2Ot41_,349

20

3491_,1_42

150

260l_,880

450633268

L,r741,,1_81_

l_,865

3781,

287

Cash

Receipts Disbursements June 30, 2015482

649372150

425260

1,545

633

268L0,945

630

195

10,9451,,804

1_,376

l_,865

50

10

9,2587,4054,841

428

1-,207

20

1,69

770

1_,207

20

1.69

770

AccountsReceivable

AccountsPayable


June 30, 2015Yeor ended June 30, 2015Dare 2 B Club

German Club

Math Club

Future EducatorsNeed Project Mini GrantForeign Language

STLP

TravelOdysseyMediaAP History/GeographySr. Beta

Jr. Beta

Drama Club

Student GovernmentDECA

MulticulturalFBLA Club

Book Rental

Spirit ClubPLTW

Sports Club

Chess Club

H u ma nities/J o u rna lismLibrary

340

469

90

450

2601,545

633268

1",376

l_,865

1,1

2,646

l-,350

209604265

37

448

2,L8L2099793 1_1

37

461

980

76

6,8997,4055,672

l_,355

46

89

tt2,646

1,350209

604265

37

448

Muhlenberg County School DistrictStatement of FiduciarV Net Position

School r\ctivity FundsMuhlenberg County High School - East Campus

00

Year ended June 30, 201"5

Swim Team

MS SoftballArcherySoftba I I

Baseball ClubBaseball

Varsity Baseball BoostersBaseball 15 & Under League

Track Team

Cross CountryGirls SoccerBoys Soccer

Boys'GolfVolleyballTra nsfe rs

Cash

luly L,2Ot4

7522,1935,90i_

22

3212,609

137

L,268

71,5

3,4091",7L3

ReceiptsAccounts



June 30, 20154,2895,017

22,3549,5L0

11,6053,640

11,98919,775

5,70312,8295,3034,79L

(6,02ol

'.L,971

.;l_,857

20,0381";l_,552

22

2,3r82,9124,5092,859

32L3,550

9995,2707,002t,3L6L,718

6792,832

Cash

Disbursernents .trune 30, 20152,3182,9!24,5092,859

tt),664

";l_,7786,7191-.!1,04L

.t!,387

L',.L,826

13,033

.11,672

(6,020)

32r3,550

9995,2707,4O2

L,3L6T,7LB

6792,832

Tota I S 91,259 5 309 8s9 s Zg iL 703 s rog 41.s s S tog,+ts

.. ..',,:..,.,,. t .:.::.: :: '.'.., .:

Muhlenberg County School DistrictSchedule of Expenditures of Federal Awards

Year Ended June 30, 201-5

Federal GrantorPass-Through Grantor

Program Title

FederalCFDA

Number

Pass-ThroughEntity

ldentifyingNumber Federal Expenditures

U.S. Department of Agriculture:Child Nutrition Cluster

Direct ProgramFood Distribution Program- noncash

Passed-Through State Department ofEducation:

School Breakfast ProgramNational School Lunch Program

1_0.s55

1-0.553

10.555776000s t57750002 L5

5 t66,1+t

464,537

L,6L4,924

Total U.S. Department of Agriculture 2,246,202

U.S. Department of DefenseDirect Program

ROTC 12.000 94,107

Total U.S. Department of Defense 94,LO7

U.S. Department of EducationPassed-Through State Department ofEducation:

Title l, Part A ClusterTitle I to Local Educational Agencies - 201.4 84.010Title lto Local EducationalAgencies -2Ot5 84.010

SubtotalSpecial Education Cluster

Special Education - 2OL3 84.027Special Education -201,4 84.027Special Education -2OI5 84.027Special Education - Preschool -201.5 84.173

SubtotalPerkins -2014 84.048Perkins - 2015 84.048

SubtotalRural/Low lncome School/Title Vl - 2013 84.358Rural/Low lncome School/Title Vl - 2OI4 84.358

Subtotallmproving Teacher Quality - 2014 84.367lmproving Teacher Quality - 201.5 84.367

S u btota I

31-00002 13

3100002 14

3BrO002 12

3810002 1"3

3810002 14

3800002 14

37!OOO2 13

37rO0021,4

3140002 12

3140002 t3

3230002 13

32300021,4

429,369990,O74

4,4L5532,Ort90L,77L57,78L

2,3L352,995

24,40032,085

r,557245,930

L,4r9,443

1,495,978

55,308

56,485

See accompanying notes to the Schedule of Expendltures of Federal Awards

-79

247,487

Muhlenberg Courrty School DistrictQ¡harl r rla nf FwnanÀitr,.o. ^f Eorlorrl A,^rrr.lcJLttLUqrL Vt L/\yV¡¡VtLVtLJ Vl t LVLtUt

^VVUtUJ

Year Ended June 30, 2015

Federal GrantorÞrcc-Thrnr roh lîrrninr

Program Title

FederalrEn^

Number

Pass-ThroughEntity

l¡lanlifr¡inarsLrlr¡¡y¡116

Number Federal ExpendituresRace to the Top

Passed-Through State Workforce Cabinet:Community Based Work Transition

84.OO2 3960002 11

84.126 376A

8,529

12,572

Total U.S. Department of Education 3,295,9O2

Total expenditures of federal awards 5 5,636,i_11

See accompanying notes to the Schedule of Expenditures of Federal Awards

-80.

i,, - '-

Muhlenberg County School DistrictNotes to the Schedule of Expenditures of Federal Awards

NOTE L: BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federalgrant activity of Muhlenberg County School District (the "District") under programs of the federalgovernment for the year ended June 30, 201-5, The information in this schedule is presented in

accordance with the requirements of Office of Management and Budget (OMB) Circular A-L33,

Audits of States, Locol Governments ond Non-Profit Orgonizations. Because the schedule presents

only a selected portion of the operations of the District, it is not intended to and does not present

the financial position, changes in net position or cash flows of the District.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the schedule are reported on the accrual basis of accounting. Such

expenditures are recognized following the cost principles contained in OMB Circular A-87, CostPrinciples for Stote, Locol ond lndian Tribol Governmenfs, wherein certain types of expenditures are

not allowable or are limited as to reimbursement. Pass-through entity identifying numbers arepresented where available.

Nonmonetary assistance is reported in the schedule of fair value of the goods received

NOTE 3: SUBRECIPIENTS

There were no subrecipients during the fiscal year

8r.

None reported

Muhienberg County Schooi DistrictSummary Schedule of Prior Year Audit Findings

.82

(l

:::ì;:':\'l_ ffimmCARRRIffGS &I NGRAM

CPÄ,s and Àcfvisors

lndependent Auditors' Report on lnternal Control overFinancial Reporting and on Compliance and OtherMatters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Stondards


927 College Street

Bowling Green, Kentucky 42101

P0 Box 104


(270)182-0100

(2/0) 782-0932 (fax)

167 South l\,4ain Street

Russellville, Kenlucky 4227 6

(270) 726.7 1s1

(270) 726-3155 (fax)

www.cricpa.com


We have audited, in accordance with the auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States, and the audit requirementsprescribed by the Kentucky State Committee for School District Audits as defined in thelndependent Auditor's Contract, the financial statements of the governmental activities, thebusiness-type activities, each major fund and the aggregate remaining fund information ofMuhlenberg County School District as of and for the year ended June 30, 20L5, and the relatednotes to the financial statements, which collectively comprise Muhlenberg County School District'sbasic financial statements, and have issued our report thereon dated October 29,2015.

lnternal Control Over Financial Reporting

ln planning and performing our audit of the financial statements, we considered the District'sinternal control over financial reporting (internal control) to determine the audit procedures

that are appropriate in the circumstances for the purpose of expressing our opinions on thefinancial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe District's internal control. Accordingly, we do not express an opinion on the effectivenessof the District's internal control.

A deficiency in internal controlexists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct misstatements on a timely basis. A, material weokness is adeficiency, or combination of deficiencies, in internal control such that there is a reasonablepossibility that a material misstatement of the entity's financial statements will not be

prevented, or detected and corrected on a timely basis. A significont 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 withgove rna nce.

Our consideration of internal control was for the limited purpose described in the firstparagraph of this section and was not designed to ident¡fy all deficiencies in internal control

-83


that might be material weaknesses or significant def iciencies and therefore, materialweaknesses or significant deficiencies may exist that were not identified. Given theselimitations, during our audit we did not identify any deficiencies in internal control that weeonsicJer to be material weaknesses. We did identify certain deficiencies in interna! contro!,described in the accompanying schedule of findings and questioned costs that we considertobe significant deficiencies. We consider the deficiencies described in the accompanyingschedule of findings and questioned costs as item numbers 2015-001,2OI5-002 and 201-5-003to be significant deficiencies.

eomplianee and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statementsare free from material misstatement, we performed tests of its compliance with certainprovisions of laws, regulations, contracts and grant agreements, noncompliance with whichcould have a direct and material effect on the determination of financial statement amounts.However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results of our testsdisclosed an instance of noncompliance or other matterthat is required to be reported under

--l:L:.--. -L-..--l--,1- - I l: r : I :l r ..iuvcíí¡ííieíiL ^üu¡L¡íig iLuítuuíuJ díìU Wí¡¡Cíì ¡5 ûescí¡ûeû ¡íì ine aCCOmpAnying 5C¡ìeûii¡e Oifindings and questioned costs as item 2015-001. ln addition, the results of our tests disclosedno instances of material noncompliance of specifie state statutes or regulations identified in

the lndependent Auditor's Contract - State Compliance Requiremenfs, except as noted above.

Muhlenberg County School District's Response to Findings

Muhlenberg County School District's response to the findings identified in our audit is

described ín the accompanying schedule of findings and questioned costs. The District'sresponse was not subjected to the auditing procedures applied in the audit of the financialstatements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal controland compliance and the results of that testing, and not to provide an opinion on theeffectiveness of the entity's internal control or on compliance. This report is an integral partof an audit performed in accordance with Government Auditing Standards in considering theentity's internal control and compliance. Accordingly, this communication is not suitable forany other purpose.

C*, flW i J,"X"Ð" L.t.c-


Bowling Green, KentuckyOctober 29,2015

-84.

;";;;"\.Tå ffiffiHfuåîi#CPAs and Advisors


927 Colìege Street


P0 Box 1 04


(270]| 782-0100

(270)182-0932 (rax)

167 South lvlain Street

Russellville, Kenlucky 4227 6

(270\ 126-7 151

(270\726-3155 (laxl

www.cflcpa.c0m

lndependent Auditors' Report on Compl¡ancefor Each Major Program and on lnternalControloverCompliance Required by OMB Circular A-133


Report on Compliance for Each Major Federal Program

We have audited Muhlenberg County School District's (the "District") compliance with thetypes of compliance requirements described in the OMB Circular A-133 ComplianceSupplemenf that could have a direct and material effect on each of the District's majorfederal programs for the year ended June 30, 2015. The District's major federal programs are

identified in the summary of auditors'results section of the accompanying schedule offindings and questioned costs.

M a n a g e m e nt's R es p o n si bi lity

Management is responsible for compliance with the requirements of laws, regulations,

contracts and grants applicable to its federal programs.

Au dit o rs' R e s p on si bi I ity

Our responsibility is to express an opinion on compliance for each of the District's majorfederal programs based on our audit of the types of compliance requirements referred toabove. We conducted our audit of compliance in accordance with auditing standardsgenerally accepted in the United States of America; the standards applicable to financial

audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; OMB Circular A-133, Audits of Stotes, Local Governments and Non-ProfitOrgønizations. Those standards and OMB Circular A-133 require that we plan and performthe audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and materíal effect on a

major federal program occurred. An audit includes examining, on a test basis, evidence

-85-


about the District's compliance with those requirements and performing such other proceduresas we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on conrpliance for eachmajor federal program. However, our audit does not provide a legal determination of theDistrict's complia nce.

Opinion on Eoch Mojor FederolProgrom

ln our opinion, the District complied, in all material respects, with the type of compliancerequirements referred to above that could have a direct and material effect on each of its majorfederal programs for the year ended June 30, 2015.

Report on lnternal Controlover Compliance

Management of the District is responsible for establishing and maintaining effective internalcontrol over compliance with the types of compliance requirements referred to above. lnplanning and performing our audit of compliance, we considered the District's internal control

-.-- -t:- --- :rl rluveí uuííìiiiiäíìCe W¡i.íì i.íìû i'y'peS Oï íeqU¡i'emenis inAi COLjiû nave A û¡feci anü fnalefiai eîîeCt ûneach major federal program to determine the auditing procedures that are appropriate in thecircumstances for the purpose of expressing an opinion on compliance for each major federalprogram and to test and report on internal control over compliance in accordance with OMBCircuiar A-133, but not for the purpose of expressing an opinion on tne effectlveness of internaicontrol over compliance. Accordingly, we do not express an opinion on the effectiveness of theDistrict's internal control over compliance.

A deficiency in internol control over complionce exists when the design or operation of a controlover compliance does not allow management or employees, in the normal course of performingtheir assigned functions, to prevent, or detect and correct, noncompliance with a type ofcompliance requirement of a federal program on a timelv basis. A material weakness in internolcontrol over compliance is a deficiency, or combination of deficiencies, in internal control overcompliance, such that there is a reasonable possibility that material noncompliance with a typeof compliance requirement of a federal program will not be prevented, or detected andcorrected, on a timely basis. A significant deficiency in internal control over compliance is a

deficiency, or a combination of deficiencies, in internal control over compliance with a type ofcompliance requirement of a federal program that is less severe than a material weakness ininternal control over compliance, yet important enough to merit attention by those chargedwith governance.

Our consideration of internal control over compliance was for the limited purpose described inthe first paragraph of this section and was not designed to identify all deficiencies in internalcontrol over compliance that might be material weaknesses or significant deficiencies. We didnot identify any deficiencies in internal control over compliance that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

-86.


The purpose of this report on internal control over compliance is solely to describe the scope of ourtesting of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

C*, ßW i J,,X^Ð" L¿.e


Bowling G reen, KentuckyOctober 29,2015

.87.

Section I - Summary of Auditors'Results

Financial Statements

-l-.,^^ ^f ^,,Ai+^--, -^^^-+ :--..^1,,.-*^¡:f;^-Jr yps \,rr ouurLUrJ rcpvr L r)5ucu. uillltuuiltcu

lnternal control over financial reporting

Material weakness(es) identified?

Significant deficiency(ies) identifíed?

Noncompliance material to financialstatements noted?

FederalAwards

lnternal control over major programs

ivî ateria i wea kness(es) icìe ntifiecl?

Significant deficiency(ies) identified?

Type of auditors' report issued on

compliance for major programs: unmodified

Any audit findings disclosed that are requiredto be reoorted in accordance with section510(a) of Circular A-1"33?

Muhlenberg County Schooi DistrictSchedule of Findings and Questioned Costs

Yes No

Yes n None reported

!Yes ø No

U Yes No

tr Yes Ø None reported

trYes ø No

-88.

Muhlenberg County School DistrictSchedule of Findings and Questioned Costs (Continued)

ldentification of major federal program

CFDA NumbersName of Federal Program or

Cluster

10.ss3 / 10.55584.01_0

Child Nutrition ClusterTitle l, Part A Cluster

Dollar threshold used to distinguishbetween type A and type B programs: $3oo,ooo

Auditee qualified as low-risk auditee? [J Yes El ltlo

Section ll - FinancialStatement Findings

. 2015-001 lnvestments

Criterio and Condition: The Kentucky regulations (KRS 66.480) restricts the types ofinvestments that the District may hold.

Cause: The District has investment holdings that include stocks that are in violation of KRS

66.480.

Effect: The District is not in compliance with Kentucky regulations

Recommendation:We recommend all investment holdings comply with KRS 66.480

Views of Responsible Officials ond Planned Corrective Actions: The Exxon and Chevronstock the board currently owns was bequeathed to it in a will from years ago. This will is

very specific and restrictive in relation to how the District is allowed to spend the dividendmonies. The District is in compliance with the legal requirements of the will.

. 2OL5-0O2lnformation Technology (lT) - General Controls

Criteria and Condition: The finance officer, who performs general ledger accountingfunctions, also assigns user access rights and has rights to allaccounting modules.

Cause: These conditions have been created because of the small and limited staff in the lTand finance departments.

Effect: Proper segregation of duties does not exist over user access rights which increases

the risk that unauthorized transactions are not prevented or detected and corrected in a

timely manner.

89-


Recommendation: The District should implement compensating controls to assist inreducingthe riskfrom these control deficiencies. To further improve the internal controls,the assigning of user access rights should be performed by someone independent of the-^^^.-l l^,-l^^' -^^l ^, rrran+ riah+c .h^,,1¡ hn n.,rl' '-+^.16çrrLrqr tLv6Lr qrtu LU¡rLr¡L tt6rtLJ Jttvutu wL çvqtvqtçu,

Views of Responsible Officiols ond Planned Corrective Actions: The finance departmenthas reduced staff size to minimize costs. Additionally, the finance officer creates new useraccounts and has an outside consultant put permissions in place. Moving forward thefinance officer will reduce user assignment access to MUNIS.

I 20L5-003 Fixed Assets

Criteria and Condition: Fixed assets should be reviewed and reconciled by management

Cause: Certain internal controls weremisstatements in fixed asset balances.

not in place to detect, prevent or correct

Effect: Fixed asset balances could be materially incorrect without being detected byrnarragernent.

Recornmendotion: The District should implement controls to monitor and reconcile fixedasset activity and balances to ensure proper reporting.

Views of Responsible Officiols and Planned Corrective Actions: Moving forward,management will place internal controls into daily processes that will ensure proper fixedasset balances. These processes to be completed by management will include fixed assetentry, balance and reconciliation.

-90-


Section lll - FederalAward Findings and Questioned Costs

None reported

9t-

j.ìril.'È.1.ü?".À

;a;q.¡.1:;3-!\15

ffiffimf;,å*iää gmå Ð.-.&øgÐñrruGfiAfvtCPAs and Acivisors

Co,rr,, ÊW i J^X "Ðr L.t -c

Car, Riggs & lngram, LLC

927 College Street


PO Box 1 04

Bowling Green, Kentucky 421 02-0104

(270\ 782.0700

(270) 782-0932 (fax)

167 South ¡/aln Street

Russellville, Kenltcky 4227 6

(270\726-7151

(270) 726-3155 (fax)

www,cícpa,c0m

l/^.-L,,^l-., aL^L- ^^.--.--:r!- - 1--- ? -l- - -l ñ: l:LNef tLuLKy JrdLc LUf f tf f iltLee tuf )Lf toot ut5t.f tct Auolt5

Members of the Board of EducationMuhlenberg County School DistrictPowderly, Kentucky

ln planning and perform¡ng our audit of the financial statements of Muhlenberg County SchoolDisirict (the "District") for the year ended june 30, 2015, we considered the District's internalcontrol in order to determine our auditing procedures for the purpose of expressing an opinion onthe financial statements and not to provide assurance on Internal control.

However, during our audit we became aware of matters that are opportunities for strengtheninginternal controls and operating efficiencies. The memorandum that accompanies this lettersummarizes our comments and recommendat¡ons regarding these matters. Any uncorrectedcomments from the prior year have been listed in this letter. A separate report dated October 29,2015 contains our report on the District's internal controi. This letter does not atfect our reportdated October 29,2015 on the financial statements of the District.

We will review the status of these comments during our next audit engagement. We have alreadydiscussed the comments and recommendations with various District personnel, and we will bepleased to discuss them in further detail at your convenience, to perform any additional study ofthese matters or to assist you in implementing the recommendations.


Bowling Green, KentuckyOctober 29,2015

-92-

Muhlenberg County School DistrictComments and Recommendations (Continued)

Current Year and Prior Year

e Central Office

During our procedures over bidding, we noted one instance of a vendor with purchases

in excess of 520,000 that was not properly bid. We recommend all items over 520,000be bid and the biddine process be monitored as required by regulations.

During our review of the accounting records, we noted that there were Food Service

expenses recorded in the General Fund. We recommend all Food Service expenses be

recorded in Food Service so that there is a more accurate indication of the operations ofthat function.

During our review of procurement, we noted that purchase orders are not used for Food

Service purchases. We recommend, in order to obtain and document, proper approval ofexpenditures, purchase orders be used for all purchases over a set threshold.

Muhlenberg South Middle School

During our procedures over disbursements, we noted that purchase orders are notsigned by the person requesting the purchase on a consistent basis. We recommend theperson requesting the purchase sign the purchase in accordance with Redbook

requirements.

¡ Muhlenberg County High School - East Campus

During our inquiries over ticket sales, we noted that the duties of ticket seller and tickettaker are not segregated. We recommend that the duties of ticket seller and ticket takerbe segregated to ensure proper controls over gate receipts.

o Longest Elementary School

During our inquiries regarding the activity funds, we noted that budgets and the annualreport of receipts and disbursements and cash balances are not obtained fromsupporting organizations. We recommend budgets and annual reports are obtainedfrom supporting organizations in accordance with Redbook requirements.

Current Year

o South Elementary

During our procedures over receipts, we noted that the receipt numbers listed on thedeposit slips did not match the receipts numbers contained in the deposit. We

recommend the receipt numbers listed on the deposit slip correspond to the actualreceipt numbers.

-93-

Muhienberg County Schooi DistrictComments and Recommendations (Continued)

During our inquiries regarding the activity funds, we noted that monthly financial reportsare not distributed to the sponsors on a monthly basis. We recommend monthlyfinancial reports be distributed to the sponsors on a monthly basis to keep theminformed.

r Longest Elementary School

During our sampling procedures over disbursements, we noted 2 checks were míssingdual signatures. We recommend all checks be reviewed and contain dual signatures as

required by Redbook guidance.

During our proeedures over reeeipts, we noted deposit slips did not contain dual initials.We recommend as the deposit slip is prepared and reviewed by a different individualthat this control be documented with dual initials on the deposit slip.

o Central City Elementary School

During our procedures over receipts, we noted that the receipt numbers were not listedon the deposit slips. We recommend the receipt numbers be listed on the deposit slip

¡ Muhlenberg North Middle School

During our sampling procedures over receipts, we noted that the receipt numbers listedon the deposit slips did not match the receipt numbers contained in the deposit. Werecommend the receipt numbers listed on the deposit slip correspond to the actualreceipt numbers.

During cur proceCures over Cisbursernents, \¡,/e ncted 3 checks r¡¡ere rnissing dualsignatures. We recommend all checks be reviewed and contain dual signatures as

required by Redbook guidance.

¡ Muhlenberg South Middle School

During our procedures over receipts, we noted that the receipt numbers were not listedon the deposit slips. We recommend the receipt numbers be listed on the deposit slips.

During our review of receipts, we noted bookfair monies are not deposited on a dailybasis. We recommend all deposits over $100 be made on a daily basis.

During our review of disbursements, we noted staff food, retirement gifts, coaches'cardsand coaches' plaques were purchased with activity monies. Student generated activityfunds should only be spent on student related expenses. We recommend all moniesspent with activity funds be spent on students and not staff.

I

-94-

Muhlenberg County School DistrictComments and Recommendations (Continued)

. Muhlenberg County High School - West Campus

During our procedures over receipts, we noted that the receipt numbers were not listedon the deposit slips. We recommend the receipt numbers be listed on the deposit slip.

During our review of receipts, we noted several receipts dated after the deposit date.This indicates that money is being deposited without receipts and a receipt is not beingissued when all money is received. We recommend a receipt be issued for all money onthe date it is received.

.95.

I

Muhlenberg County Schooi Districtt\/t ^h1^^mnn+ Þn¡nan¡¡rvr d f ¡dB,ef ilerì L ñesIJOilses

Current Year and Prior Year

o Central Office

During our procedures over bidding, we noted one instance of a vendor with purchases in

excess of 520,000 that was not properly bid. We recommend all items over 520,000 be bid

and the bidding process be monitored as required by regulations.

Vendor in question is now part of the Kentucky Purchasing Cooperative.

Additionally, various items are purchased throughout the year wherein an aggregate

of over $ZO,OO0 is possible. Any other purchases made are done using the Model

Procurement method as described in KRS Statute.

During our review of the accounting records, we noted that there were Food Service

expenses recorded in the General Fund. We recommend all Food Service expenses be

recorded in Food Service so that there is a more accurate indication of the operations of thatfr-rnction.

The expenses noted from the General Fund for Food Service are lunchroom

monitors placed in some of the locations. Additionally, uniforms are paid from the---^^.-^l f--.^l r-^^l ----.-:-- l--^ :.^-l:--t^-l tl--r tl---- .---.-:r-.-- l-- .--:i r.-E,elleldl IUllu, rU(JU 5erVlUe Ild5 lllulLclLcu Llldt Lf leSe lllUllltuf 5 LdrlllUt Ue PdlU llUIfl

their funds as they do not directly relate to food preparation.

During our review of procurement, we noted that purchase orders are not used for Food

Service purchases. We recommend, in order to obtain and document, proper approval ofexpenditures, purchase orders be used for all purchases over a set threshold

Purchase order sr7stems will be used for Food Service

Muhlenberg South Middle School

During our procedures over disbursements, we noted that purchase orders are not signed by

the person requesting the purchase on a consistent basis. We recommend the person

requesting the purchase sign the purchase in accordance with Redbook requirements.

All current financial secretaries and principals have been sent to Redbook trainingprovided through regional educational cooperatives.

-96-

Muhlenberg County School DistrictManagement Responses (Continued)

o Muhlenberg County High School - East Campus

During our inquiries over ticket sales, we noted that the duties of ticket seller and ticket

taker are not segregated. We recommend that the duties of ticket seller and ticket taker be

segregated to ensure proper controls over gate receipts.

When at events where few people attend, i.e., baseball or softball, it would cost

prohibitive to have two separate people as ticket taker and gatekeeper.


During our inquiries regarding the activity funds, we noted that budgets and the annual

report of receipts and disbursements and cash balances are not obtained from supporting

organizations. We recommend budgets and annual reports are obtained from supporting

organizations in accordance with Redbook requirements.

Every attempt is made to obtain the documentation mentioned above from

supporting organizations. All current financial secretaries and principals have been

sent to Redbook training provided through regional educational cooperatives.

Current Year

o South Elementary

During our procedures over receipts, we noted that the receipt numbers listed on the

deposit slips did not match the receipts numbers contained in the deposit. We recommend

the receipt numbers listed on the deposit slip correspond to the actual receipt numbers.

Stronger measures will be put in place moving forward to ensure proper receipt

numbers are listed on deposits. This will include stapling all receipts together and

confirming the number on the receipt corresponds with the number on the deposit

slip.

¡

-97-

Muhienberg County Schooi DistrictManagement Responses (Continued)

During our inquiries regarding the activity funds, we noted that monthly financial reports are

not distributed to the sponsors on a monthly basis. We recommend monthly financial

reports be cjistributecj to the sponsors on a monthiy basis to keep them informecj.

Monthly financial reports will be printed and distributed accordingly to each of our

sponsors.


During our sampling procedures over disbursements, we noted 2 checks were missing dual

signatures. We recommend all checks be reviewed and contain dual signatures as required

by Redbook guidance.

Tighter controls will be put in place to ensure dual signatures are obtained for each

check written. All current financial secretaries and principals have been sent toRedbook training provided through regional educational cooperatives.

During our procedures over receipts, we noted deposit slips did not contain dual initials. We

recommend as the deposit slip is prepared and reviewed by a different individual that this¡nnlrnl ha Än¡r ¡mantaÄ rrrith À' rrl inif irlc nn iha ¡lannci+ clinvvrt¡r vqur rrrrLrsri vr¡ !lrL vL}/vJ¡r Jrt¡/!

Tighter controls will be put in place to ensure each deposit is reviewed by an

additional individual and dual initials are obtained. All current financial secretaries

and principals have been sent to Redbook training provided through regional

educational cooperatives.

. Central City Elementary School

During our procedures over receipts, we noted that the receipt numbers were not listed on

the deposit slips. We recommend the receipt numbers be listed on the deposit slip.

Stronger measures will be put in place moving forward to ensure receipt numbers are

listed on deposits.

. Muhlenberg North Middle School

During our sampling procedures over receipts, we noted that the receipt numbers listed on

the deposit slips did not match the receipt numbers contained in the deposit. We

recommend the receipt numbers listed on the deposit slip correspond to the actual receipt

n u m bers.

-98

Muhlenberg County School DistrictManagement Responses (Continued)

Our current procedures for processing bank deposits ensure the accuracy of all

recorded information. Receipts are prepared in triplicate for all monetary collections.

The third copy is retained in a pre-numbered, bound receipt book. When the bank

deposit slip is prepared, the receipt numbers represented in the deposit are written

on the deposit slip and initialed by the financial secretary. Another school employee is

then given the pre-numbered receipt book and the deposit book to verify that the

receipt numbers are recorded correctly, that all receipt numbers since the previous

deposit have been accounted for, and that the total of the receipts matches the total

amount of the deposit. The deposit slip is then initialed by that employee.

During our procedures overdisbursements, we noted 3 checks were missing dual signatures.

We recommend all checks be reviewed and contain dual signatures as required by Redbook

guidance,

Four people are authorized to sign checks on our activity account: the principal,

assistant principal, financial secretary, and financial officer. lt is our policy that two

signatures are present on all disbursements. Payments are prepared in a timely

manner allowing sufficient time to obtain both required signatures.

¡ Muhlenberg South Middle School


the deposit slips. We recommend the receipt numbers be listed on the deposit slips.

!


listed on deposits.

During our review of receipts, we noted book fair monies are not deposited on a daily basis

We recommend all deposits over $100 be made on a daily basis.

Deposits are made on a regular basis. Tighter controls will be put in place to ensure

deposits are made daily, even after bank hours. Additionally, all current financial

secretaries and principals have been sent to Redbook training provided through

regiona I educationa I cooperatives.

During our review of disbursements, we noted staff food, retirement gifts, coaches' cards

and coaches' plaques were purchased with activity monies. Student generated activity funds

should only be spent on student related expenses. We recommend all monies spent with

activity funds be spent on students and not staff.

-99.

Â d..l-l-.-l- ^.-- ^-...-r-

- a-l^ - -l ñ:^r.-:^rtvtuf ilef luef B, Louf rty )uf t(Jot ut5Lf tuL

Management Responses (Continued)

Schools have been instructed these items are not allowed to be purchased using

activity funds. Therefore, all current financial secretaries and principals have been sent

to Redbook training provided through regional educational cooperatives.

o rvlunrenoerg LounEy ñrgn scnoot - wesÏ Lampus


the deposit slips, We recommend the receipt numbers be listed on the deposit slip.


listed on deposits.

During our review of receipts, we noted several receipts dated after the deposit date. This

indicates that money is being deposited without receipts and a receipt is not being issued

when all money is received. We recommend a receipt be issued for all money on the date itis received.

A review of accounting procedures has been completed at this site and new processes

have been put in place to ensure the receipt is created at the time funds are received.

L00.

Join Our Conversation

WËBSITË (CRlcpa.com)

CRlt website features ñnancial calculators, current tax andestate iax guicles, a record reiention schedule, glossary ofcommon frnancial terms, and hundreds of articles with topicsranging from currenl legislation tô industry-specific news.

1u

atl

BLüG SlTE (blog,eRlcpa.eorn)

Featuring articles and videos, CRI's interactive blog siteprovides helpful tips for readers both personally and

professionally.Written by our partners from their përspective

and experiences, these plain Ênglish explanations of currentregulations and trends exemplifu our commitment to opendialogue.

CRlnsights {ÇRlcpa.com)

We understand that just because a topic makes perfect sense

to a CPA dcesn't mean that it v;ill to oui clients, That's '"vhr"

we developed CRlnsights, our in-depth yet down-to-earthexplanations of complex topics.

NËWSLETîüR {Sign up at CRlcpa.com)

Our team is dedicated to keeping our clients informed, andwe prove it by creating a custom monthly e-newsletter withwideiy-applirable topics. The articles are designed to help youimprove your business and personal finances, Popular recenttopics include:

. Reportable Health Care Coverage on W-2s

. Navigating Alternative Minimum Tax (AMT)

. Key Considerations of Health Care Law

. Six ComfirandrÏents of Estate Planning

APPENDIX C


Series of 2016

Continuing Disclosure Agreement

(C-1)

CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Undertaking Agreement ("Agreement") made and entered into as of the 1st

day of September, 2016, by and between the Board of Education of Muhlenberg County ("Board"); the

Muhlenberg County School District Finance Corporation, an agency and instrumentality of the Board

("Corporation") and the Registered and Beneficial Owners of the Bonds hereinafter identified as third party

beneficiaries to this Agreement. For the purposes of this Agreement "Beneficial Owner" means the person or

entity treated as the owner of the Bonds for federal income tax purposes and "Registered Owner" means the person

or entity named on the registration books of the bond registrar.

W I T N E S S E T H:

WHEREAS, the Corporation has acted as issuing agency for the Board pursuant to the provisions of

Section 162.385 of the Kentucky Revised Statutes ("KRS") and the Corporation's Bond Resolution in connection

with the authorization, sale and delivery of $13,020,000 of the Corporation's School Building Refunding Revenue

Bonds, Series of 2016, dated as of September 1, 2016 ("Bonds"), which Bonds were offered for sale under the

terms and conditions of a Final Official Statement ("FOS") prepared by Ross, Sinclaire & Associates, LLC,

Lexington, Kentucky ("Financial Advisor") and approved by the authorized representatives of the Board and the

Corporation, and

WHEREAS, the Securities and Exchange Commission ("SEC"), pursuant to the Securities and Exchange

Act of 1934, has amended the provisions of SEC Rule 15c2-12 relating to financial disclosures by the issuers of

municipal securities under certain circumstances ("Rule"), and

WHEREAS, it is intended by the parties to this Agreement that all terms utilized herein shall have the

same meanings as defined by the Rule, and

WHEREAS, the Board is an "obligated person" as defined by the Rule and subject to the provisions of

said Rule, and

WHEREAS, failure by the Board and the Corporation to observe the requirements of the Rule will inhibit

the subsequent negotiation, transfer and exchange of the Bonds with a resulting diminution in the market value

thereof to the detriment of the Registered and Beneficial Owners of said Bonds and the Board;

NOW, THEREFORE, in order to comply with the provisions of the Rule and in consideration of the

purchase of the Bonds by the Registered and Beneficial Owners, the parties hereto agree as follows:

1. ANNUAL FINANCIAL INFORMATION

The Board agrees to provide the annual financial information contemplated by Rule 15c2-12(b)(5)(i)

relating to the Board for its fiscal years ending June 30 of each year to (a) the Municipal Securities Rulemaking

Board ("MSRB"), or any successor thereto for purposes of its Rule, through the continuing disclosure service

portal provided by the MSRB's Electronic Municipal Market Access ("EMMA") system as described in 1934 Act

Release No. 59062, or any similar system that is acceptable to the Securities and Exchange Commission and (b)

the State Information Depository ("SID"), if any (the Commonwealth of Kentucky has not established a SID as

of the date of this Agreement) within nine (9) months of the close of each fiscal year.

For the purposes of the Rule "annual financial information" means financial information and operating

data provided annually, of the type included in the FOS with respect to the Board in accordance with guidelines

established by the National Federation of Municipal Analysts, and shall include annual audited financial statements

for the Board in order that the recipients will be provided with ongoing information regarding revenues and

operating expenses of the Board and the information provided in the FOS under the headings "OUTSTANDING

BONDS", "BOND DEBT SERVICE", "DISTRICT STUDENT POPULATION", "LOCAL SUPPORT - Local

Tax Rates, Property Assessment and Revenue Collections and SEEK Allotment". If audited financial statements

(C-2)

are not available when the annual financial information is filed, unaudited financial statements shall be included,

to be followed by audited financial statements when available.

The audited financial statements shall be prepared in accordance with Generally Accepted Accounting

Principles, Generally Accepted Auditing Standards or in accordance with the appropriate sections of KRS or

Kentucky Administrative Regulations.

The parties hereto agree that this Agreement is entered into among them for the benefit of those who

become Registered and Beneficial Owners of the Bonds as third party beneficiaries to said Agreement.

2. MATERIAL EVENTS NOTICES

Under the Rule, Section 15c2-12(b)(5)(i)(C), the following fifteen (15) events must be disclosed within

ten (10) business days following the occurrence of said event to MSRB via EMMA and the SID, if any:

(1) Principal/interest payment delinquency;

(2) Nonpayment related default, if material;

(3) Unscheduled draw on debt service reserve reflecting financial difficulties;

(4) Unscheduled draw on credit enhancement reflecting financial difficulties;

(5) Substitution of credit or liquidity provider, or its failure to perform;

(6) Adverse tax opinions, the issuance by the IRS 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 securities, or other material events affecting the tax status of the

security;

(7) Modifications to rights of security holders, if material;

(8) Bond call, if material;

(9) Defeasance;

(10) Tender offers;

(11) Release, substitution or sale of property securing the repayment of the security, if material;

(12) Rating change;

(13) Merger, consolidation, acquisition or sale of all or substantially all assets of an obligated person,

other than in the ordinary course of business, and the entry into a definitive agreement to

undertake such action or the termination of a definitive agreement relating to such action, other

than pursuant to its terms, if material;

(14) Bankruptcy, insolvency, receivership or similar event; and

(15) Successor, additional or change in trustee, if material.

Notice of said material events shall be given to the entities identified in this Section by the Board on a

timely basis (within ten (10) business days of the occurrence). Notwithstanding the foregoing, the provisions of

the documents under which the Bonds are authorized and issued do not provide for a debt service reserve, credit

enhancements or credit or liquidity providers.

(C-3)

In accordance with Rule Section 15c2-12(b)(5)(i)(D), the Board agrees that in the event of a failure to

provide the Annual Financial Information and Operating Data required under Section 1 of this Agreement, it will

notify MSRB via EMMA of such failure in a timely manner as required above.

The Finance Officer of the Board shall be the responsible person for filing the annual financial

information, operating data and/or notices of the events set forth above within the time prescribed in this

Agreement. The Board shall cause the Finance Officer to institute an internal tickler system as a reminder of the

obligations set forth herein. By December 1 of each fiscal year and each 30 days thereafter the Finance Officer will

contact the auditor for the Board to determine when the audited financial statements will be finalized. The Finance

Officer will impress upon the auditor the necessity of having such audited financial report on or before March 15.

Within 5 days of receipt of such audited financial report the finance officer will cause the annual financial

information to be filed as required by this Agreement.

3. SPECIAL REQUESTS FOR INFORMATION

Upon the request of any Registered or Beneficial Owner of the Bonds or the original purchaser of the

Bonds or any subsequent broker-dealer buying or selling said Bonds on the secondary market ("Underwriters"),

the Board shall cause financial information or operating data regarding the conduct of the affairs of the Board to

be made available on a timely basis following such request.

4. DISCLAIMER OF LIABILITY

The Board and the Corporation hereby disclaim any liability for monetary damages for any breach of the

commitments set forth in this Agreement and remedies for any breach of the Board's continuing disclosure

undertaking shall be limited to an action for specific performance or mandamus in a court of competent jurisdiction

in Kentucky following notice and an opportunity to cure such a breach.

5. FINAL OFFICIAL STATEMENT

That the Final Official Statement prepared by the Financial Advisor and approved by the authorized

representatives of the Board and the Corporation is hereby incorporated in this Agreement as fully as if copied

herein and the "annual financial information" required under Section 1 hereof shall in summary form update the

specific information set forth in said FOS.

6. DURATION OF THE AGREEMENT

This Agreement shall be in effect so long as any of the Bonds remain outstanding and unpaid; provided,

however, that the right is reserved in the Board to delegate its responsibilities under the Agreement to a competent

agent or trustee, or to adjust the format of the presentation of annual financial information so long as the intent and

purpose of the Rule to present adequate and accurate financial information regarding the Board is served.

7. AMENDMENT; WAIVER

Notwithstanding any other provision of this Agreement, the Board may amend this Agreement, and any

provision of this Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Section 1, it may only be made in connection

with a change in circumstances that arises from a change in legal requirements, change in law, or change in the

identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally

recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of

the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in

circumstances; and

(C-4)

(c) The amendment or waiver either (i) is approved by the holders of the Bonds in the same manner as

provided in the Bond Resolution for amendments to the Bond Resolution with the consent of holders, or (ii) does

not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Registered Owners

or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Agreement, the Board shall describe such

amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the

reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles,

on the presentation) of financial information or operating data being presented by the Board. In addition, if the

amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such

change shall be given in the same manner as for a material event under Section 15c2-12(b)(5)(i)(C) of the Rule,

and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form

and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new

accounting principles and those prepared on the basis of the former accounting principles.

8. DEFAULT

In the event of a failure of the Board to comply with any provision of this Agreement, the Corporation may

and, at the request of any Underwriter or any Registered Owner or Beneficial Owner of Bonds, shall take such

actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order,

to cause the Board to comply with its obligations under this Agreement. A default under this Agreement shall not

be deemed an event of default under the Bond Resolution, and the sole remedy under this Agreement in the event

of any failure of the Board to comply with this Agreement shall be an action to compel performance.

In witness whereof the parties hereto have executed this Agreement as of the date first above written.

BOARD OF EDUCATION OF THE MUHLENBERG COUNTY SCHOOL DISTRICT

Chairman

Attest:

_______________________________

Secretary

MUHLENBERG COUNTY (KENTUCKY)SCHOOL DISTRICT FINANCE CORPORATION

President

Attest:

______________________________

Secretary

APPENDIX D


Series of 2016

Official Terms and Conditions of Bond Sale

(D-1)

OFFICIAL TERMS AND CONDITIONS OF BOND SALE

$13,020,000*

Muhlenberg County School District Finance CorporationSchool Building Refunding Revenue Bonds, Series of 2016

Dated September 1, 2016

SALE: August 24, 2016 AT 11:30 A.M., E.D.S.T.

The Muhlenberg County School District Finance Corporation (the "Corporation") will until 11:30 A.M.,

E.D.S.T., on August 24, 2016 receive at the office of the Kentucky School Facilities Construction Commission,

229 W. Main Street, Suite 102, Frankfort, Kentucky 40601, competitive bids for the purchase of $13,020,000

principal amount of Muhlenberg County School District Finance Corporation School Building Refunding Revenue

Bonds, Series of 2016 (the "Refunding Bonds"), dated and bearing interest from September 1, 2016, payable on

November 1, 2016, and semi-annually thereafter on May 1 and November 1 of each year, in denominations in

multiples of $5,000 within the same maturity, maturing on November 1 in each of the years as follows:

PRINCIPALMATURITY AMOUNT*

2016 $ 575,000

2017 590,000

2018 600,000

2019 605,000

2020 930,000

2021 950,000

2022 955,000

2023 990,000

2024 995,000

2025 1,020,000

2026 1,040,000

2027 920,000

2028 940,000

2029 965,000

2030 945,000

* Subject to Permitted Adjustment increase or decrease up to $2,605,000

REDEMPTION PROVISIONS

The Bonds maturing on or after November 1, 2027 are subject to redemption at the option of the

Corporation prior to their stated maturities on any date falling on or after November 1, 2026, in any order of

maturities (less than all of a single maturity to be selected by lot), in whole or in part, upon notice of such prior

redemption being given by the Paying Agent in accordance with DTC requirements not less than thirty (30) days

prior to the date of redemption, upon terms of the face amount, plus accrued interest, but without redemption

premium.

Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to call the

Bonds in whole or in part on any date at par for redemption upon the total destruction by fire, lightning, windstorm

or other hazard of any building constituting the Projects and apply casualty insurance proceeds to such purpose.

The Refunding Bonds are to be issued in fully registered form (both principal and interest). Old National

Wealth Management, Evansville, Kentucky, the Bond Registrar and Paying Agent, shall remit interest on each

(D-2)

semiannual due date to each Registered Owner of record as of the 15th day of the month preceding the due date

which shall be Cede & Co., as the Nominee of The Depository Trust Company ("DTC"). Please see

"Book-Entry-Only-System" below.

MUHLENBERG COUNTY SCHOOL DISTRICT FINANCE CORPORATION

The Corporation has been formed in accordance with the provisions of Sections 162.120 through 162.300

and Section 162.385 of the Kentucky Revised Statutes ("KRS"), and KRS Chapter 273 and KRS 58.180, as a

non-profit, non-stock corporation for the purpose of financing necessary school building facilities for and on behalf

of the Board of Education of the Muhlenberg County School District (the "Board"). Under the provisions of

existing Kentucky law, the Corporation is permitted to act as an agency and instrumentality of the Board for

financing purposes and the legality of the financing plan to be implemented by the Bonds herein referred to has

been upheld by the Kentucky Court of Appeals (Supreme Court) in the case of White v. City of Middlesboro, Ky.

414 S.W.2d 569.

AUTHORITY AND PURPOSE

The Refunding Bonds are being issued under and in full compliance with the Constitution and Statutes

of the Commonwealth of Kentucky, including Sections 162.120 through 162.300, 162.385, and Section 58.180

of the Kentucky Revised Statutes, within the meaning of the decision of the Court of Appeals of Kentucky

(Supreme Court) in the case of Hemlepp v. Aronberg, 369 S.W.2d 121, for the purpose of providing funds to retire

the outstanding Muhlenberg County School District Finance Corporation School Building Revenue Bonds, Series

of 2007, dated May 1, 2007 maturing May 1, 2018 and thereafter (the "2007 Defeased Bonds") and the

outstanding Muhlenberg County School District Finance Corporation School Building Revenue Bonds, Taxable

Series of 2010, dated November 1, 2010 (Build America Bonds-Direct Pay to Issuer) maturing November 1, 2016

and thereafter (the "2010 Defeased Bonds" and together with the 2007 Defeased Bonds, collectively, "Defeased

Bonds" or "Prior Issues").

SCHOOL FACILITIES CONSTRUCTION COMMISSION

The Kentucky School Facilities Construction Commission is an independent corporate agency and

instrumentality of the Commonwealth of Kentucky established pursuant to the provisions of Sections 157.611

through 157.640 of the Kentucky Revised Statutes, as amended, repealed and reenacted (the "Act") for the purpose

of assisting local school districts in meeting the school construction needs of the Commonwealth in a manner

which will ensure an equitable distribution of funds based upon unmet need.

The Commission will enter into a Participation Agreement with the Board whereunder the Commission,

will agree to continue to pay approximately $240,256 to be applied to the debt service of the Refunding Bonds

through November 1, 2030; provided, however, that the contractual commitment of the Commission to pay the

annual Agreed Participation is limited to the biennial budget period of the Commonwealth, with the first such

biennial budget period terminating on June 30, 2018.

The Extraordinary Session of the General Assembly of the Commonwealth adopted the State's Budget

for the biennium ending June 30, 2018. Inter alia, the Budget provides $121,610,900 in FY 2016-17 and

$134,544,300 in FY 2017-18 to pay debt service on existing and future bond issues; $100,000,000 of the

Commission's previous Offers of Assistance made during the last biennium; and authorizes $91,000,000 in

additional Offers of Assistance for the current biennium to be funded in the Budget for the biennium ending June

30, 2018.

PROCEEDS TO RETIRE ALL OR CERTAIN BONDS OF PRIOR ISSUES

The Bonds of the Prior Issues were issued under the authority of Sections 162.120 through 162.300 and

162.385 of the Kentucky Revised Statutes for the purpose of providing funds to finance improvements to Central

City Elementary School and construction of Longest Elementary School (the "Projects"). Under the terms of the

Resolution authorizing the Prior Issues, those Bonds are payable from the income and revenues of the Projects

(D-3)

financed from the proceeds thereof. The Bonds of the Prior Issues are secured by liens upon and pledges of

revenues from the rental of the Projects to the Board under two Contract, Lease and Options, dated May 1, 2007

and November 1, 2010, respectively (the "Prior Leases").

The total principal amount of the Prior Issues currently outstanding is $1,285,000 and $11,310,000,

scheduled to mature on May 1 in each of the years 2017 through 2027 and November 1 in each of the years 2017

through 2030, respectively. The proceeds of the Refunding Bonds will be used to pay accruing interest on and

retire on May 1, 2017 the 2007 Defeased Bonds and on September 27, 2016 the 2010 Defeased Bonds.

The 2016 Bond Resolution adopted by the Corporation's Board of Directors authorizes the payment and

retirement of the Defeased Bonds including principal and accruing interest prior to their stated maturities through

the deposit of the required amount of proceeds of the Refunding Bonds in a special Escrow Fund for application

to the retirement of the Defeased Bonds.

The 2016 Bond Resolution expressly provides that upon delivery of the Refunding Bonds and the deposit

of sufficient funds in accordance with the preceding paragraph neither the liens upon nor the pledges of the

revenues from the rental of the Projects under the Prior Leases shall constitute the security and source of payment

for any of the Defeased Bonds of the Prior Issues and the Registered Owners of such Defeased Bonds of the Prior

Issues shall be paid from and secured by the monies deposited in the Prior Bond Fund or Escrow Fund for the

retirement thereof upon the delivery of the Refunding Bonds.

SECURITY FOR REFUNDING BONDS

The Refunding Bonds will constitute a limited indebtedness of the Corporation and will be payable as to

both principal and interest solely from the income and revenues of the school Projects financed from the proceeds

of the Prior Issues. The Refunding Bonds are secured by liens upon and pledges of the revenues derived from the

rental of the school Projects to the Board under a Lease Agreement dated September 1, 2016 (the "2016 Lease");

provided, however, said liens and pledges rank on the basis of parity with the lien and pledge securing the 2007

Bonds maturing May 1, 2017 (the "Remaining Bonds").

Under the 2016 Lease the Board has leased the school properties securing the Refunding Bonds in

accordance with the provisions of KRS 162.140 for an initial period from September 1, 2016 through June 30,

2017, with the option in the Board to renew said 2016 Lease from year to year for one year at a time, at annual

rentals, sufficient in each year to enable the Corporation to pay, solely from the rentals due under the 2016 Lease,

the principal and interest on all of the Refunding Bonds as same become due.

The 2016 Lease provides that the Prior Leases will be canceled with respect to the Defeased Bonds

effective upon the escrow of sufficient funds to provide for the retirement of the Defeased Bonds but shall remain

outstanding until retirement of the Remaining Bonds. The 2016 Lease provides further that so long as the Board

exercises its annual renewal options, its rentals will be payable according to the terms and provisions of the 2016

Lease until November 1, 2030, the final maturity date of the Refunding Bonds, and such annual rentals shall be

deposited as received in the Bond Fund for the Refunding Bonds and used and applied for the payment of all

maturing principal of and interest on the Refunding Bonds.

Under the terms of the 2016 Lease, and any renewal thereof, the Board has agreed so long as the Bonds

remain outstanding, and in conformance with the intent and purpose of Section 157.627(5) of the Act and KRS

160.160(5), in the event of a failure by the Board to pay the rentals due under the 2016 Lease, and unless sufficient

funds have been transmitted to the Paying Agent, or will be so transmitted, for paying said rentals when due, the

Board has granted under the terms of the 2016 Lease and Participation Agreement to the Corporation and the

Commission the right to notify and request the Kentucky Department of Education to withhold from the Board a

sufficient portion of any undisbursed funds then held, set aside, or allocated to the Board and to request said

Department or Commissioner of Education to transfer the required amount thereof to the Paying Agent for the

payment of such rentals.

(D-4)

Under the terms of the 2016 Bond Resolution and the 2016 Lease, the liens securing the Refunding Bonds

which is created and granted pursuant to KRS 162.200 upon the school Projects are and shall be restricted in their

application to the exact location of said school building Projects and to such easements and rights of way for

ingress, egress and the rendering of services thereto as may be necessary for the proper use and maintenance of

said school buildings; the right being reserved to erect or construct upon any land not occupied by the school

Projects other independently financed school buildings, free and clear of said statutory mortgage liens, which other

independently financed school buildings may or may not have a party wall with and adjoin said school building

constituting the Projects, provided no part of the cost of said other independently financed school buildings is paid

from the proceeds of the sale of the Refunding Bonds.

BIDDING CONDITIONS AND RESTRICTIONS

(A)The terms and conditions of the sale of the Refunding Bonds are as follows:

(1)Bids must be made on Official Bid Form, contained in Information for Bidders available from

the undersigned or Ross, Sinclaire & Associates, LLC, Lexington, Kentucky, or by visiting www.rsanet.com

submitted manually, by facsimile or electronically via PARITY®.

(2)Electronic bids for the Bonds must be submitted through PARITY® and no other provider of

electronic bidding services will be accepted. Subscription to the PARITY® Competitive Bidding System is

required in order to submit an electronic bid. The Corporation will neither confirm any subscription nor be

responsible for the failure of any prospective bidders to subscribe. For the purposes of the bidding process, the

time as maintained by PARITY® shall constitute the official time with respect to all bids whether in electronic or

written form. To the extent any instructions or directions set forth in PARITY® conflict with the terms of the

Official Terms and Conditions of Sale of Bonds, this Official Terms and Conditions of Sale of Bonds shall prevail.

Electronic bids made through the facilities of PARITY® shall be deemed an offer to purchase in response to the

Notice of Bond Sale and shall be binding upon the bidders as if made by signed, sealed written bids delivered to

the Corporation. The Corporation shall not be responsible for any malfunction or mistake made by or as a result

of the use of the electronic bidding facilities provided and maintained by PARITY®. The use of PARITY®

facilities are at the sole risk of the prospective bidders. For further information regarding PARITY®, potential

bidders may contact PARITY®, telephone (212) 404-8102. Notwithstanding the foregoing non-electronic bids

may be submitted via facsimile or by hand delivery utilizing the Official Bid Form.

(3) The minimum bid shall be not less than $12,824,700 (98.5% of par) plus accrued interest.

Interest rates shall be in multiples of 1/8 or 1/20 of 1% or both. Only one interest rate shall be permitted per Bond,

and all Bonds of the same maturity shall bear the same rate. Interest rates must be on an ascending scale, in that

the interest rate stipulated in any year may not be less than that stipulated for any preceding maturity. There is no

limit on the number of different interest rates.

(4) The determination of the best purchase bid for said Refunding Bonds shall be made on the

basis of all bids submitted for exactly $13,020,000 principal amount of Refunding Bonds offered for sale under

the terms and conditions herein specified; provided, however, the Corporation reserves the right to increase or

decrease the total principal amount of Refunding Bonds sold to such best bidder, in the amount of not exceeding

$2,605,000, with such increase or decrease to be made in any maturity, and the total amount of Refunding Bonds

awarded to such best bidder will be a minimum of $10,415,000 or a maximum of $15,625,000. In the event of any

such adjustment, no rebidding or recalculation of a submitted bid will be required or permitted. The price at which

such adjusted principal amount of Bonds will be sold will be at the same price per $5,000 of Refunding Bonds as

the price per $5,000 for the $13,020,000 of Refunding Bonds bid.

(5)The successful bidder may elect to notify the Financial Advisor within twenty-four (24) hours

of the award of the Bonds that certain serial maturities as awarded may be combined with immediately succeeding

serial maturities as one or more Term Bonds; provided, however, (a) bids must be submitted to permit only a single

interest rate for each Term Bond specified, and (b) Term Bonds will be subject to mandatory redemption by lot

on November 1 in accordance with the maturity schedule setting the actual size of the issue.

(D-5)

(6)The successful purchaser shall be required (without further advice from the Corporation) to

wire transfer an amount equal to 2% of the principal amount of Refunding Bonds actually awarded to the Paying

Agent Old National Wealth Management, Evansville, Kentucky, Attn: Ms. Shannon Perry (812-461-9741) by the

close of business on the day following the award as a good faith deposit said amount will be applied (without

interest) to the purchase price upon delivery and will be forfeited if the purchaser fails to take delivery.

(7) All Refunding Bonds of the same maturity shall bear the same and a single interest rate from

the date thereof to maturity.

(8)The right to reject bids for any reason deemed acceptable by the Corporation, and the right to

waive any possible informalities or irregularities in any bid, which in the sole judgment of the Corporation shall

be minor or immaterial, is expressly reserved.

(9)CUSIP identification numbers will be printed on the Refunding Bonds at the expense of the

Corporation. The purchaser shall pay the CUSIP Service Bureau assignment charge. Improper imprintation or

the failure to imprint CUSIP numbers shall not constitute cause for a failure or refusal by the purchaser to accept

delivery of and pay for said Refunding Bonds in accordance with the terms of any accepted proposal for the

purchase of said Bonds.

(B) The Bonds will be delivered utilizing the DTC Book-Entry-Only-System.

(C) Said Bonds are offered for sale on the basis of the principal of said Bonds not being subject to

Kentucky ad valorem taxation and on the basis of the interest on said Bonds not being subject to Federal or

Kentucky income taxation on the date of their delivery to the successful bidder. See TAX EXEMPTION below.

(D) The Corporation will provide to the successful purchaser a Final Official Statement in accordance with

SEC Rule 15c2-12. A Final Official Statement will be provided in Electronic Form to the successful bidder, in

sufficient time to meet the delivery requirements of the successful bidder under SEC and Municipal Securities

Rulemaking Board Delivery Requirements. The successful bidder will be required to pay for the printing of Final

Official Statements.

(E) If, prior to the delivery of the Bonds, any event should occur which alters the tax exempt status of the

Bonds, or of the interest thereon, the purchaser shall have the privilege of avoiding the purchase contract by giving

immediate written notice to the Corporation, whereupon the good faith check of the purchaser will be returned to

the purchaser, and all respective obligations of the parties will be terminated.

(F) The Corporation and the Board agree to cooperate with the successful bidder in the event said

purchaser desires to purchase municipal bond insurance regarding the Refunding Bonds; provided, however, that

any and all expenses incurred in obtaining said insurance shall be solely the obligation of the successful bidder

should the successful bidder so elect to purchase such insurance.

STATE SUPPORT OF EDUCATION

The 1990 Regular Session of the General Assembly of the Commonwealth enacted a comprehensive

legislative package known as the Kentucky Education Reform Act ("KERA") designed to comply with the mandate

of the Kentucky Supreme Court that the General Assembly provide for as efficient and equitable system of schools

throughout the State.

KERA became fully effective on July 13, 1990. Elementary and Secondary Education in the

Commonwealth is supervised by the Commissioner of Education as the Chief Executive Officer of the State

Department of Education ("DOE"), an appointee of the reconstituted State Board for Elementary and Secondary

Education (the "State Board"). Some salient features of KERA are as follows:

KRS 157.330 establishes the fund to Support Education Excellence in Kentucky ("SEEK") funded from

biennial appropriations from the General Assembly for distribution to school districts. The base funding

(D-6)

guaranteed to each school district by SEEK for operating and capital expenditures is determined in each fiscal year

by dividing the total annual SEEK appropriation by the state-wide total of pupils in average daily attendance

("ADA") in the preceding fiscal year; the ADA for each district is subject to adjustment to reflect the number of

at risk students (approved for free lunch programs under state and federal guidelines), number and types of

exceptional children, and transportation costs.

KRS 157.420 establishes a formula which results in the allocation of funds for capital expenditures in

school districts at $100 per ADA pupil which is included in the SEEK allotment ($3,911) for the current biennium

which is required to be segregated into a Capital Outlay Allotment Fund which may be used only for (1) direct

payment of construction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support

of bond issues; (4) reduction of deficits resulting from over expenditures for emergency capital construction; and

(5) a reserve for each of the categories enumerated in 1 through 4 above.

KRS 157.440(1) requires that effective for fiscal years beginning July 1, 1990 each school district shall

levy a minimum equivalent tax rate of $.30 for general school purposes. The equivalent tax rate is defined as the

rate which results when the income collected during the prior year from all taxes levied by the district (including

utilities gross receipts license and special voted) for school purposes is divided by the total assessed value of

property, plus the assessment for motor vehicles certified by the Revenue Cabinet of the Commonwealth. Any

school district board of education which fails to comply with the minimum equivalent tax rate levy shall be subject

to removal from office.

KRS 157.440(2) provides that for fiscal years beginning July 1, 1990 each school district may levy an

equivalent tax rate which will produce up to 15% of those revenues guaranteed by the SEEK program. Any

increase beyond the 4% annual limitation imposed by KRS 132.017 is not subject to the recall provisions of that

Section. Revenue generated by the 15% levy is to be equalized at 150% of the state-wide average per pupil

equalized assessment.

KRS 157.440(2) permits school districts to levy up to 30% of the revenue guaranteed by the SEEK

program, plus the revenue produced by the 15% levy, but said additional tax will not be equalized with state funds

and will be subject to recall by a simple majority of those voting on the question.

KRS 157.620(1) also provides that in order to be eligible for participation from the Kentucky School

Facilities Construction Commission for debt service on bond issues the district must levy a tax which will produce

revenues equivalent to $.05 per $100 of the total assessed value of all property in the district (including tangible

and intangible property and motor vehicles) in addition to the minimum $.30 levy required by KRS 160.470(12).

A district having a special voted tax which is equal to or higher than the required $.05 tax, must commit and

segregate for capital purposes at least an amount equal to the required $.05 tax. Those districts which levy the

additional $.05 tax are also eligible for participation in the Kentucky Facilities Support ("KFS") program for which

funds are appropriated separately from SEEK funds and are distributed to districts in accordance with a formula

taking into account outstanding debt and funds available for payment from both local and state sources under KRS

157.440(1)(b).

KRS 160.460 provides that as of July 1, 1994 all real property located in the Commonwealth subject to

local taxation shall be assessed at 100% of fair cash value.

BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2018

The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium ending

June 30, 2018 which was approved and signed by the Governor. Such budget was effective beginning July 1, 2016.

POTENTIAL LEGISLATION

No assurance can be given that any future legislation, including amendments to the Code, if enacted into

law, or changes in interpretation of the Code, will not cause interest on the Refunding Bonds to be subject, directly

or indirectly, to federal income taxation, or otherwise prevent owners of the Refunding Bonds from realizing the

(D-7)

full current benefit of the tax exemption of such interest. In addition, current and future legislative proposals, if

enacted into law, may cause interest on state or local government bonds (whether issued before, on the date of, or

after enactment of such legislation) to be subject, directly or indirectly, to federal income taxation by, for example,

changing the current exclusion or deduction rules to limit the amount of interest on such bonds that may currently

be treated as tax exempt by certain individuals. Prospective purchasers of the Refunding Bonds should consult

their own tax advisers regarding any pending or proposed federal tax legislation.

Further, no assurance can be given that the introduction or enactment of any such future legislation, or

any action of the IRS, including but not limited to regulation, ruling, or selection of the Refunding Bonds for audit

examination, or the course or result of any IRS examination of the Refunding Bonds or obligations which present

similar tax issues, will not affect the market price for the Refunding Bonds.

CONTINUING DISCLOSURE

As a result of the Board and issuing agencies acting on behalf of the Board offering for public sale

municipal securities in excess of $1,000,000, the Corporation and the Board will enter into a written agreement

for the benefit of all parties who may become Registered or Beneficial Owners of the Bonds whereunder said

Corporation and Board will agree to comply with the provisions of the Municipal Securities Disclosure Rules set

forth in Securities and Exchange Commission Rule 15c2-12 (the "Rule") by filing annual financial statements and

material events notices with the Electronic Municipal Market Access ("EMMA") System maintained by the

Municipal Securities Rule Making Board.

Financial information regarding the Board may be obtained from Superintendent, Muhlenberg County

Board of Education, 510 W. Main Street, Powderly, Kentucky 42367 (270) 338-2871.

TAX EXEMPTION; "NOT BANK QUALIFIED"

Bond Counsel is of the opinion that the Refunding Bonds are NOT "qualified tax-exempt obligations"

within the meaning of the Internal Revenue Code of 1986, as amended, and therefore advises as follows:

(A) The Refunding Bonds and the interest thereon are exempt from income and ad valorem taxation

by the Commonwealth of Kentucky and all of its political subdivisions.

(B) The interest income from the Refunding Bonds is excludable from the gross income of the

recipient thereof for Federal income tax purposes under existing law; provided, that the corporate entities noted

below are advised of certain tax consequences as follows:

(1) In the computation of the corporate minimum tax, earnings and profits may include

otherwise tax-exempt interest on the Refunding Bonds; this provision applies to corporations only.

(2) Property and casualty insurance companies may be denied certain loss reserve deductions

to the extent of otherwise tax-exempt interest on the Refunding Bonds.

(C) As a result of certifications by the Board and the Corporation, indicating the issuance of MORE

than $10,000,000 of tax-exempt obligations during the calendar year ending December 31, 2016, the Bonds may

NOT be treated by financial institutions as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code.

(D) The interest income from the Refunding Bonds is excludable from the gross income of the

recipient thereof for Federal income tax purposes under existing law for individuals; however, said income must

be included in the calculation of "modified adjusted gross income" in the determination of whether and to what

extent Social Security benefits are subject to Federal income taxation.

The Corporation will provide the purchaser the customary no-litigation certificate, and the final approving

Legal Opinions of Steptoe & Johnson PLLC, Bond Counsel and Special Tax Counsel, Louisville, Kentucky

(D-8)

approving the legality of the Bonds. These opinions will accompany the Bonds when delivered, without expense

to the purchaser.


The Refunding Bonds shall utilize the Book-Entry-Only-System administered by The Depository Trust

Company ("DTC").

DTC will act as securities depository for the Bonds. The Bonds initially will be issued as fully-registered

securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond

Certificate will be issued, in the aggregate principal amount of the Bonds, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking

organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a

"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency"

registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities

that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of

securities transactions, such as transfers and pledges, in deposited securities through electronic computerized

book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities

certificates. "Direct Participants" include securities brokers and dealers, banks, trust companies, clearing

corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New

York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities

Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks,

and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly

or indirectly ("Indirect Participants"). The Rules applicable to DTC and its participants are on file with the

Securities and Exchange Commission.

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 Participant's records. Beneficial Owners

will not receive written confirmation from DTC of their purchase, but Beneficial Owners are 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 ("Beneficial Ownership Interest") are to be accomplished by entries made on the

books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates

representing their Beneficial Ownership interests in Bonds, except in the event that use of the book-entry system

for the Securities is discontinued. Transfers of ownership interest in the Securities are to be accomplished by

entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not

receive certificates representing their ownership interests in Securities, except in the event that use of the

book-entry system for the Securities is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name

of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of

Cede & Co., effect no 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 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.

Redemption notices shall be sent to Cede & Co. If less than all of the Bonds are being redeemed, DTC's

practice is to determine by lot the amount of the interest of each Direct Participant in the Bonds to be redeemed.

(D-9)

Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures,

DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns

Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on

the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments of the Bonds will be made to DTC. DTC's practice is to credit Direct

Participants' account on payable date in accordance with their respective holdings shown on DTC's records unless

DTC has reason to believe that it will not receive payment on payable date. 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 Issuer, or the Trustee, subject to any statutory or regulatory requirements as may

be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the

Trustee, disbursements of such payments to Direct Participants shall be the responsibility of DTC, and

disbursements of such payment to the Beneficial Owners shall be the responsibility of Direct and Indirect

Participants.

A Beneficial Owner shall give notice to elect to have its Beneficial Ownership Interests purchased or

tendered, through its Participant, to the Trustee, and shall effect delivery of such Beneficial Ownership Interests

by causing the Direct Participant to transfer the Participant's interest in the Beneficial Ownership Interests, on

DTC's records, to the purchaser or the Trustee, as appropriate. The requirements for physical delivery of Bonds

in connection with a demand for purchase or a mandatory purchase will be deemed satisfied when the ownership

rights in the Bonds are transferred by Direct Participants on DTC's records.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time

by giving reasonable notice to the Issuer or the Bond Registrar. Under such circumstances, in the event that a

successor securities depository is not obtained, Bond certificates are required to be printed and delivered by the

Bond Registrar.

NEITHER THE ISSUER, THE BOARD NOR THE BOND REGISTRAR/PAYING AGENT WILL

HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT

PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE

REGISTRATION BOOKS OF THE BOND REGISTRAR/PAYING AGENT AS BEING AN OWNER WITH

RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR

ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY

DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL

OWNER IN RESPECT OF THE PURCHASE PRICE OF TENDERED BONDS OR THE PRINCIPAL OR

REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY ANY DIRECT

PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH

IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BOND RESOLUTION TO BE GIVEN TO

HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE

EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER

ACTION TAKEN BY DTC AS HOLDER.

MUHLENBERG COUNTY SCHOOLDISTRICT FINANCE CORPORATION

By s/ Randy McCarty

Secretary

APPENDIX E


Series of 2016

Official Bid Form

(E-1)

OFFICIAL BID FORM(Bond Purchase Agreement)

The Muhlenberg County School District Finance Corporation ("Corporation"), will until 11:30 A.M., E.D.S.T., on August24, 2016, receive in the office of the Kentucky School Facilities Construction Commission, Suite 102, 229 W. Main Street,Frankfort, Kentucky 40601, (telephone 502-564-5582; Fax 888-979-6152) competitive bids for its $13,020,000 School BuildingRefunding Revenue Bonds, Series of 2016, dated September 1, 2016; maturing November 1, 2016 through 2030 ("Bonds").

We hereby bid for said $13,020,000* principal amount of Bonds, the total sum of $_______________ (not less than$12,824,700) plus accrued interest from the dated date payable November 1, 2016 and semiannually thereafter (rates onascending scale in multiples of 1/8 or 1/20 of 1%; number of interest rates unlimited) and maturing as to principal on November1 in each of the years as follows:

Year Amount* Rate

2016 $ 575,000 ________%2017 590,000 ________%2018 600,000 ________%2019 605,000 ________%2020 930,000 ________%2021 950,000 ________%2022 955,000 ________%2023 990,000 ________%2024 995,000 ________%2025 1,020,000 ________%2026 1,040,000 ________%2027 920,000 ________%2028 940,000 ________%2029 965,000 ________%2030 945,000 ________%

* Subject to Permitted Adjustment increase or decrease up to $2,605,000

We understand this bid may be accepted for as much as $15,625,000 of Bonds or as little as $10,415,000 of Bonds, at thesame price per $5,000 Bond, with the variation in such amount occurring in any maturity or all maturities, which will bedetermined by the Secretary of the Corporation at the time of acceptance of the best bid.

Electronic bids for the Bonds must be submitted through PARITY® and no other provider of electronic bidding serviceswill be accepted. Subscription to the PARITY® Competitive Bidding System is required in order to submit an electronic bid.The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidders to subscribe.For the purposes of the bidding process, the time as maintained by PARITY® shall constitute the official time with respect toall bids whether in electronic or written form. To the extent any instructions or directions set forth in PARITY® conflict withthe terms of the Official Terms and Conditions of Sale of Bonds, this Official Terms and Conditions of Sale of Bonds shallprevail. Electronic bids made through the facilities of PARITY® shall be deemed an offer to purchase in response to the Noticeof Bond Sale and shall be binding upon the bidders as if made by signed, sealed written bids delivered to the Corporation. TheCorporation shall not be responsible for any malfunction or mistake made by or as a result of the use of the electronic biddingfacilities provided and maintained by PARITY®. The use of PARITY® facilities are at the sole risk of the prospective bidders.For further information regarding PARITY®, potential bidders may contact PARITY®, telephone (212) 404-8102.

The successful bidder may elect to notify the Financial Advisor within twenty-four (24) hours of the award of the Bondsthat certain serial maturities as awarded may be combined with immediately succeeding serial maturities as one or more TermBonds; provided, however, (a) bids must be submitted to permit only a single interest rate for each Term Bond specified, and(b) Term Bonds will be subject to mandatory redemption by lot on November 1 in accordance with the maturity schedule settingthe actual size of the issue.

The DTC Book-Entry-Only-System will be utilized on delivery of this issue.

It is understood that the Corporation will furnish the final, approving Legal Opinions of Steptoe & Johnson PLLC, Bondand Special Tax Counsel, Louisville, Kentucky.

No certified or bank cashier's check will be required to accompany a bid, but the successful bidder shall be required to wiretransfer an amount equal to 2% of the principal amount of Refunding Bonds awarded by the close of business on the datefollowing the award. Said good faith amount will be applied (without interest) to the purchase price on delivery. Wire transferprocedures should be arranged through Old National Wealth Management, Evansville, Kentucky, Attn: Ms. Shannon Perry(812-461-9741).

Bids must be submitted only on this form and must be fully executed.

If we are the successful bidder, we agree to accept and make payment for the Bonds in Federal Funds within forty-five (45)days of the award and upon acceptance by the Issuer's Financial Advisor this Official Bid Form shall become the Bond PurchaseAgreement.

Respectfully submitted,

__________________________________Bidder

By ________________________________Authorized Officer

___________________________________Address

(E-2)

Total interest cost from September 1, 2016 to final maturity $______________

Plus discount or less any premium $______________

Net interest cost (Total interest cost plus discount or less any premium) $______________

Average interest rate or cost (ie NIC) _______________%

The above computation of net interest cost and of average interest rate or cost is submitted for information only and is nota part of this Bid.

Accepted by Ross, Sinclaire & Associates, LLC as Agent for the Muhlenberg County School District Finance Corporationfor $_________________ amount of Bonds at a price of $______________ as follows:

Year Amount Rate Year Amount Rate

2016 _______,000 ________% 2024 _______,000 ________%2017 _______,000 ________% 2025 _______,000 ________%2018 _______,000 ________% 2026 _______,000 ________%2019 _______,000 ________% 2027 _______,000 ________%2020 _______,000 ________% 2028 _______,000 ________%2021 _______,000 ________% 2029 _______,000 ________%2022 _______,000 ________% 2030 _______,000 ________%2023 _______,000 ________%

Dated: August 24, 2016________________________________Ross, Sinclaire & Associates, LLC,Financial Advisor and Agent for Muhlenberg CountySchool District Finance Corporation

$13,020,000* MUHLENBERG COUNTY SCHOOL DISTRICT … · 2018. 7. 8. · 1 OFFICIAL STATEMENT Relating...

Documents

Transcript of $13,020,000* MUHLENBERG COUNTY SCHOOL DISTRICT … · 2018. 7. 8. · 1 OFFICIAL STATEMENT Relating...