FINAL OFFICIAL STATEMENT DATED MARCH 9, 2011

NEW ISSUE Standard and Poor’s Rated “AA” Bank Qualified

In the opinion of Godfrey & Kahn, S.C., Bond Counsel, assuming continuing compliance with the requirements of the Internal Revenue Code of 1986 (the "Code"), interest on the Notes is excluded from gross income and is not an item of tax preference for federal income tax purposes under existing law. See "TAX EXEMPTION" for a more detailed discussion of federal tax consequences of owning the Notes. Interest on the Notes is not exempt from present Wisconsin income taxes. The Notes will be designated by the District as "Qualified Tax Exempt Obligations" for purposes of Section 265 of the Code.

$3,300,000 CEDAR GROVE - BELGIUM AREA SCHOOL DISTRICT

Sheboygan and Ozaukee Counties, Wisconsin General Obligation Promissory Notes

Dated: March 29, 2011 Due: October 1, 2011 and April 1, 2012 - 2020 The $3,300,000 General Obligation Promissory Notes (the “Notes”) will be dated March 29, 2011, and will be in the denomination of $5,000 each or any multiple thereof, and will mature serially on October 1, 2011 and April 1, 2012 through 2020. Interest on the Notes shall be payable commencing on October 1, 2011 and semi-annually thereafter on April 1 and October 1 of each year. Associated Trust Company, National Association, Green Bay, Wisconsin, will serve as paying agent for the Bonds.

MATURITY SCHEDULE

Maturity Amount Rate Yield

CUSIP(1)

Base

150375

October 1, 2011 $35,000 2.00% 0.70% EJ8

April 1, 2012 175,000 2.00 0.75 EK5

April 1, 2013 195,000 2.00 1.10 EL3

April 1, 2014 190,000 3.00 1.45 EM1

April 1, 2015 195,000 3.00 1.75 EN9

April 1, 2016 205,000 3.00 2.05 EP4

April 1, 2017 210,000 3.00 2.35 EQ2

April 1, 2018 220,000 3.00 2.60 ER0

April 1, 2019 1,095,000 3.00 2.83 ES8

April 1, 2020 780,000 3.125 3.03 ET6

The Notes are being issued pursuant to Chapter 67 of the Wisconsin Statutes. The Notes will be general obligations of the Cedar Grove – Belgium Area School District, Wisconsin, (the “District”) for which its full faith and credit and taxing powers are pledged which taxes may, under current law, be levied without limitation as to rate or amount. The proceeds from the sale of the Notes will provide the remaining financing for the public purpose of paying the cost of renovating and remodeling the middle school including improvements to address safety, security, mechanical systems and Americans With Disabilities Act issues; providing a new computer room at the elementary school; constructing and equipping classroom additions at the middle and elementary schools to meet current and short term demands; constructing and equipping a technology education center; and providing district-wide technology upgrades (the “Project”). (See "THE FINANCING PLAN" herein.) The Notes maturing April 1, 2019 and thereafter are subject to call and prior redemption on April 1, 2018 or any date thereafter, in whole or in part, from maturities selected by the District and by lot within each maturity at par plus accrued interest to the date of redemption. The Notes will be issued only as fully registered Notes and will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as the securities depository of the Notes. Individual purchases will be made in book-entry form only in denominations of $5,000 principal amount or any integral multiple thereof. Purchasers of the Notes will not receive certificates representing their interest in the Notes purchased. (See "BOOK-ENTRY-ONLY SYSTEM" herein)

The District’s Notes are offered when, as and if issued subject to the approval of legality by Godfrey & Kahn, S.C., Milwaukee, Wisconsin, Bond Counsel. The anticipated settlement date for this issue is March 29, 2011.

BAIRD

(1) CUSIP data herein provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. Copyright 2011.

American Bankers Association.

2

CEDAR GROVE - BELGIUM AREA SCHOOL DISTRICT (Sheboygan and Ozaukee Counties, Wisconsin)

SCHOOL BOARD

James Lautenschlaeger, President Chad Hoopman, Vice President

Aileen Dahlke, Clerk Terry Eernisse, Treasurer

Dan Bruhn, Member Julie Reichle, Member

Laura Schieffer, Member

ADMINISTRATION

Steven Shaw, Superintendent

John Hocking, High School Principal

Jeanne Courneene, Middle School Principal

Mary Kay Wolf, Elementary School Principal

Tamra O’Keefe, Director of Pupil Services

PROFESSIONAL SERVICES

District Attorney: Davis & Kuelthau, S.C. Milwaukee, Wisconsin

Underwriter: Robert W. Baird & Co., Milwaukee, Wisconsin

Bond Counsel: Godfrey & Kahn, S.C., Milwaukee, Wisconsin

Paying Agent: Associated Trust Company, National Association, Green Bay, Wisconsin.

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REGARDING USE OF THIS OFFICIAL STATEMENT No dealer, broker, salesperson, or other person has been authorized by the District or by Robert W. Baird & Co., the Underwriter, to give any information or to make any representations other than those contained herein, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. Under no circumstances shall this Official Statement constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its

responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this

transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of

this Official Statement nor any other sale made hereunder shall, under any circumstances, create any implication

that there has been no change in the affairs of the District.

TABLE OF CONTENTS Page

SCHOOL BOARD ....................................................................................................................................................... 2 ADMINISTRATION ..................................................................................................................................................... 2 PROFESSIONAL SERVICES ..................................................................................................................................... 2 REGARDING USE OF THIS OFFICIAL STATEMENT .............................................................................................. 3 SUMMARY .................................................................................................................................................................. 4 INTRODUCTORY STATEMENT ................................................................................................................................ 5 RECENT DEVELOPMENTS....................................................................................................................................... 5 THE FINANCING PLAN .............................................................................................................................................. 5 CONSTITUTIONAL AND STATUTORY CONSIDERATIONS AND LIMITATIONS CONCERNING THE

DISTRICT'S POWER TO INCUR INDEBTEDNESS ............................................................................................... 5 THE RESOLUTIONS .................................................................................................................................................. 7 THE DISTRICT ........................................................................................................................................................... 7 GENERAL INFORMATION ....................................................................................................................................... 10 DEMOGRAPHIC AND ECONOMIC INFORMATION ............................................................................................... 10 TAX LEVIES, RATES AND COLLECTIONS ............................................................................................................ 12 EQUALIZED VALUATIONS ...................................................................................................................................... 13 INDEBTEDNESS OF THE DISTRICT ...................................................................................................................... 14 FINANCIAL INFORMATION ..................................................................................................................................... 16 GENERAL FUND SUMMARY .................................................................................................................................. 17 UNDERWRITING ...................................................................................................................................................... 18 RATINGS .................................................................................................................................................................. 18 REVENUE LIMITS ON WISCONSIN SCHOOL DISTRICTS ................................................................................... 18 TAX EXEMPTION ..................................................................................................................................................... 18 DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS ............................................................................. 19 CONTINUING DISCLOSURE ................................................................................................................................... 20 BOOK-ENTRY-ONLY SYSTEM ............................................................................................................................... 20 LITIGATION .............................................................................................................................................................. 22 LEGAL MATTERS .................................................................................................................................................... 22 GOVERNOR’S BIENNIAL BUDGET BILL ................................................................................................................ 22 MISCELLANEOUS ................................................................................................................................................... 23 AUTHORIZATION ..................................................................................................................................................... 23 Appendix A: 2010 Basic Financial Statements and Related Notes Appendix B: Form of Continuing Disclosure Certificate Appendix C: Form of Legal Opinion

4

SUMMARY

District: Cedar Grove - Belgium Area School District, Sheboygan and Ozaukee Counties, Wisconsin.

Issue: $3,300,000 General Obligation Promissory Notes.

Dated Date: March 29, 2011.

Interest Due: Commencing October 1, 2011 and on each April 1 and October 1 thereafter. Interest on the Notes will be computed on the basis of a 30-day month and a 360-day year.

Principal Due: October 1, 2011 and April 1 of the years 2012 through 2020.

Redemption Provision: The Notes maturing on and after April 1, 2019 shall be subject to call and prior payment on April 1, 2018 or on any date thereafter at par plus accrued interest. The amounts and maturities of the Notes to be redeemed shall be selected by the District. If less than the entire principal amount of any maturity is to be redeemed, the Notes of that maturity which are to be redeemed shall be selected by lot. Notice of such call shall be given by sending a notice thereof by registered or certified mail, facsimile or electronic transmission or overnight express delivery at least thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Note to be redeemed at the address shown on the registration books.

Security: The full faith, credit and resources of the District are pledged to the payment of the principal of and the interest on the Notes as the same become due and, for said purposes, there are levied without limitation on all the taxable property in the District, direct, annual irrepealable taxes in each year and in such amounts which will be sufficient to meet such principal and interest payments when due. Under current law, such taxes may be levied without limitation as to rate or amount.

Purpose: The proceeds from the sale of the Notes will be used for the public purpose of paying the remaining cost of renovating and remodeling the middle school including improvements to address safety, security, mechanical systems and Americans With Disabilities Act issues; providing a new computer room at the elementary school; constructing and equipping classroom additions at the middle and elementary schools to meet current and short term demands; constructing and equipping a technology education center; and providing district-wide technology upgrades (the “Project”).

Credit Ratings: This issue has been assigned a “AA” rating by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.. (See “RATINGS” herein.)

Bank Qualification: The Notes are "qualified tax-exempt obligations."

Tax Status: Interest on the Notes is excludable from gross income for federal income tax purposes. (See “TAX EXEMPTION” herein.)

Record Date: The 15th day of the calendar month next preceding each interest payment date.

Information set forth on this page is qualified by the entire Official Statement. A full review of the Official Statement should be made by potential investors.

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INTRODUCTORY STATEMENT

This Official Statement presents certain information relating to the Cedar Grove - Belgium Area School District, Wisconsin (the "District" and the "State" respectively) in connection with the sale of the District's $3,300,000 General Obligation Promissory Notes (the “Notes”). The Notes are issued pursuant to the Constitution and laws of the State and the resolutions (the “Resolutions”) adopted by the School Board (the "Board") and other proceedings and determinations related thereto. All summaries of statutes, documents and the Resolutions contained in this Official Statement are subject to all the provisions of, and are qualified in their entirety by reference to such statutes, documents and the Resolutions, and references herein to the Notes are qualified in their entirety by reference to the form thereof included in the Resolutions. Copies of the Resolutions may be obtained from the Underwriter upon request.

RECENT DEVELOPMENTS

On March 1, 2011, Governor Scott Walker introduced his biennial budget bill. Refer to page 22 for additional details of the budget bill.

THE FINANCING PLAN

As a result of a referendum election on April 6, 2010, the District has been authorized to issue general obligation bonds in an amount not to exceed $6,000,000 for the purpose of renovating and remodeling the middle school including improvements to address safety, security, mechanical systems and Americans With Disabilities Act issues; providing a new computer room at the elementary school; constructing and equipping classroom additions at the middle and elementary schools to meet current and short term demands; constructing and equipping a technology education center; and providing district-wide technology upgrades (the “Project”). On June 29, 2010, the District authorized the issuance of $2,700,000 Bond Anticipation Notes (the “BANs”), which constituted a portion of the referendum-approved amount and provided interim financing for the purpose as described above. The BANs are dated July 20, 2010, are due to mature on June 20, 2011 and are callable at par on February 1, 2011 or any date thereafter. On October 13, 2010, the District authorized the issuance of $2,700,000 Taxable General Obligation Refunding Bonds (Qualified School Construction Bonds-Direct Payment) (the “Bonds”), which constituted a portion of the referendum-approved amount and provided permanent financing for the purpose as described above. The Bonds are dated November 3, 2010, are due to mature on April 1, 2023 and are not callable. This issue of Notes is being issued to pay the remaining portion of the referendum approved amount for the Project. The Notes are dated March 29, 2011 and are callable at par on April 1, 2018 or any date thereafter.

CONSTITUTIONAL AND STATUTORY CONSIDERATIONS AND LIMITATIONS CONCERNING THE DISTRICT'S POWER TO INCUR INDEBTEDNESS

The Constitution and laws of the State limit the power of the District (and other municipalities of the State) to issue

obligations and to contract indebtedness. Such constitutional and legislative limitations include the following, in

summary form and as generally applicable to the District.

Purpose

The District may not borrow money or issue notes or bonds therefore for any purpose except those specified by

statute, which include among others the purposes for which the Notes are being issued.

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Bond or Note Anticipation Notes

In anticipation of issuing general obligation bonds or notes, the District is authorized to borrow money using bond or

note anticipation notes. The bond or note anticipation notes shall in no event be general obligations of the District,

and do not constitute an indebtedness of the District, nor a charge against its general credit or taxing power. The

bond or note anticipation notes are payable only from (a) proceeds of the bond or note anticipation notes set aside

for payment of interest on the bond or note anticipation notes as they become due, and, (b) proceeds to be derived

from the issuance and sale of general obligation bonds or notes which proceeds are pledged for the payment of the

principal of and interest on the bond or note anticipation notes. The maximum term of any bond or note anticipation

notes (including any refunding) is five years.

General Obligation Bonds

The principal amount of every sum borrowed by the District and secured by an issue of bonds may be payable at

one time in a single payment or at several times in two or more installments; however, no installment may be made

payable later than the termination of twenty years immediately following the date of the bonds. The Board of the

District is required to levy a direct, annual, irrepealable tax sufficient in amount to pay the interest on such bonds as

it falls due and also to pay and discharge the principal thereof at maturity. Bonds issued by the District to refinance

or refund outstanding notes or bonds issued by the District may be payable no later than twenty years following the

original date of such notes or bonds.

Refunding Bonds

The District is authorized to borrow money using refunding bonds for refunding existing debt. To evidence such

indebtedness, the District must issue to the lender its refunding bonds (with interest) payable within a period not

exceeding twenty years following the initial date of the debt to be refunded. Such refunding bonds constitute a

general obligation of the District. Refunding bonds are not subject to referendum.

Promissory Notes

In addition to being authorized to issue bonds, the District is authorized to borrow money using notes for any public

purpose. To evidence such indebtedness, the District must issue to the lender its promissory notes (with interest)

payable within a period not exceeding ten years following the date of said notes. Such notes constitute a general

obligation of the District. Notes may be issued to refinance or refund outstanding notes. However, such notes may

be payable not later than twenty years following the original date of such outstanding notes. Temporary Borrowing

The Board of the District may, on its own motion, borrow money in such sums as may be needed to meet the

immediate expenses of maintaining the schools in the District during the then current school year. No such loan or

loans shall be made to extend beyond November 1 of the following year nor in any amount exceeding one-half of

the estimated receipts for the operation and maintenance of the District for the current school year in which the loan

is made.

Debt Limit

The District has the power to contract indebtedness for purposes specified by statute so long as the principal amount thereof does not exceed ten percent of the equalized value of taxable property within the District. For information with respect to the District's percent of legal debt incurred, see the caption "INDEBTEDNESS OF THE DISTRICT - Debt Limit," herein.

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THE RESOLUTIONS The following are summaries of certain provisions of the Resolutions adopted by the Board pursuant to the procedures prescribed by Wisconsin Statutes. Reference is made to the Resolutions for a complete recital of their terms.

The Initial Resolution; Referendum Election; Interim Financing

By way of a resolution adopted on February 10, 2010 (the “Initial Resolution”), the Board authorized the issuance of general obligation bonds in an amount not to exceed $6,000,000 for the purpose of renovating and remodeling the middle school including improvements to address safety, security, mechanical systems and Americans With Disabilities Act issues; providing a new computer room at the elementary school; constructing and equipping classroom additions at the middle and elementary schools to meet current and short term demands; constructing and equipping a technology education center; and providing district-wide technology upgrades (the “Project”). By way of a resolution adopted on February 10, 2010, the Board provided for a referendum election to be held on

April 6, 2010. The District gave notice to the electors relating to the bond referendum at which time the electors

would vote to approve or reject the Initial Resolution. On April 6, 2010, a referendum was held in the District on the proposition of whether the Initial Resolution should be

approved at which 545 votes were cast “Yes” for approval of the Initial Resolution and 419 votes were cast “No” for

rejection of the Initial Resolution.

The District adopted a resolution on June 29, 2010 and issued $2,700,000 Bond Anticipation Notes dated July 20, 2010, to provide interim financing for a portion of the Project. The District adopted a resolution on October 13, 2010 and issued $2,700,000 Taxable General Obligation Refunding Bonds (Qualified School Construction Bonds-Direct Payment) dated November 3, 2010, to provide permanent financing for a portion of the Project.

The provisions of Section 67.12(12)(e)(2) of the Wisconsin Statutes provide that if the purpose and amount of a

borrowing have been approved by the electors, general obligation promissory notes may be issued without any

additional approval by the electors.

The Award Resolution By way of the resolution adopted on March 9, 2011 (the "Award Resolution "), the District will accept the bid of the Underwriter (or reject all bids) for the purchase of the Notes, provide the details and form of the Notes, and set out certain covenants with respect thereto. The Award Resolution for the Notes pledges the full faith, credit and resources of the District to payment of the principal of and interest on the Notes. Pursuant to the Award Resolution, direct, annual, irrepealable taxes will be levied for collection in the years 2011 to 2020 in amounts which will be sufficient to meet the principal and interest payments on the Notes when due. The Award Resolution establishes separate and distinct from all other funds of the District a separate debt service fund with respect to payment of principal and interest on the Notes.

THE DISTRICT The administration of the District is exercised by the Board. The Board consists of seven members who are elected at large for staggered three-year terms of office. The Board elects a President, Vice President, Clerk, and Treasurer from among its members for one-year terms. The Board is empowered to employ a Superintendent to conduct the affairs and programs of the District. Common School Districts hold an annual meeting prior to adopting the budget for the ensuing year. The Board shall present at the annual meeting a full, itemized written report. The report shall state all receipts and expenditures of the District since the last annual meeting, the current cash balance of the District, the amount of the deficit and the bills payable of the District, the amount necessary to be raised by taxation for the support of the schools of the District for the ensuing year and the amount required to pay the principal and interest of any debt due during the ensuing year. The report shall also include the budget summary. The Board has the power and duty, among other things, to make rules for the organization, graduation, and government of the schools of the District, enter into agreements with other governmental units, tax for operation and maintenance, engage employees including a Superintendent and purchase school equipment.

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School Board

Name

Expiration of Term

James Lautenschlaeger, President April, 2012 Chad Hoopman, Vice President April, 2013 Aileen Dahlke, Clerk April, 2011 Terry Eernisse, Treasurer April, 2011 Dan Bruhn, Member April, 2011 Julie Reichle, Member April, 2011 Laura Schieffer, Member April, 2013

Administration The members of the Administration and their years of service are as follows:

Name

Title

Years of

Service

Steven Shaw Superintendent 3

John Hocking High School Principal 15

Jeanne Courneene Middle School Principal 13

Mary Kay Wolf Elementary School Principal 3

Tamra O’Keefe Director of Pupil Services >1* * Prior to this position Ms. O’Keefe served as the Director of Special Education for the Kohler School District.

District Facilities

Facility Construction Addition/Remodeling Cedar Grove – Belgium High School 1999 Cedar Grove – Belgium Middle School 1969 2010 Cedar Grove - Belgium Elementary School 1991 2010

School Enrollments

Year

Total

2006-07 1,051

2007-08 1,065

2008-09 1,087

2009-10 1,118

2010-11 1,118

2011-12* 1,157

2012-13* 1,172

2013-14* 1,198

2014-15* 1,221

2015-16* 1,221 * Projected.

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Employment Relations

Department

Number of Employees

Teachers 86 Administration 6 Instructional Aides 26 Secretaries 7 Custodians 13 Food Service 11 Bookkeeper/Admin Asst. 2 Pool 13 Total 164

Labor Contracts Organization

Employee Group Represented

Contract Expiration

Cedar Grove-Belgium Area Teacher’s Association Teachers June 30, 2011

All non-administrative personnel with the exception of those in confidential, supervisory, or management positions are covered by the Municipal Employment Relations Act (MERA) of the Wisconsin Statutes. Pursuant to that law, employees have the right to organize and collectively bargain with municipal employers. In the event of impasse, either party has the option to pursue final and binding arbitration under a procedure referred to as mediation-arbitration. Further, the ability of teachers to access final and binding arbitration for economic gain is restricted to statutory limits of 3.8% total package compensation increase. Under the procedure, mediation is first attempted and, upon its failure, final and binding arbitration is commenced. If both parties withdraw their final offer prior to the arbitration, the union, upon proper notice, may legally strike. As a practical matter, it is anticipated that legal strikes will be rare. Illegal strikes must be enjoined by the courts. Collective bargaining is conducted by the Board through a consensus bargaining committee of the Board with support from District administrative personnel and using private labor counsel as consultants. Staff responsibilities rest with the Superintendent. Board members, the Superintendent, and the business office calculate the cost and long-range financial impact of wage and benefit packages. Pension Plan All employees of the District are covered under the Wisconsin Retirement System established under Chapter 40 of the Wisconsin Statutes. The total retirement plan contributions for 2009 were $571,594 and $642,299 for 2010. The amounts of such contributions were determined by the Wisconsin Retirement Fund and are in accordance with the actuarially determined requirement. Other Post Employment Benefits The District currently provides post employment benefits for its employees who retire and meet other negotiated criteria. Similar to other governmental units, the District has historically funded its Other Post Employment Benefits (“OPEB”) program on a pay-as-you-go basis. The District completed an actuarial study and valuation of liabilities for OPEB for the fiscal year ending June 30, 2009. The District is currently working with CESA 6 and Key Benefit Concepts on a plan for post employment benefits.

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GENERAL INFORMATION

The District is located in Sheboygan and Ozaukee Counties, and encompasses all or portions of the Villages of Cedar Grove and Belgium, and the Towns of Belgium, Holland and Sherman, totaling 37 square miles. The District is easily accessible via interstate Highway 43, which connects with Milwaukee just 45 miles to the south, and Sheboygan just 15 miles north. Lake Michigan borders the District to the east, which provides beauty and recreation to the area. The District offers a comprehensive program for students in Early Childhood through the twelfth grades. With a 2010-11 enrollment of 1,118 students, the District facilities include one elementary school, one middle school and one high school. The District is dedicated to the intellectual, moral, cultural, emotional, social and physical development of all students in a secure environment thereby enabling them to function effectively in society as competent, productive, caring and responsible people. Higher Education Higher Education is provided at the University of Wisconsin-Sheboygan, the University of Wisconsin-Milwaukee, Lakeland College and Lakeshore Technical College. These institutions are just a short commute from the District and offer a variety of cultural and educational opportunities for area residents.

DEMOGRAPHIC AND ECONOMIC INFORMATION Population

Sheboygan County

Ozaukee County

Village of Cedar Grove

Village of Belgium

Estimate, 2010 117,650 87,447 2,055 2,106 Estimate, 2009 117,566 87,173 2,045 2,099 Estimate, 2008 117,472 87,008 2,052 2,053 Estimate, 2007 117,045 86,697 2,055 2,017 Estimate, 2006 116,348 86,389 2,039 2,012 Census, 2000 112,656 82,317 1,887 1,678

Source: Wisconsin Department of Administration, Demographic Services Center.

Per Return Adjusted Gross Income

State of Wisconsin

Sheboygan County

Ozaukee County

Village of Cedar Grove

Village of Belgium

2009 $45,372 $45,992 $79,263 $46,507 $51,098 2008 47,046 47,781 86,785 48,035 53,905 2007 48,985 47,428 89,593 47,780 53,185 2006 48,107 46,824 85,546 47,226 50,393 2005 45,357 44,381 81,365 45,035 47,194

Source: Wisconsin Department of Revenue, Division of Research Analysis.

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Unemployment Rate

State of Wisconsin

Sheboygan WI MSA

Ozaukee County

December, 2010 7.0% 7.3% 5.4%

December, 2009 8.3 8.6 6.9

Prelim. Average, 2010 8.1% 8.3% 6.7%

Average, 2009 8.5 9.1 7.4

Average, 2008 4.8 4.4 3.8

Average, 2007 4.8 4.1 3.7

Average, 2006 4.7 3.9 3.6

Source: Wisconsin Department of Workforce Development.

Building Permit Valuations-Village of Belgium

Estimated Cost of Construction

2010 $1,151,945

2009 1,042,128

2008 2,257,286

2007 8,369,236

2006 6,962,013 Source: Village of Belgium.

Largest Employers Because of its proximity to Sheboygan and Port Washington, many residents commute to these communities for employment. Some of Sheboygan's largest employers include the Kohler Company, with 5,000 employees, and Bemis Manufacturing Company with 1,600 employees. Port Washington's largest employer is Allen-Edmonds Shoe Corp. with 660 employees. The largest employers in the District are listed below:

Employer Type of Business Number of Employees

Lakeside Foods Inc. Manufacturer canned vegetables 290

Cedar Grove-Belgium Area School District Education 164

Willman Industries, Inc. Industrial iron products 160

How-Dea Service Center Inc. Truck stop and repair 85

Cedar Grove Gardens Homes for the elderly 68

Belgium Community Center Private recreational facility 57

Gustafson Construction Corporation Water and sewer construction services 50

Cedar Valley Cheese Manufacturer of Italian cheese 46

Trimen Industries Inc Metal coating, engraving 46

Appleland Apple orchard 34* *Includes seasonal employees. Source: 2011 Wisconsin Manufacturers and Services Directories and Wisconsin’s Worknet Large Employer Listing.

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Largest Taxpayers

2010 2010 Assessed Equalized Name Type of Business Valuation Valuation

Lakeside Foods Inc.* Manufacturer canned vegetables $3,968,500 $3,817,211

CDG Belgium Grocery, LLC* Commercial 1,945,000 1,870,852

Alan Luther** Assisted Living 1,935,300 1,854,398

Alan Luther** Assisted Living 1,665,800 1,596,164

How Dea Service Center, Inc.* Truck Stop and repair 1,651,900 1,588,926

Sandmar Properties, LLC* Assisted Living 1,639,800 1,577,287

Ski-Ter Properties, LLC* Commercial 1,372,700 1,320,369

Mitan S. Arya* Manufacturing/Industrial 1,015,700 976,979

CM Partnership, LLC* Manufacturing/Industrial 1,007,700 969,284

Talwinder S. Gill* Gas Station 853,400 820,866 *Village of Belgium. **Village of Cedar Grove. Source: Village of Cedar Grove and Village of Belgium.

TAX LEVIES, RATES AND COLLECTIONS

Personal property taxes, special assessments, special charges and special taxes must be paid to the town, city or village treasurer in full by January 31. Real property taxes may be paid in full by January 31 or in two equal installments payable by January 31 and July 31. Municipalities also have the option of adopting payment plans which allow taxpayers to pay their real property taxes and special assessments in three or more installments, provided that the first installment is paid by January 31, one-half of the taxes are paid by April 30 and the remainder is paid by July 31. Amounts paid on or before January 31 are paid to the town, city or village treasurer. Amounts paid after January 31 are paid to the county treasurer unless the municipality has authorized payment in three or more installments in which case payment is made to the town, city or village treasurer. Any amounts paid after July 31 are paid to the county treasurer. For municipalities which have not adopted an installment payment plan, the town, city or village treasurer settles with other taxing jurisdictions for collections through the preceding month on January 15 and February 20. For municipalities which have adopted an installment payment plan, the town, city or village treasurer settles with other taxing jurisdictions for collections through the preceding month on January 15, February 15 and the 15th day of each month following a month in which an installment payment is due. On or before August 20, the county treasurer must settle in full with the underlying taxing districts for all real property taxes and special taxes. The County Board may authorize its County Treasurer to also settle in full with the underlying taxing districts for all special assessments and special charges. The county may then recover any tax delinquencies by enforcing the lien on the property and retain any penalties or interest on the delinquencies for which it has settled. Since, in practice, all delinquent real estate taxes are withheld from the county's share of taxes, the District receives 100 percent of the real estate taxes it levies. See "Governor's Biennial Budget Bill" on page 22 herein for information on proposed additional limitations on District tax levies. Set forth below are the taxes levied and the tax rate per $1,000 equalized value on all taxable property within the District as well as a history of collections.

Levy/Collection

Year

District

Tax Rate

District Levy

Uncollected Taxes as of August 20 of Each

Year Percent of

Levy Collected

2010/2011 $9.27 $5,547,394 - In the Process of Collection -

2009/2010 8.66 5,310,199 -0- 100.00%

2008/2009 8.72 5,129,400 -0- 100.00

2007/2008 7.92 4,574,767 -0- 100.00

2006/2007 8.03 4,310,486 -0- 100.00

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2010-2011 Proportionate Amounts of Local Tax Revenue Per Municipality Based on 2010 Equalized Valuation

Municipality

2010 Equalized Valuation (TID OUT)

Percent of Levy

Amount of Levy

Village of Cedar Grove $134,996,000 22.560068% $1,251,496

Town of Belgium 135,147,798 22.585436 1,252,903

Village of Belgium 151,843,800 25.375614 1,407,685

Town of Holland 175,979,750 29.409132 1,631,440

Town of Sherman 417,376 0.069750 3,869

TOTAL $598,384,724 100.000000% $5,547,394

EQUALIZED VALUATIONS The State of Wisconsin, Department of Revenue, Supervisor of Assessments Office determines all equalized valuations of property in the State of Wisconsin. Equalized valuations are the State's estimate of full market value.

Set forth in the table below are equalized valuations of property located within the District for the years 2006

through 2010. The District’s Equalized Valuation has increased by 13.17 percent since 2006 with an average

annual increase of 3.14 percent.

Equalized Valuation

Equalized Valuation

Year (TID IN) (TID OUT)

2010 $628,317,824 $598,384,724

2009 639,726,755 613,156,555

2008 610,860,881 587,920,381 2007 600,560,207 577,696,207 2006 555,193,696 536,708,596

Tax Increment District

The Village of Belgium has a Tax Incremental District created under Wisconsin Statutes Section 66.1105. TID

valuation totaling $29,933,100 has been excluded from the District’s tax base for 2010.

Municipality

TID

Creation

Date

Base Value

2010 Value

Increment

Village of Belgium 4 1995 $424,900 $30,358,000 $29,933,100

TOTAL $29,933,100

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INDEBTEDNESS OF THE DISTRICT

Direct Indebtedness Set forth below is the direct indebtedness of the District, including principal and interest payments due on existing debt as well as debt on the Notes. Interest on the Notes has been calculated using an average rate of 3.01 percent.

Direct Payment

Total Debt

Outstanding Bonds and Notes

New Issue Interest

Service

Year

Principal

Interest

Principal

Interest Credits

Requirements

2011

$823,207

$371,880

$35,000

$48,495 ($114,390)

$1,164,192

2012

797,494

322,672

175,000

93,475 (125,550)

1,263,091

2013

821,982

292,684

195,000

89,775 (125,550)

1,273,891

2014

725,000

261,534

190,000

84,975 (125,550)

1,135,959

2015

750,000

234,065

195,000

79,200 (125,550)

1,132,715

2016

775,000

205,465

205,000

73,200 (125,550)

1,133,115

2017

810,000

174,945

210,000

66,975 (125,550)

1,136,370

2018

840,000

142,350

220,000

60,525 (125,550)

1,137,325

2019

0

125,550

1,095,000

40,800 (125,550)

1,135,800

2020

345,000

125,550

780,000

12,188 (125,550)

1,137,188

2021

1,145,000

125,550

--

-- (125,550)

1,145,000

2022

1,000,000

125,550

--

-- (125,550)

1,000,000

2023

210,000

62,775

--

-- (62,775)

210,000

9,042,683

2,570,570

3,300,000

649,608 (1,558,215)

14,004,645

Less 2011

Sinking Funds (823,207)

(371,880)

(35,000)

(48,495) 114,390

(1,170,676)

TOTAL

$8,219,476

$2,198,690

$3,265,000

$601,113 ($1,443,825)

$12,840,453

Other Financing The District does not borrow for short-term cash flow purposes.

Future Financing The District does not plan on issuing any additional general obligation debt in the next six months.

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Overlapping and Underlying Indebtedness Set forth below is information relating to the outstanding overlapping and underlying indebtedness of the District.

Name of Entity

Amount of Debt (Net of 2011 Principal

Payments)

Percent Chargeable to District

Outstanding Debt Chargeable to

District

Lakeshore Technical College District $16,055,000 3.40% $545,870

Milwaukee Area Technical College District 73,995,000 0.16 118,392

Ozaukee County 16,620,000 2.93 486,966

Sheboygan County 29,810,000 3.34 995,654

Village of Belgium 5,109,289 100.00 5,109,289

Village of Cedar Grove 1,729,767 100.00 1,729,767

Total Towns 112,560 varies 29,962

TOTAL $143,431,616 $9,015,900

Statistical Summary The table below reflects direct, overlapping and underlying bonded indebtedness net of all 2011 principal payments.

2010 Equalized Valuation $628,317,824

Direct Bonded Indebtedness Including This Issue $11,484,476

Direct, Overlapping and Underlying Bonded Indebtedness Including This Issue $20,500,376

Direct Bonded Indebtedness as a Percentage of Equalized Valuation 1.83%

Direct, Overlapping and Underlying Bonded Indebtedness as a Percentage of Equalized Valuation 3.26%

Population of School District (2010 Estimate) 6,058

Direct Bonded Indebtedness Per Capita $1,895.75

Direct, Overlapping and Underlying Bonded Indebtedness Per Capita $3,384.02

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Debt Limit As described under the caption "CONSTITUTIONAL AND STATUTORY CONSIDERATIONS AND LIMITATIONS CONCERNING THE DISTRICT'S POWER TO INCUR INDEBTEDNESS--Debt Limit," the total indebtedness of the District may not exceed ten percent of the equalized value of property in the District. Set forth in the table below is a comparison of the outstanding indebtedness of the District, net of 2011 principal payments, as a percentage of the applicable debt limit.

Equalized Valuation (2010) as certified by Wisconsin Department of Revenue $628,317,824

Legal Debt Percentage Allowed 10.00%

Legal Debt Limit $62,831,782

General Obligation Debt Outstanding Including This Issue $11,484,476

Unused Margin of Indebtedness $51,347,306

Percent of Legal Debt Incurred 18.28%

Percentage of Legal Debt Available 81.72%

FINANCIAL INFORMATION The financial operations of the District are conducted primarily through a series of state mandated funds. All revenues except those attributable to the building funds and other funds authorized by State law are accounted for in the general fund, and any lawful expenditure of the District must be made from the appropriate fund and recorded therein. As in other areas of the United States, the financing of public education in the State is subject to changing legislation, variations in public opinion, examination of financing methods through litigation and other matters. For these reasons the District cannot anticipate with certainty all of the factors which may influence the financing of its future activities. Budgeting Process The District is required by State law to annually formulate a budget and to hold an annual meeting thereon prior to the determination of the amounts to be financed in whole or in part by general property taxes, funds on hand or estimated revenues from other sources. Such budget must list existing indebtedness of the District and all anticipated revenue from all sources during the ensuing year and must also list all proposed appropriations for each department, activity and reserve account of the District during the ensuing year. The budget must show actual revenues and expenditures for the preceding year, actual revenues and expenditures for not less than the first six months of the current year and estimated revenues and expenditures for the balance of the current year. As part of the budgeting process, budget requests are submitted during the course of the fiscal year by the teachers and departmental administrators of each school. All requests for program additions or modifications are reviewed by the administrative team and the Board. The Board reviews final recommendations of the administrative team and adjusts the budget as necessary. The proposed budget is formally adopted by the Board after the annual meeting is held.

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GENERAL FUND SUMMARY FOR YEARS ENDED JUNE 30

2010-11 2009-10 2008-09 2007-08 2006-07

BUDGET ACTUAL ACTUAL ACTUAL ACTUAL

Revenues

Local Sources $4,578,615 $4,079,719 $4,046,025 $3,525,305 $3,198,962

Interdistrict Sources 80,000 139,589 85,317 103,270 84,063

Intermediate Sources -- 2,514 509 616 1,022

State Sources 5,908,069 5,588,230 4,929,161 5,469,562 5,262,325

Federal Sources 48,000 370,242 671,831 44,260 26,882

Other Sources 11,000 20,252 16,427 12,133 74,136

Total revenues 10,625,684 10,200,546 9,749,270 9,155,146 8,647,390

Expenditures

Instruction 6,116,430 5,976,782 5,674,266 5,048,976 4,730,299

Support services 3,625,823 3,387,286 3,455,010 3,272,893 3,115,046

Non-program 883,431* -- -- -- --

Total Expenditures $10,625,684 9,364,068 9,129,276 8,321,869 7,845,345

Excess of revenues over

(under) expenditures 836,478 619,994 833,277 802,045

Other financing sources (uses)

Transfer to special education fund** (689,776) (613,941) (690,499) (637,318)

Transfer to food service -- -- (6,867) --

- Proceeds from capital lease -- -- 39,656 95,285

-Compensation for fixed assets -- 105 2,000 1,952

Net other financing sources (uses) (689,776) (613,836) (655,710) (539,893)

Revenues and other sources over

(under) expenditures and other uses 146,702 6,158 177,567 262,152

Fund balances - beginning of year 2,251,807 2,245,649 2,068,082 1,805,930

Fund balances - end of year $2,398,509 $2,251,807 $2,245,649 $2,068,082

*This amount includes special education costs to be transferred to the special education fund from the general fund. **These “Operating Transfers Out” are the result of a requirement by the State of Wisconsin Department of Public Instruction to move the accounting for special education costs from the general fund to a special revenue fund and to show the net cost of special education as an operating transfer from the general fund to the special revenue fund, rather than as general fund expenditures.

The amounts shown for the years ending June 30, 2007 through 2010 are excerpts from the audit reports examined by Corson, Peterson & Hamann S.C., Certified Public Accountants, Sheboygan, Wisconsin. The amounts for the year ending June 30, 2011 are shown on a budgetary basis. The comparative statement of revenues, expenditures and encumbrances should be read in conjunction with the other financial statements and notes thereto appearing at Appendix A to this Official Statement. The Auditor was not asked to perform any additional review in connection with this Official Statement.

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UNDERWRITING Robert W. Baird & Co., (the "Underwriter") has agreed to purchase the Notes from the District for a purchase price of $3,302,942.10 plus accrued interest to the delivery of the Notes. The Underwriter will be obligated to purchase all of the Notes if any of such Notes are purchased. The Underwriter reserves the right to join with dealers and other underwriters in offering the Notes to the public. The Underwriter may offer and sell the Notes to certain dealers (including dealers depositing the Notes into investment trusts) at prices lower than the offering prices derived from the rates and yields for each maturity set forth on the cover of this Official Statement. Such initial public offering prices may be changed from time to time by the Underwriter.

RATINGS

This issue has been assigned a “AA” rating by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. Moody’s Investors Service, Inc. has rated certain outstanding long-term obligations of the District “Aa3". No application has been submitted to Moody's in connection with the Notes. Such rating reflects only the views of such organization and explanations of the significance of such rating may be obtained from the rating agency furnishing the same. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency, if in the judgment of such rating agency circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Notes.

REVENUE LIMITS ON WISCONSIN SCHOOL DISTRICTS The Wisconsin Statutes impose revenue limits on Wisconsin school districts, including the District. In general terms, for the 2010-11 school year, a school district may not increase its average revenues per pupil by more than $200.00 per pupil. Similar limitations may be imposed for future school years. A school district, which wishes to exceed the revenue limit, must obtain approval at a referendum. The revenue limit is increased by funds needed for payment of debt service on general obligation debt authorized before the effective date of the revenue limit statutes (August 12, 1993) (the "Effective Date") and debt service on obligations issued to refund such debt. Debt authorized after the Effective Date is exempt from the revenue limits if approved at a referendum, as is debt service on obligations issued to refund such debt. The payment of debt service on the Notes by the District is not subject to the revenue limits.

TAX EXEMPTION In the opinion of Godfrey & Kahn, S.C., Milwaukee, Wisconsin, Bond Counsel, interest on the Notes is excluded from gross income for present Federal income tax purposes, except for the treatment of interest on Notes owned by certain corporations and other taxpayers as discussed in "Aspects of Federal Taxation." The Issuer will issue its certificate to the effect that on the basis of the facts, estimates and circumstances in existence on the date of delivery of the Notes, it is not expected that the proceeds of the Notes will be used in a manner that would cause the Notes to be "arbitrage bonds" under Section 148 of the Internal Revenue Code. The Issuer has covenanted that it will comply with all requirements of the Internal Revenue Code to ensure that interest on the Notes continues to be excluded from gross income for federal income tax purposes. The interest on the Notes is not excluded from income and therefore is not exempt from present Wisconsin income taxes. Prospective purchasers of the Notes should consult their tax advisors to determine the specific tax consequences of their owning the Notes.

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Aspects Of Federal Taxation The Internal Revenue Code of 1986, as amended (the "Code"), includes many requirements for interest on the Notes to be and to continue to be excluded from gross income. These requirements apply to the Issuer. The proceedings of the Issuer and the documents relating to the Notes include covenants and provisions which, if complied with by the Issuer, meet the requirements of the Code. Failure to comply with certain of these covenants and provisions may cause interest on the Notes to be includable in gross income retroactive to the date of issuance of the Notes. Assuming continuing compliance by the Issuer with the covenants and provisions referred to above, interest on the Notes will not, under present law, be includable in the gross income of registered owners for federal income tax purposes, except for the treatment of interest on Notes owned by certain corporations described below. Effect On Corporations The Code provides for an alternative minimum tax ("AMT") for corporations which is levied in addition to the regular corporate tax in certain cases. The AMT, if any, is based upon the corporation's alternative minimum taxable income ("AMTI"), which is taxable income with certain adjustments. One adjustment used in computing AMTI of a corporation is an amount equal to seventy-five percent (75%) of the excess of the corporation's "adjusted current earnings" over its AMTI. "Adjusted current earnings" includes all tax-exempt interest, including interest on the Notes. Effect On Other Taxpayers Prospective purchasers of the Notes should be aware that Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Notes or, in the case of a financial institution (within the meaning of Section 265(b)(5)), that portion of a holder's interest expense allocated to interest on the Notes. The District will designate the Notes as "qualified tax-exempt obligations" for purposes of Section 265 of the Internal Revenue Code of 1986 relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expenses that is allocable to carrying and acquiring tax-exempt obligations. Insurance companies subject to the tax imposed by Section 831 of the Code should be aware that the Code reduces the deduction for loss reserves by fifteen percent (15%) of the sum of certain items, including interest on the Notes. Interest on the Notes earned by certain foreign corporations doing business in the United States may be subject to a branch profits tax imposed by Section 884 of the Code. Passive investment income including interest on the Notes may be subject to federal income taxation under Section 1375 of the Code for certain S corporations. Finally, Section 86 of the Code requires recipients of certain Social Security and Railroad Retirement benefits to take into account receipts or accruals of interest on the Notes in determining gross income.

DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS The District will designate the Notes as "qualified tax-exempt obligations" for purposes of Section 265 of the Internal Revenue Code of 1986 relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations.

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CONTINUING DISCLOSURE

In order to assist the Underwriters in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934 (the "Rule"), the District shall covenant pursuant to a Resolution adopted by the Governing Body to enter into an undertaking (the "Undertaking") for the benefit of holders including beneficial holders of the Notes to provide certain financial information and operating data relating to the District annually to the Municipal Securities Rulemaking Board (the "MSRB"), and to provide notices of the occurrence of certain events enumerated in the Rule electronically or in the manner otherwise prescribed by the MSRB to the MSRB. The undertaking provides that the annual report will be filed not later than 270 days after the end of each fiscal year. The District's fiscal year ends June 30

th. The details and

terms of the Undertaking, as well as the information to be contained in the annual report or the notices of material events, are set forth in the Continuing Disclosure Certificate to be executed and delivered by the District at the time the Notes are delivered. Such Certificate will be in substantially the form attached hereto as Appendix B. Except as noted below, in the previous five years, the District has not failed to comply in any material respect with any previous undertakings under the Rule to provide annual reports or notices of material events. A failure by the District to comply with the Undertaking will not constitute an event of default on the Notes (although holders will have the right to obtain specific performance of the obligations under the Undertaking). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Notes in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Notes and their market price. In December 2008, the Securities and Exchange Commission (the "Commission") approved an amendment to the Rule designating the MSRB as the central repository for continuing disclosure by state and local government debt issuers, including the District. Under a separate MSRB rule change, the MSRB designated its Electronic Municipal Market Access ("EMMA") system as the system to be used for continuing disclosures to investors. The Commission and MSRB rule changes took effect on July 1, 2009. As a result, the District is required to file its continuing disclosure information using the EMMA system. Investors will be able to access continuing disclosure information filed with the MSRB at www.emma.msrb.org.

The District had an annual report due on April 1, 2010 under a previous undertaking executed by the District. The

report was not timely filed. However, the information was subsequently filed with the MSRB through the EMMA

system, and the District is presently in compliance in all material respects with all previous undertakings under the

Rule.

BOOK-ENTRY-ONLY SYSTEM

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Notes. The Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Note certificate will be issued for each maturity of the Notes, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are

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

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The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that District believes to be reliable, but District takes no responsibility for the accuracy thereof.

LITIGATION There is no controversy or litigation of any nature now pending or, to the knowledge of the District, threatened, restraining or enjoining the issuance, sale, execution or delivery of the Notes, or in any way contesting or affecting the validity of the Notes or any proceedings of the District taken with respect to the issuance or sale thereof.

LEGAL MATTERS

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

opinion of Godfrey & Kahn, S.C., Bond Counsel. Such opinion will be issued on the basis of the law existing at the

time of the issuance of the Notes. A copy of such opinion will accompany the Notes and will be available at the

time of the delivery of the Notes.

GOVERNOR'S BIENNIAL BUDGET BILL

General

On March 1, 2011, Governor Scott Walker introduced his biennial budget bill (the "Bill") through companion bills 2011 Assembly Bill 40 and 2011 Senate Bill 27. It is expected the Bill will be enacted in final form on or about the end of the State's fiscal year, June 30, 2011. In the event that a final budget bill is not enacted before the end of the State's fiscal year, the existing spending levels in effect under the previous biennial budget bill continue until a new budget bill has been enacted.

The Bill contains a number of provisions that would affect school districts, technical college districts and other municipalities in Wisconsin. This section contains a summary of a portion of such provisions. The District makes no representation as to whether any of these provisions, or any other provisions, will be included in the final budget bill signed into law by the Governor.

School District Revenue Limit

Current law imposes revenue limits on Wisconsin school districts (see "REVENUE LIMITS ON WISCONSIN SCHOOL DISTRICTS" herein). In general terms, current law provides that for the 2011-12 school year, a school district may not increase its average revenues per pupil by more than $275 per pupil and in the 2012−13 school year, by more than the percentage change in the Consumer Price Index. The Bill would reduce the revenue limit for all school districts by 5.5 percent in the 2011−12 school year. For the 2012−13 school year, the Bill would provide that a school district may not increase its per pupil revenues above the amount it received in the 2011−12 school year.

Current law exempts a school district from the revenue limit if its per pupil revenue is less than a statutory revenue ceiling, which is set at $9,000 for the 2010−11 school year and $9,800 thereafter. The Bill would decrease the per pupil revenue ceiling to $8,900 for the 2011−12 school year and for any subsequent school year.

Current law provides that if a school district’s revenue limit, as calculated before any adjustments, is less than the district’s base revenue from the previous school year, the district’s initial revenue limit is set at the prior year’s base revenue. The Bill would eliminate this adjustment.

The Bill would not change the provisions of current law which increase the revenue limit by the amount of funds needed for payment of general obligation debt service on obligations authorized by a referendum and which provide that the reduction in property taxes required as a penalty for exceeding the revenue limit does not apply to property taxes levied to pay valid bonds or notes issued by the school board.

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State Spending on K-12 Education

The Bill would cut $834,000,000 in State K-12 education spending over the next two years, a 7.9 percent reduction compared to the base year doubled.

MISCELLANEOUS

Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Bond Counsel has not assumed responsibility for this Official Statement or participated in its preparation (except with respect to the section entitled “Tax Exemption”) and has not performed any investigation as to its accuracy, completeness or sufficiency. The execution and delivery of this Official Statement by its Clerk has been duly authorized by the District. In accordance with the Rule, the Preliminary Official Statement is deemed final except for the omission of certain information described in the Rule.

AUTHORIZATION This Official Statement has been approved for distribution to prospective purchasers and the Underwriter of the Notes. The District, acting through its Clerk, will provide to the Underwriter of the Notes at the time of delivery of the Notes, a certificate confirming to the Underwriter that, to the best of its knowledge and belief, the Official Statement with respect to the Notes, together with any supplements thereto, at the time of the adoption of the Resolution and at the time of delivery of the Notes, was true and correct in all material respects and did not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated, where necessary to make the statements in light of the circumstances under which they were made, not misleading.

CEDAR GROVE - BELGIUM AREA SCHOOL DISTRICT

By /s/ Aileen Dahlke District Clerk

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APPENDIX A

BASIC FINANCIAL STATEMENTS AND RELATED NOTES

CEDAR GROVE - BELGIUM AREA SCHOOL DISTRICT SHEBOYGAN AND OZAUKEE COUNTIES, WISCONSIN

For year ended June 30, 2010

Corson, Peterson & Hamann S.C. Certified Public Accountants

Sheboygan, Wisconsin

The Auditor was not asked to perform any additional review in connection with this Official Statement.

CORSON, PETERSON & HAMANN S.C.

PAUL CORSON, C.P.A.

GREG PETERSON, C.P.A.

DAVID HAMANN, C.P.A.

To the Board of Education Cedar Grove-Belgium Area School District Cedar Grove, Wisconsin

CERTIFIED PUBLIC ACCOUNTANTS

2203 SOUTH MEMORIAL PLACE

SHEBOYGAN, WISCONSIN 5308t

INDEPENDENT AUDITOR'S REPORT

TELEPHONE

(920) 457-364 t

FAX

(920) 457-8148

We have audited the accompanying finanCial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Cedar Grove-Belgium Area School District (the "District") as of and for the year ended June 30, 2010, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's Board of Education and management. Our responsibility is to express opinions on these financial statements based on our audit

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures m the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the District's Board of Education and management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information, as well as each fiduciary fund type of the Cedar Grove-Belgium Area School District as of June 30,2010 and the respective changes in financial position, and cash flows, where applicable, thereof and the respective budgetary comparison for the governmental activities for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated November 30,2010 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 2 through 11 be presented to supplement the basic fmancial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers It to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during aUf audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's financial statements as a whole. The combining and individual nonmajor fund financial statements and other information listed in the table of contents as supplementary information are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards and schedule of state financial assistance are presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and the State Single Audit Guidelines and are also not a required part of the financial statements. The combining and individual non major fund financial statements, schedule of expenditures of federal awards, schedule of state financial assistance and other information listed in the table of contents as supplementary information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the finanCial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

~J~"rf~S,C, Sheboygan, Wisconsin November 30,2010

Management's Discussion and Analysis

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

The discussion and analysis of the Cedar Grove-Belgium Area School District's financial information provides an overall review of financial activities for the fiscal year. The analysis generally focuses on school district financial performance as a whole.

FINANCIAL HIGHLIGHTS

The D·istrict's overall financial position, as reflected in total net assets, increased by $267,767 and totaled $8,626,748 as of June 30,2010.

In the governmental funds, total fund balances decreased $52,860 and totaled $2,587,546 as of June 30, 2010. The general fund balance increased $146,702. The debt service fund balance increased $887. The capital projects fund balance decreased $213,639. The community service fund balance increased $12,165. The special revenue trust fund balance increased $1,025.

The school food service program, the District's only business-type activity, had $394,173 in total revenue and $400,654 in total expenses resulting in a $6,481 decrease in net assets.

OVERVIEW OF THE FINANCIAL STATEMENTS

The basic financial statements are comprised of 1) government-wide financial statements, 2) fund financial statements and 3) notes to the basic financial statements. In addition, other information supplementary to the basic financial statements is provided.

Government-Wide financial statements

The government-wide financial statements are the statement of net assets and statement of activities. These statements present an aggregate view of the Districts finances in a manner similar to private­sector business. Both statements distinguish functions that are supported principally by property taxes and intergovemmental revenues, called governmental activities, from functions that are intended to recover all or a significant portion of costs through user fees and charges called business-type aotivities.

The statement of net assets presents information on all of the District's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

The statement of activities presents information showing how the District's net assets changed during the year. This statement reports the cost of governmental functions and how those functions were financed for the fiscal year.

The government-wide financial statements are shown on pages 12 to 13 of this report.

Page 2

Fund financial statements

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

The District also produces fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities. The District, like other state and local governments, uses fund accounting to demonstrate compliance with finance related legal requirements. Fund statements generally report operations in more detail than the govemment­wide statements and provide information that may be useful in evaluating a district's near-term financing requirements. .

There are two fund financial statements, the balance sheet and the statement of revenues, expenditures and changes in fund balances. Generally, fund statements focus on near-term inflows and outflows of spendable resources and their impact on fund balances.

Because the focus of fund financial statements is narrower than that of the govemment-wide statements it is useful to make comparisons between the information presented. By doing so, readers may better understand the long-term implication of Ihe government's near-term financial decisions. A reconciliation to facilitate this comparison is provided at the bottom of the balance sheet - governmental funds and as a separate statement following the statement of revenues, expenditures and changes in fund balances­governmental funds.

The District has three kinds of funds: governmental, proprietalY and fiduciary. Governmentel funds include the District's five permanent funds (general, special education, debt service, community service and special revenue trust) and individual capital project funds as needed. In the current fiscal year the District had one capital projects fund. The District has one proprietary fund, the food service fund. The District's two fiduciary funds include the private-purpose trust (scholarship funds) and agency funds (student activity funds).

Financial information is presented separately ·on both the balance sheet and the statement of revenues, expenditures and changes in fund balanoes for the general fund, special education fund, debt service fund and the capital projects fund as these funds are considered to be major funds. Nonmajor other govemmental funds include the special revenue trust and the community service fund and are combined into a single, aggregated column. Data for each of these individual non major funds is provided separately as supplementary information. The governmental fund financial statements are shown on pages 14 to 15 of this report.

The proprietary fund statements for the District's food service program are prepared on the same basis of accounting and measurement focus as the government-wide financial statements. In addition, the District provides a statement of cash flows for the proprietary fund. The proprietary fund financial statements are shown on pages 17 to 19 of this report.

The District serves as the trustee, or fiduciary, for assets that belong to others, such as the scholarship fund and student activity fund. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes the activities from the government-wide financial statements because it cannot use these assets to finance its operations. Fiduciary fund statements are presented on page 20 of this report.

The District adopts an annual appropriated budget for its major funds. Budgetary comparison statements have been provided to demonstrate budget compliance. The budgetary comparison statements are presented on pages 21 to 25 of this report.

Notes to the financial statements

The notes to the financial statements provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 26 to 44 of this report.

Page 3

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30,2010

Major features of the Government-Wide and fund financial statements

The major features of the District's financial statements, including the portion of the activities reported and the type of information contained, is shown in the following table,

Government-Wide Fund Financial Statements Statements

Governmental Proprietary Fiduciary Funds Funds Funds

Scope Entire District The activities of the Activities the District Instances in which the (except fiduciary District that are not operates similar to District administers funds) proplietary or fiduciary, private business: the resources on behalf of

such as instructional, District's food service someone else, such as support services and program is its only scholarship programs community BeNices proprietary operation and student activities

Required Statement of net Balance sheet Statement of net assets Statement of fiduciary financial assets net assets statements Statement of revenues, Statement of revenues,

Statement of expenditures and changes expenses and changes Statament of changes activities in fund balances in net assets in fiduciary net assets

Statement of cash flows

Basis of Accrual accounting. Modified accrual Accrual accounting Accrual accounting accounting and and economic accounting and current and economic and economic measurement resources focus financial resources focus resources focus resources focus focus

Type of asset All assets and Generally assets expected All assets and liabilities, All assets and and liability liabilities, both to be used up and both financial and liabilHies, both financial information financial and liabilities that come due capital; short-term and and capital; short-term

capital, short-term during the year or soon long-tenn and long-tenn; the and long-term thereafter; no capital District's funds do not

assets or long-term currently contain any liabilities included capital assets,

although they can

Type of inflow All revenues and Revenues for which cash All revenues and All additions and and outflow expenses during is received during or soon expenses during the deductions during the information the year, after the end of the year; year, regardless of year, regardless of

regardless of when expenditures when goods when cash is received when cash is received cash is received or or selVices have been or paid or paid paid received and the related

liability is due and payable

Page 4

The District as a Whole

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30,2010

FINANCIAL ANALYSIS

Net assets, Table 1, below, provides a summary of the District's net assets for the year ended June 30, 2010 compared to 2009, as restated,

Table 1 Condensed Statement of Net Assets

June 30, 2010 and 2009

Governmental Business-Type Total Increase Activities Activities School District (Decrease)

2010 2009 2010 2009 2010 2009 2010-2009

Assets Current assets $ 3,282,743 $ 3,096,072 $29,952 $19,278 $ 3,312,695 $ 3,115,350 $ 197,345 Capital assets - net 12838237 13048060 60602 72924 12898839 13120984 (222145)

Total assets ~16120 980 m16144132 $90554 m92202 m16 211534 ~16 236 334 $ (24800)

Liabilities Long-term liabilities $ 6,814,533 $ 7,337,494 $ $ $ 6,814,533 $ 7,337,494 $(522,961) Other liabilities 754 892 529331 15361 10528 770253 539859 230394

Total liabilities ~ 7569425 m 7866825 m15361 $10528 ~ 7584 786 ~ 7877 353 m(292567)

Net assets Invested in capital assets, net of related debt $ 6,550,554 $ 5,734,982 $60,602 $72,924 $ 6,611,156 $ 5,807,906 $ 803,250

Restricted 346,888 315,948 14,591 8,750 361,479 324,698 36,781 Unrestricted 1654113 2226377 1654113 2226377 (572284)

~-- ---

Total net assets S 8551 55li i 8211301 ~ ~ S 8626 Z48 i B 358 981 ~

In governmental activities, total assets decreased $23,152 including a decrease in capital assets, net of accumulated depreciation of $209,823,

Total long-term liabilities decreased $522,961 due primarily to the payment of general obligation bonds, See Table 5 for details, .

Total other liabilities increased $230,394, due primarily to an increase in accrued salaries and related items,

In business-type activities net assets decreased by $6,481,

Page 5

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

Change in net assets. Table 2 shows the change in net assets for the yeat ended June 30, 2010 and 2009, as restated.

Table 2 Change in Net Assets

Years ended June 30, 2010 and 2009

Revenues Program revenues

Charges for services Operating grants and contributions

General revenues Property and other taxes Equalization aid/federal stimulus aid Other

Total revenues

Expenses Instruction Pupil and instructional staff services Administration and business services Operations, maintenance and remodeling Pupil transportation Community services Interest and related expense on debt Other

Total expenses

Change in net assets

Governmental Business-Type Activities Activities

$ 332,038 681,420

5,316,793 5,812,617

28470

~12171 338

$ 7,478,125 687,389

1,121,091 1,172,114

426,612 61,802

264,305 685652

$275,954 118,099

~

$394173

$

Total School District

607,992 799,519

5,316,793 5,812,617

28590

~12565511

$ 7,478,125 687,389

1,121,091 1,172,114

428,612 61,802

264,305 1086306

$ 576,283 688,101

5,130,712 5,469,132

44093

~11 908321

$ 6,715,291 627,385 984,890

1,175,568 449,394 67,482 .

289,839 1061616

$11897090 $400654 $12297744 $11371465

$ 274 248 ~ $ 267 767 $ 536800

Program revenues, in the form of charges for services and operating grants and contributions, totaled $1,013,458 for the governmental activities and $394,053 for the business-type activities.

General revenues, including property taxes 'and equalization aid, totaled $11,129,410 for the governmental activities. The Cedar Grove-Belgium Area School Districfs property taxes totaled $5,310,199 or approximately 44% of its govemmental revenues for the year ended June 30, 2010.

Total revenues exceeded expenses by $267,767 which will be used to finance future operations of the District.

Page 6

Govemmental Activities

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

Net cost of governmental activities. Table 3 reports the cost of the District's major activities for the years ended June 30, 2010 and 2009, as restated. The table also shows each activity's net cost (total cost less fees generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the District's taxpayers by each of these functions.

Table 3 Net Cost of Governmental Activities

Years ended June 30, 2010 and 2009

Instruction Pupil and instructional staff services Administration and business services Operations, maintenance and remodeling Pupil transpDFtation Community service Interest and related expense on debt Other

Total

Total Cost of Services

$ 7,478,125 $ 6,715,291 687,389 627,385

1,121,091 984,890 1,172,114 1,175,568

426,612 449,394 61,802 67,482

264,305 289,839 685,652 687,725

:1111 891 Q9Q :II1Q 991 5B

Net Cost of Services

$ 6,760,441 $ 6,058,643 490,219 483,949

1,118,930 984,890 1,163,835 1,167,958

375,875 413,426 24,538 26,077

264,305 289,839 685,489 687,725

:II1Q 883 632 :II1Q 112 5Q1

The total cost of all governmental activities was $11,897,090, an increase of $899,516 compared to the prior year.

Individuals, other districts and others who directly participated in or benefited from a program paid $332,038 of the costs.

Governmental and other operating grants and contributions funded $681 ,420 of the costs.

Net cost of governmental activities were financed with general revenues, which consist of property taxes, state equalization aid, federal stimulus aid, exempt computer aid, interest income and miscellaneous items.

The "other" category includes central services, insurance, other support services and unallocated depreciation expense.

Page 7

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

Governmental Activities - Continued

Property taxes, general state aid and federal stimulus aid account for the greatest portion of revenues for the District as illustrated in Chart 1.

Chart 1 Sources of Revenues for Fiscal Year 2010

General aids/federal stimulus aid

48%

Grants and contributions

5%

Expenses by major function are illustrated in Chart 2.

Chart 2 Expenses for Fiscal Year 201 0

Pupil transportation

3%

Operations, maintenance

remodeling 10%

services 6%

6%

""Includes unallocated depreciation and miscellaneous activities.

63%

Page 8

Business-Type Activities

Cedar Grove-Belgium Area School District Management's Discussion and Analysis

Year ended June 30, 2010

Revenues for the District's business-type activity (food service program) consisted of charges for services, federal and state reimbursements. (See Table 2)

Food service expenses exceeded revenues by $6,481.

Charges for services, which are amounts paid by students and staff for daily food service, totaled $275,954.

Federal and state reimbursements for meals served, including payments for free and reduced lunches, were $118,099.

Governmental Funds

The District completed the year with a total governmental fund balance of $2,587,546 which was $52,860 less than last year's ending fund balance of $2,640,406.

The general fund had an increase in fund balance of $146,702, which was better than the final break even budget. See page 21 for additional budget comparisons.

The debt service fund had an increase in fund balance of $887. The debt service fund balance will fluctuate from year to year because the fund balance must be at least equal to the amount of debt payments that are scheduled prior to January 20 of the subsequent year.

The capital projects fund spent $213,639 on preliminary construction costs that will be funded with referendum borrowing during the fiscal year ending June 30, 2011, causing a negative fund balance.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

As of June 30, 2010, the District had invested over $24.2 million in a broad range of capital assets, including land, buildings, improvements, furniture and equipment. (See Table 4) Additional information about capital assets can be found in Note 4. Accumulated depreciation on these assets totaled $11.3 million:

Asset acquisitions for governmental activities totaled $356,594 during the year.

For the year ended June 30, 2010 the District recognized depreCiation expense of $566,417 for governmental activities and $12,322 for the food service program.

In April 2010 the District passed a $6 million referendum for renovating and remodeling of existing buildings. The project is anticipated to be completed by September 30,2011.

Page 9

Capital Assets - Continued

Land Site improvements Building and building improvements

Furniture and equipment Construction in progress

Accumulated depreciation

Total

Long-Term Debt

$

Cedar Grove-Belgium Area School District Managemenfs Discussion and Analysis

Year ended June 30, 2010

Table 4 Capital Assets

June 30, 2010 and 2009

Governmental Activities

681,516 $ 1,404,005

681,516 $ 1,404,005

18,541,697 18,541,697

Business-Type Activities

$

3,154,855 3,124,417 284,062 284,062 213639 __ _

$

Total School District

2010 2009

681,516 1,404,005

18,541,697 3,438,917

213639

$ 681,516 1,404,005

18,541,697 3,408,479

$ 23,995,712 $ 23,751,635 $ 284,062 $ 284,062 (11157475) (10703575) (223460) (211138)

$ 24,279,774 (11380935)

$ 24,035,697 (10914713)

$ 12 83B 237 $ 13 Q4B QBQ ~ ~ l! 12 BSB 839 l! 13 12Q SB~

Increase (Decrease) 2010-2009

$

30,438 213639

$ 244,077 (466222)

~

At year end, the District had $6,814,533 in general obligation bonds and other long-term liabilities outstanding - a reduction of $522,961 compared to 2009, as restated. Additional information about the District's long-term liabilities is presented in Note 5 to the financial statements.

General obligation bonds State trust fund loan Capital lease Other post-employment benefits Vested sick pay

Total

Table 5 Outstanding Long-Term Obligation

June 30, 2010 and 2009

Total School District

$5,905,000 $6,815,000 382,683 498,078

24,416 370,370 -(1) 156460

Sf> 81'1533 $1331 '19'1

Increase (Decrease) 2010-2009

$(910,000) (115,395)

(24,416) 370,370 156480

~

(1) Balance 8S of June 30,2009 has been restated to complyWtth GASB Statement No. 45. See note 15 on page 44.

The District retired $910,000 of outstanding general obligation bonds during the year.

other post-employment benefits include future benefits for employees at retirement for health, dental and life insurance.

During the fiscal year ended June 30, 2010 the District started a benefit program for vested sick pay at retirement.

Page 10

Cedar Grove-Belgium Area School District Management's Discussion and AnalYSis

Year ended June 30,2010

FACTORS BEARING ON THE DISTRICT'S FUTURE

Currently known situations that will impact the District's financial status in the future are:

A referendum was passed in April 2010 for $6 million and construction will be starting in August 2010.

Total District enrollment count increased 31 students compared to 2009. The Districfs FTE units for 2009 is 1116 for the three year rolling average for state aid calculation purposes.

Summer school FTE have been increasing each year, up 2 FTE from 2008. The course offering is very appealing to the students.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview of the Districfs finances and to demonstrate the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Steven Shaw, District Administrator, Cedar Grove-Belgium Area School District, 321 North Second Street, Cedar Grove, Wisconsin 53013.

Page 11

Basic Financial Statements

Cedar Grove-Belgium Area School District Statement of Net Assets

June 30, 2010

Governmental Business-Type Activities Activities Total

Assets Current assets

Cash and investments Taxes receivable Accounts receivable Due from other governments Prepaid expenses

Total current assets

Non-current assets Capital assets

Land Site improvements Buildings and building improvements Furniture and equipment Construction in progress

Less: Accumulated depreciation

Total non-current assets

Total assets

Liabilities Current liabilities

Accounts payable Accrued salaries and related items Accrued interest payable Due to other governments Deposits payabte Deferred revenue Current portion of long-term obligations

Total current liabilities

Non-current liabilities Non-current portion of long-term obligations

Total liabilities

Net assets Invested in capital assets, net of related debt Restricted for

Special needs Debt service Community service Food service

Unrestricted

Total net assets

Total liabilities and net assets

See accompanying notes to the basic financial statements

$ 1,291,894 1,610,237

3,366 315,541 61705

~ 3282743

681,516 1,404,005

18,541,697 3,154,855

213639

$ 23,995,712 (11 157475)

~ 12838237

$ 16120980

$ 107,519 525,517

59,695 49,078

13,083 768207

$ 1,523,099

6046326

$ 7569425

$ 6,550,554

1,025 290,553

55,310

1654113

~ 8551555

$ 16120980

29,952

----

$ 29952

$

284,062

----

$ 284,062 (223460)

$ 60602

L.illl.554

$ 6,783

8,578

$ 15,361

----

~

60,602

14,591

----

~

~

$

1,321,846 1,610,237

3,366 315,541 61705

3312695

681,516 1,404,005

18,541,697 3,438,917

213639

$ 24,279,774 (11380935)

~ 12,898,839

$ 16211534

107,519 532,300

59,695 49,078

8,578 13,Q83

768207

1,538,460

6046326

$ 7584786

$ 6,611,156

1,025 290,553

55,310 14,591

1654113

8626748

16211534

Page 12

Cedar Grove-Belgium Area School District Statement of Activities

Year ended June 30, 2010

Program Revenues

Functions/Programs

Governmental activities Instruction

Regular instruction Vocational instruction Special instruction Other instruction

Total instruction

Support services Pupil services Instructional staff services General administration services Building administration services Business services Operations, maintenance and remodeling Pupil transportation Central services Insurance Community services Interest and related expense on debt Other support services Depreciation ~ unallocated*

Total support services

Total governmental activities

Business-type activities School food service program

Total school district

General revenues Taxes

Expenses

$ 5,444,253 462,323

1,025,633 ~

$ 7478125

335,411 351,978 333,060 609,240 178,791

1,172,114 426,612 89,026

110,534 61,802

264,305 60,741 ~

$ 4418965

$11 897090

$ 400654

~

General property taxes Debt service property taxes Community service property taxes Payment in lieu of taxes

Charges for Services

$144,070 10,616 38,090 62710

$255486

$ 28,935 2,693

2,000

5,660

37,264

$ 76552

$332038

§275954

~

State aids not restricted to specific functions Equalization aiel Exempt computer aid

Federal aids not restricted to specific functions Federal stimulus aid

Interest income

Miscellaneous

Total general revenues

Change in net assets

Net assets ~ Beginning of year, as restated

Net assets ~ End of year

Operating Grants and

Contributions

$ 55,443 3,523

396,761 ~

$462198

$ 52,978 112,564

161

2,619 50,737

163

$219222

$681 420

$118099

~

Net (Expense) Revenue and Changes in Net Assets

Business Governmental Type

Activities Activities Total

$ (5,244,740) $ (5,244,740) (448,184) (448,184) (590,782) (590,782) (476735) ~

$ (6760441) ~ $ (6760441)

(253,498) (253,498) (236,721) (236,721) (333,060) (333,060) (607,079) (607,079) (178,791) (178,791)

(1,163,835) (1,163,835) (375,875) (375,875)

(88,863) (88,863) (110,534) (110,534)

(24,538) (24,538) (264,305) (264,305)

(60,741) (60,741) (425351) ~

§ (4123191) ~ ~

§(10 883 632) ~ $(10883632)

~ ~

i(10 883 632) ~ §(10 890233)

3,975,155 3,975,155 1,301,672 1,301,672

33,372 33,372 6,594 6,594

5,503,957 5,503,957 2,988 2,988

308,660 308,660

3,688 120 3,808

21794 ~

§ 11157880 L12Q $ 11158000

274,248 $(6,481) 267,767

8277 307 81674 8358981

855:1 555 ~ ~

*This amount exdudes the depreciation that is included in the direct expenses ofthe various functions.

See accompanying notes to the basic financial statements. Page 13

Cedar Grove-Belgium Area School District Balance Sheet

Governmental Funds June 30, 2010

Spedal Debt Capital General Education Service Projects

Fund Fund Fund Fund

Assets Cash and investments $ 880,944 $346,341 Taxes receivable 1,610,237 Accounts receivable 860 Due from other funds 178,527 Due from other governments 166,942 148,599 Prepaid expenses ~

Total assets ~ ~ ~ $ -

liabilities and fund balances liabilities

Accounts payable 24,393 $ $ $ 83,126 Accrued salaries and related items 474,010 51,507 Due to other funds 48,014 130,513 Due to other governments 49,078 Deferred revenue ~ ---

Total liabilities $ 500706 $148599 L-----= $ 213639

Fund balances Reserved for

Prepaid expenses 61,705 $ Debt service 346,341 Special needs Community service

Unreserved - deSignated 2336804 (213639)

Total fund balances $2398509 ~ $346341 $(213639)

Total liabilities and fund balances $2899215 ~ ~ $ -

Total net assets reported for governmental activities in the statement of net assets are different from the amount reported above as total governmental funds fund balance because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the fund statements above. Amounts reported for governmental activities in the statement of net assets include:

Other Governmental

Funds

$64,609

2,506

$6L115

10780

$10780

1,025 55,310

$56335

~

Governmental capital asset Governmental accumulated depreciation

$ 23,995,712 (11157475)

Long~term liabilities, including bonds and notes payable, are not due in the current period and therefore are not reported in the fund statements above. Long~term liabilities reported in the statement of net assets that are not reported in the fund balance sheet are:

General obligation debt Accrued interest on long~term obligations Other post~employment benefits Vested sick pay

Total net assets ~ governmental activities

See accompanying notes to the basic financial statements.

6,287,683 59,695

370,370 156480

Total Governmental

Funds

$ 1,291,894 1,610,237

3,366 178,527 315,541 ~

~

107,519 525,517 178,527 49,078 ~

$ 873724

61,705 346,341

1,025 55,310

2123165

$ 2,587,546

12,838,237

Page 14

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds Year ended June 30, 2010

Special Debt Capital Other General Education Service Projects Governmental

Fund Fund Fund Fund Funds

Revenues Property taxes $ 3,975,155 $ $1,301,672 $ $33,372 Other local sources 104,564 887 43,354 Interdistric1 sources 139,589 57,573 Intermediate sources 2,514 7,993 State sources 5,588,230 260,960 Federal sources 370,242 263,260 Other sources ~

Total revenues $10200546 $ 589786 $1302559 ~ $76726

Expenditures Instruction

Regular instruction $ 5,076,658 $ 29,918 $ $ Vocational instruction 419,310 3,443 Special instruction 6 964,713 Other instruction 480808 4570 ---- ---- ---

Total instruction $ 5976782 $ 998074 ~ ~ $ 4570

Support S8IVices Pupil services $ 199,994 $ 118,275 $ $ Instructional staff services 221,116 113,856 General administration services 316,915 Building administration services 571,344 Business services 170,020 Operations, maintenance and remodeling 1,238,498 52 213,639 Pupil transportation 409,288 15,532 208 Central services 87,194 26 Insurance 110,534 Community service 58,758 Principal, interest and related expense 26,414 1,301,672 Other support services ~ ~

Total support services $ 3387286 $ 281488 $1301672 $ 213639 $58966

Total expenditures $ 9364068 $1279562 $1301672 $ 213639 $63536

Excess (deficiency) of revenues over expenditures $ 836,478 $ (689,776) $ 887 $(213,639) $13,190

Other financing sources (uses) Transfer to special education fund (689776) 689776

Net change in fund balances 146,702 $ $ 887 $(213,639) $13,190

Fund balances.:. Beginning of year 2,251807 ---- 345454 --- 43145

Fund balances - End of year ~ $ -~ ~ ~

See accompanying notes to the basic financial statements.

Total Governmental

Funds

$ 5,310,199 148,805 197,162 10,607

5,849,190 633,502 ~

$12169617

$ 5,106,576 422,753 964,719 485378

$ 6979426

318,269 334,972 316,915 571,344 170,020

1,452,189 425,028

87,220 110,534 58,758

1,328,086 ~

$ 5243051

$12222477

(52,860)

(52,860)

2640406

~

Page 15

Cedar Grove-Belgium Area School District Reconciliation of the Governmental Funds Statement of Revenues, Expenditures

and Changes in Fund Balances with the Government-Wide Statement of Activities Year ended June 30, 2010

Net change in fund balances - total governmental funds

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

Capital outlays are reported as expenditures in the govemmental funds. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital outlay Donated capital assets received Depreciation expense

Capital outlay in excess of depreciation expense

In the statement of activities, other post-employment benefits and vested sick pay are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these benefits are measured by the amount paid. I n the current period, these amounts are:

Other post-employment benefits earned Other post-employment benefits paid Vested sick pay earned

Amount paid is less than amount accrued by

Debt proceeds are reported in the governmental funds as other financing sources, but are reported as an increase in long-term debt in the statement of net assets and does not affect the statement of activities. Repayment of principal on long-term debt is reported as an expenditure in the governmental funds, but is reported as a reduction in long-term liabilities in the statement of net assets. In the current period, these amounts consisted of:

Principal paid on bonds and capital leases

In governmental funds interest payments on long-term debt are reported as an expenditure when paid. In the statement of activities interest is reported as it accrues. In the current period, these amounts are:

Interest paid I nterest accrued

Interest paid is greater than interest accrued by

Change in net assets - governmental activities

See accompanying notes to the basic financial statements.

$ 354,873 1,721

(566417)

$(387,147) 16,777

(156480)

$ 277,290 (263320)

$ (52,860)

(209,823)

(526,850)

1,049,811

13970

$ 274248

Page 16

Cedar Grove-Belgium Area School District Statements of Net Assets

Proprietary Funds

Assets Current assets

Cash and investments

Non-current assets Capital assets

Furniture and equipment Less: Accumulated depreciation

Total non-current assets

Total assets

Liabilities Current liabilities

Accrued salaries and related items Deposits payable

Total liabilities

Net assets Invested in capital assets, net of related debt Restricted for food service"

Total net assets

Total liabilities and net assets

"Restricted per State regulations

June 30, 2010

See accompanying notes to the basic financial statements.

Food Service Fund

$ 284,062 (223460)

$ 60,602

$ 6,783 ----..MZ§.

~

$ 60,602 ~

~

Page 17

Cedar Grove-Belgium Area School District Statement of Revenues, Expenses and Changes in Net Assets

Proprietary Funds

Operating revenues Food·sales State sources Federal sources Federal commodities Other sources

Total operating revenues

Operating expenses Salaries and wages Employee benefits Purchased services Supplies, food and materials Other Depreciation

Total operating expenses

Operating loss

Non-operating revenues I nterest income

Change in net assets

Net assets - Beginning of year

Net assets - End of year

Year ended June 30,2010

See accompanying notes to the basic financial statements.

Food Service Fund

$275,319 4,785

85,502 27,812 ~

$394,053

$139,610 42,932 22,899

181,652 1,239

12322

$400654

$ (6,601)

Page 18

Cedar Grove-Belgium Area School District Statement of Cash Flows

Proprietary Funds

Cash flows from operating activities Cash received from customers

Year ended June 30, 2010

Cash received from other government payments Cash payments to employees for services Cash payments for employee benefits Cash payments to suppliers for goods and services Cash payments for other operating expenses

Net cash flows from operating activities

Cash flows from investing activities I nterest income

Net increase in cash and cash equivalents

Cash and cash equivalents - Beginning of year

Cash and cash equivalents - End of year

Reconciliation of operating loss to net cash flows from operating activities Operating loss Adjustments to reconcile operating loss to

net cash flows from operating activities Depreciation Changes in assets and liabilities

Decrease in due from other governments Increase in accrued salaries and related items Increase in deposits payable

Net cash flows from operating activities

Noncash noncapital financing activities

During the year the District received food commodities from the U.S. Department of Agriculture

See accompanying notes to the basic financial statements.

Food Service Fund

$ 276,310 93,968

(139,610) (38,455)

(176,739) ~

$ 14,235

--.lli.

$ 14,355

$ (6,601)

12,322

3,681 4,477 ~

Page 19

Cedar Grove-Belgium Area School District Statement of Fiduciary Net Assets

June 30, 2010

Private-Purpose Trust Agency Funds

Assets Cash and investments

Liabilities Due to student organizations $

Net assets Restricted for scholarships

Total liabilities and net assets

Additions Gifts and contributions

Deductions Scholarship awards

Change in net assets

Net assets - Beginning of year

Net assets - End of year

Cedar Grove-Belgium Area School District Statement of Changes in Fiduciary Net Assets

Year ended June 30, 2010

See accompanying notes to the basic financial statements.

$56,274

Private-Purpose Trust

$200

$

Page 20

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - General Fund Year ended June 30, 2010

Budgeted Amounts

Original Final Actual

Revenues Property taxes $ 3,929,868 $ 3,966,627 $ 3,975,155 Other local sources 79,250 79,250 104,564 Interdistrict sources 60,000 60,000 139,589 Intermediate sources 2,514 State sources 5,885,255 5,905,633 5,588,230 Federal sources 48,062 48,062 370,242 Other sources 10000 10000 20252

Total revenues ~10,012,435 ~10,069,572 ~10 200 546

Expenditures Instruction

Regular instruction $ 4,938,579 $ 4,928,248 $ 5,076,658 Vocational instruction 438,451 438,451 419,310 Special instruction 5,305 5,305 6 Other instruction 502810 502810 480808

Total instruction ~ 5885145 ~ 5874814 ~ 5976782

Support services Pupil services $ 220,803 $ 220,803 $ 199,994 Instructional staff services 230,124 230,124 221,116 General administration services 325,218 325,218 316,915 Building administration services 564,051 564,051 571,344 Business services 175,203 175,203 170,020 Operations, maintenance and remodeling 1,309,120 1,309,120 1,238,498 Pupil transportation 424,870 424,870 409,288 Central services 93,128 93,128 87,194 Insurance 107,000 107,000 110,534 Principal, interest and related expense 26,830 26,830 26,414 Other support services 62810 62810 35969

Total support services ~ 3539157 ~ 3539157 ~ 3387286

Total expenditures ~ 9424302 ~9413971 ~ 9364068

Excess of revenues over expenditures $ 588133 $ 655601 $ 836478

other financing sources (uses) Transfer to special education fund $ (611,110) $ (611,110) $ (689,776) Transfer to food service fund (44491) (44 491)

Net other financing sources (uses) $ (655601) $ (655601) $ (689776)

Net change in fund balance $ (67,468) $ $ 146,702

Fund balance - Beginning of year 2,251,807 2,251801 2251807

Fund balance - End of year S 218'1339 ~ 2251801 ~2398~~

See accompanying notes to the basic financial statements.

Variance With Final Budget

Favorable (Unfavorable)

8,528 25,314 79,589 2,514

(317,403) 322,180 ~

$ 130974

$(148,410) 19,141 5,299

22002

$(101968)

20,809 9,008 8,303

(7,293) 5,183

70,622 15,582 5,934

(3,534) 416

26841

$ 151871

$ 49903

$ 180877

$ (78,866) 44491

~

$ 146,702

---~

Page 21

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - Special Education Fund Year ended June 30, 2010

Budget Actual

Revenues Interdistrict sources $ 47,850 $ 57,573 Intermediate sources 4,500 7,993 State sou rces 255,000 260,960 Federal sources 193000 263,260

Total revenues $ 500,350 § 589786

Expenditures Instruction

Regular instruction $ $ 29,918 Vocational instruction 3,443 Special instruction 947,900 964713

Total instruction § 947900 § 998074

Support services Pupil services $ 57,991 $ 118,275 Instructional staff services 105,569 113,856 Operations, maintenance and remodeling 52 Pupil transportation 15,532 Central services 26 Other support services 33747

Total su pport services § 163560 m 281488

Total expend itures §1111460 §1 279562

Excess (deficiency) of revenues over expenditures $(611,110) $ (689,776)

Other financing sources Transfer from general fund 611110 689776

Net change in fund balance $ $

Fund balance - Beginning of year

Fund balance - End of year $ S

See accompanying notes to the basic financial statements.

Variance Favorable

(Unfavorable)

$ 9,723 3,493 5,960

70,260

$ 89436

$ (29,918) (3,443)

~

U§Q.llil

$ (60,284) (8,287)

(52) (15,532)

(26) (33747)

$(117928)

§(168102)

$ (78,666)

78666

$

S -

Page 22

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - Debt Service Fund Year ended June 30, 2010

Budget Actual

Revenues Property taxes $1,301,672 $1,301,672 Other local sources 5500 887

Total revenues $1307,172 ~1 302559

Expenditures Su pport services

Principal, interest and fees Principal $1,025,395 $1,025,395 Interest 276277 276,277

Total expenditures $1301672 §1 301672

Net change in fund balance $ 5,500 $ 887

Fund balance - Beginning of year 345,454 345,454

Fund balance - End of year $ 3509Q4 $ 346341

See accompanying notes to the basic financial statements.

Variance Favorable

(Unfavorable)

$ (4613)

~

$

L-.::

$(4,613)

~

Page 23

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - Capital Projects Fund Year ended June 30, 2010

Budget Actual

Revenues ~ ~

Expenditures Support services

Operations, maintenance and remodeling ~ $ 213639

Net change in fund balance $ $(213,639)

Fund balance - Beginning of year

Fund balance - End of year ~ ~

See accompanying notes to the basic financial statements.

Variance Favorable

(Unfavorable)

~

$(213639)

$(213,639)

~

Page 24

Cedar Grove-Belgium Area School District Statement of Revenues, Expenditures and Changes in Fund Balance

Budget and Actual - Other Governmental Funds Year ended June 30, 2010

Budget Actual

Revenues Property taxes $33,372 $33,372 Other local sources 30175 43354

Total revenues $63547 $76726

Expenditures Instruction

Other instruction ~ $ 4570

Support services Pupil transportation $ $ 208 Community service 63547 58,758

Total support services $63,547 $58,966

Total expenditures $63547 $63536

Net change in fund balance $ $13,190

Fund balance - Beginning of year 43145 43145

Fund balance - End of year ~ ~

See accompanying notes to the basic financial statements.

Variance Favorable

(Unfavorable)

$ 13179

$13179

[THIS PAGE IS INTENTIONALLY BLANK]

$(4570)

$ (208) 4,789

~

1-.11

$13,190

---

~

Page 25

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30,2010

Note 1. Summary of Significant Accounting Policies

The financial statements of the Cedar Grove-Belgium Area School District (the "District") have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting principles and policies utilized by the District are described below.

A Reporting Entity/Component Units

The Cedar Grove-Belgium Area School District is organized as a common School District governed by a seven member elected school board. The District operates grades kindergarten through 12. The District is comprised of all or parts of five taxing districts.

The accompanying financial statements present the activities of the Cedar Grove-Belgium Area School District. The School District is not a component unit of another reporting entity nor does it have any component units

The reporting entity for the District is based upon criteria set forth by the Governmental Accounting Standards Board (GAS B) Statement No. 14, The Financial Reporting Entity. The financial reporting entity consists of (a) organizations for which the standalone government is financially accountable and (b) the standalone government that is controlled by a separately elected governing body that is legally separate and is fiscally independent. All of the accounts of the District comprise the standalone government.

B. Basis of Presentation

Government-Wide Statements

The statement of net assets and the statement of activities present financial information about the District's governmental and business-type activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize the double counting of internal transactions. These statements distinguish between the governmental and business-type activities of the District. Governmental activities generally are financed through property taxes, intergovernmental revenues and other non exchange transactions. Business-type activities are financed in part by fees charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for business-type activities and for each function of the District's governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients for goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Page 26

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 1. Summary of Significant Accounting Policies - Continued

B. Basis of Presentation - Continued

Fund Financial Statements

The fund statements provide information about the District's funds, including fiduciary funds. Separate statements for each fund category - governmental, proprietary and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and proprietary funds, each displayed in a separate column. All remaining governmental and proprietary funds are aggregated and reported as other governmental or other proprietary funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal value. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

The District reports the following major governmental funds:

General Fund - This is the District's primary operating fund. It accounts for all financial activity that is not required to be accounted for in another fund.

Special Education Fund - This fund accounts for activities associated with providing educational programs for students with disabilities. Sources include financial aid received from the state and federal government and payments from other school districts. Excess expenditures of the fund are financed with a transfer from the general fund.

Debt Service Fund - This fund accounts for the resources accumulated and payments made for principal and interest on long-terrn general obligation debt of governmental activities.

Capital Projects Fund - This fund accounts for activities associated with the construction and related costs of capital assets.

The District also reports the following nonmajor governmental funds:

Special Revenue Trust Fund - This fund accounts for trust funds that can be used for District operations. Sources of funds include gifts and donations from private parties.

Community Service Fund - This fund accounts for activities that service the community, including open gym, swimming lessons, and other swimming pool activities.

The District operates one proprietary fund, the food service fund. This fund accounts for the activities of the District's food service program.

The District's fiduciary funds account for activities in which the District acts as a trustee or in an agency capacity for another party. These are resources that are not available to support District operations. Fiduciary funds include private-purpose trust funds which account for scholarship funds and the agency fund which accounts for assets held by the District as an agent for various student organizations or other individuals.

Page 27

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 3D, 2010

Note 1. Summary of Significant Accounting Policies - Continued

C. Measurement Focus and Basis of Accounting

The government-wide, proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Nonexchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. State general and categOrical aids are recognized as revenue in the entitlement year. Federal and state aids for reimbursable programs are recognized as revenue in the year related program expenditures are incurred. Aids received prior to meeting revenue recognition criteria are recorded as deferred revenues.

The governmental fund statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recOgnized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments and compensated absences which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources, if any.

Under the terms of grant agreements, the District may fund certain programs by a combination of specific cost reimbursement grants, categorical block grants and general revenues. Therefore, when program expenses are incurred, both restricted and unrestricted net assets may be available to finance the program. It is the District's policy to first apply cost reimbursement grant resources to such programs, followed by general revenues.

The Districfs food service fund follows all pronouncements of the Governmental Accounting Standards Board and has elected not to follow Financial Accounting Standards Board pronouncements issued after November 3D, 1989.

D. Assets and Liabilities

Cash and Investments

The District's cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition. All funds share common (pooled) checking and investment accounts unless regulations require separate investment accounts.

All investments are stated at fair value.

Page 28

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 3D, 2010

Note 1. Summary of Significant Accounting Policies - Continued

D. Assets and Liabilities - Continued

Cash and Investments - Continued

State statutes permit the District to invest available cash balances in the following:

1. Time deposits in any credit union, bank, savings bank or trust company maturing in three years or less.

2. Bonds or securities of any county, city, drainage district, technical college district, village, town or school district of the state. Also bonds issued by a local exposition district, local professional baseball park district, local professional football stadium district, local cultural arts district or by the University of Wisconsin Hospitals and Clinics Authority.

3. Bonds or securities issued or guaranteed by the federal government.

4. The local government investment pool.

5. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency.

6. Securities of an open end management investment company or investment trust, subject to various conditions and investment options.

7. Repurchase agreements with public depositories, with certain conditions.

Property Tax Lew

Under Wisconsin law, personal property taxes and first installment real estate taxes are collected by city, town and village treasurers or clerks who then make proportional settlement with the school district and county treasurer for those taxes collected on their behalf. Second installment real estate taxes and delinquent taxes are collected by the county treasurer who then makes settlement with the city, town, village and school districts before retaining any taxes for county purposes.

The District's property taxes are levied on or before October 31 on the equalized property valuation certified by the Wisconsin Department of Revenue. As permitted by a collecting municipality's ordinance, taxes may be paid in full or two or more installments with the first installment payable the subsequent January 31" and a final payment no later than the following July 31". The District is paid by the collecting municipality its proportionate share of tax collections received through the last day of the preceding month on or before January 15th and by the 20th of each subsequent month thereafter. On or before August 20th, the County Treasurer makes full settlement to the District for any remaining balance. The County assumes all responsibility for delinquent real property taxes.

Property taxes are recognized as revenue in the period for which the taxes are levied. The 2009 tax levy is used to finance operations of the District's fiscal year ended June 3D, 2010. All property taxes are considered due on January 1", when an enforceable lien is assessed against the property and the taxpayer is liable for the taxes. All taxes are collected within 60 days of June 30th and are available to pay current liabilities.

Page 29

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 1. Summary of Significant Accounting Policies - Continued

D. Assets and Liabilities - Continued

Accounts Receivable

All accounts receivable are shown at gross amounts with uncollectible amounts recognized under the direct write-off method. No allowance for uncollectible acccunts has been provided since such allowance would not be material.

Prepaid Items

Prepaid items represent payments made by the District for which benefits extend beyond June 30. A reserve for these non-liquid assets (prepaid items) has been recognized to signify that a portion of fund balance is not available for other subsequent expenditures.

Internal Receivables and Payables

The amounts, if any, reported on the statement of net assets for internal receivables and payables represent amounts due between different fund types (governmental activities, business-type activities and fiduciary funds). Eliminations are made for these internal balances within the same fund type. Residual internal balances between governmental and business-type activities are fu.rther eliminated in the total primary government column.

Capital Assets

Capital assets are reported at actual cost or estimated historical cost, based on appraisals conducted by an independent third-party professional appraisal firm. Donated assets are reported at estimated fair value at the time received.

Capitalization thresholds (the dollar value above which asset acquisitions are added to the capital asset accounts), depreciation methods and estimated useful lives of capital assets reported in the Govemment-Wide statements and proprietary funds are as follows:

Site improvements Buildings and building improvements Furniture and equipment Computers and related technology Vehicles

Capitalization Threshold

$1,000 1,000 1,000 1,000 1,000

Depreciation Method

Straight-line Straight-line Straight-line Straight-line Straight-line

Estimated Useful Life

20 Years 45-50 Years 5-30 Years 5-10 Years

6 Years

Page 30

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 1. Summary of Significant Accounting Policies - Continued

E. Net Assets

In the government-wide and proprietary fund financial statements, net assets are divided into three components:

Invested in capital assets, net of related debt - This consists of the historical cost of capital assets less accumulated depreciation less any debt that remains outstanding that was used to finance those assets.

Restricted - This consists of net assets that are restricted when there are limitations imposed on their use through extemal restrictions imposed by donors, creditors, grantors or laws or regulations of other governments.

Unrestricted - All other net assets are reported in this category.

F. Govemmental Fund Balances

Governmental fund balances are reported as reserved when the balances are not available for appropriation or expenditure or because they are legally segregated for a specific future use. Fund equity reserves have been established for prepaid expenditures, donor restrictions, debt service funds and community service funds. The remaining balances are unreserved fund balances. Unreserved fund balance has been designated for future cash flow purposes.

G. Employee Benefits

Vacation - District employees are granted vacation in varying amounts, based on length of service and other factors. Earned vacation is generally forfeited if not taken by year-end.

Sick Pay - The District's policy allows teachers and administrators to accumulate 10 days of sick pay for each year employed, accumulated to a maximum amount of 90 days. Upon retirement, qualifying employees shall have accumulated sick days applied to either his or her health insurance premiums or a tax sheltered annuity plan of the employee's choice at a rate of $40 a day.

Retirement Plans - District employees participate in the Wisconsin Retirement System as described in Note 8. All contributions made by the District on behalf of its employees are reported as expenditures when paid.

Other Post-employment Benefits - The District provides health, dental and life insurance coverage for certain retired teachers, support staff and administrators at least age 55 per the terms of contracts with the School Board. The District will pay 55%, frozen at the premium rate in effect upon retirement, towards the monthly insurance premium of each qualified retired employee and their dependents based on one year of coverage for every five years of service to the District up to a maximum number of five years. The employee may continue insurance coverage after the District's contribution expires with the employee paying the entire premium amount. The District follows GASB Statement No. 45 for recording its Actuarial Accrued Liability and its Annual Required Contribution for these benefits as described in Note 9 ..

Page 31

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 1. Summary of Significant Accounting Policies - Continued

H. Budgetary Accounting

Budgets are adopted each fiscal year for funds in accordance with Section 65.90 of the Wisconsin Statutes, using the budgetary accounting basis prescribed by the Wisconsin Department of Public Instruction. The legally adopted budget and budgetary expenditure control is exercised at the two­digit subfunction level for the general fund and at the one-digit subfunction level for all other funds.

The District follows these procedures in establishing the budgetary data reflected in the financial statements.

Based upon requests from District staff, District administration recommends budget proposals to the School Board.

The School Board prepares a proposed budget including proposed expenditures and the means of financing them for the July 1 through June 30 fiscal year.

A public notice is published containing a summary of the budget and identifying the time and place where a public hearing will be held on the proposed budget.

Pursuant to the public budget hearing, the School Board may make alterations to the proposed budget.

Once the School Board (following the public hearing) adopis the budget, no changes may be made in the amount of tax to be levied or in the amount of the various appropriations and the purposes of such appropriations unless authorized by a 213 vote of the Board.

Appropriations lapse at year end unless authorized as a carryover by the School Board.

GASB 34 requires that both the original adopted budget and final budget, as amended by School Board resolution, be presented in the accompanying financial statements. If the School Board did not amend the budget for any fund during the year, only one budget amount is presented.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect reported amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates.

Page 32

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 2. Explanation of Differences Between Governmental Fund Statements and Government-Wide Statements

Due to the differences in the measurement focus and basis of accounting used on the governmental fund statements and government-wide statements certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items.

Explanation of Differences between Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances and the Statement of Activities

Differences between the governmental funds statement of revenues, expenditures and changes in fund balance and the statement of activities fall into one of three broad categories. The amounts shown in the columns on the following page represent:

a. Long-Term Revenues/Expenses

Long-term revenue differences arise because governmental funds report revenues only when they are considered "available", whereas the statement of activities reports revenues when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis whereas the accrual basis of accounting is used on the statement of activities. The long-term expenses reported on the following page recognize the change in other post-employment benefits and vested sick pay benefits.

b. Capital Related Items

Capital related differences include (1) the difference between proceeds from the sale of capital assets reported on governmental fund statements and the gain or loss on the sale of assets as reported on the statement of activities and (2) the difference between recording an expenditure for the purchase of capital assets in the governmental fund statements and capitalization and recording depreciation expense on those assets as recorded in the statement of activities and (3) recording Qonated capital assets in the statement of activities but not in the governmental fund statements.

c. Long-Term Debt Transactions

Long-term debt transaction differences occur because long-term debt proceeds, if any, are . recorded as revenue and both interest and principal payments are recorded as expenditures in the governmental fund statements. In the statement of activities, long-term debt proceeds are recorded as a liability, interest is recorded as an expense when incurred and principal payments are recorded as a reduction of liabilities.

Page 33

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30,2010

Note 2. Explanation of Differences Between Governmental Fund Statements and Government-Wide Statements - Continued

(a) (b) (c) Total Long-term Capital Long·term Statement of

Governmental RevenuesJ Related Debt Activities ~ Expenses Items Transactions Total

Revenues and other sources

Property taxes $ 5,310,199 $ 5,310,199

Other local sources Charges for services 137,772 137,772 Operating grants and contributions 5,803 1,721 7,524 Interest income 3,688 3,688 Miscellaneous 1,542 1,542

Interdistrict sources Charges for services 192,266 192,266 Operating grants and contributions 4,896 4,896

Intermediate sources Charges for services 2,000 2,000 Operating grants and contributions 8,507 8.507

State sources General state aid 5,506,945 5,506,945 Payment in lieu of taxes 6,594 6,594 Operating grants and contributions 335,651 335,651

Federal sources General federal aid 308,660 308,660 Operating grants and contributions 324,842 324,842

Other sources Miscellaneous ~ ~

Total revenues ~ ~ L....1..ill. ~ $12171 338

Ex~nditures/ex~nses

Regular instruction $ 5,106,576 $ 302,187 35,490 $ $ 5,444,253 Vocational instruction 422,753 26,408 13,162 462,323 ~pecia[ instruction 964,719 58,325 2,589 1,025,633 Other instruction 485,378 27,843 32,695 545,916 Pupil services 318,269 18,915 (1,773) 335.411 Instructional staff services 334,972 13,880 3,126 351,978 General administration services 316.915 15,483 662 333,060 Building administration services 571,344 36,267 1,629 609,240 Business services 170,020 8,667 104 178,791 Operations, maintenance and remodeling 1,452,189 23,442 (303,517) 1,172,114 Pupil transportation 425,028 1,584 426,612 Cantral services 87,220 1,514 292 89,026 Insurance 110,534 110,534 Community service 58,758 2,894 150 61,802 Principal, interest and related expense 1,328,086 (1,063,781) 264,305 other support services 69.716 (8,975) 60,741 Depreciation ~ unallocated 425351 425351

Total expenditures/expenses $12222477 $ 526850 $ 211544 $(1 063781) $11897090

Net change for year ~ ~ ~ ~ ~

Page 34

Note 3. Cash and Investments

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

The debt service fund accounts for its transactions through separate and distinct bank and investment accounts. In addition, the fiduciary funds use separate and distinct accounts. All other funds share in common bank and investment accounts.

For cash and inveslments shown below, the market value at the balance sheet date is substantially the same as the carrying value. The difference between the bank balance of $254,567 and the carrying amount of $97,432 is due to outstanding checks and/or deposits in transit. At various times during the year, the District's deposits may have been higher than the June 30, 2010 balance detailed below. This means that the District's risk and exposure could be higher at these times. .

The Districfs cash and investments at June 30, 2010are summarized as follows:

Cash on deposit with financial institutions

Investment in Wisconsin Local Govemment Investment Pool

Petty cash

Total cash and investments

Cash and investments held by fiduciary funds - private purpose trust

Cash and investments held by fiduciary funds - agency funds

Cash and investments reported on the statement of net assets

The District had no significant type of investments during the year not included above.

$ 97,432

1,280,530

505

$1,378,467

347

56274

$1321846

Deposits in banks are insured by the Federal Deposit Insurance Corporation (FDIC) in the amount of $250,000 for interest bearing accounts and unlimited coverage for noninterest bearing accounts at . partiCipating FDIC insured institutions. In addition, the State of Wisconsin has a State Guarantee Fund which provides a maximum of $400,000 per entity above the amount provided by the FDIC. However, due to the relatively small size of the Guarantee Fund in relation to the total coverage, total recovery of losses may not be available.

The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF) and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At June 30, 2010, the fair value of the LGIP's assets were substantially equal to the District's share as reported above.

The primary investment objective of the LGIP is to provide a safe investment for local governments. Although no investment is guaranteed, the LGIP emphasizes diversifying the investment instruments as a means of limiting the risk of possible losses. In addition to the generally safe investment instruments utilized in the pool, Federal Deposit Insurance Corporation coverage for Certificates of Deposit generally applies to the proportionate public unit share of accounts, thereby reducing the uninsured portion of the deposit. The LGIP has been designated a public depository by the District so the State of Wisconsin's Public Deposit Guarantee Fund created under Chapter 34 of the Wisconsin Statutes protects the District against any losses of public funds up to $400,000 subject to the total amount of the Guarantee Fund available.

Page 35

Note 4. Capital Assets

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Capital assei balances and activity for the year ended June 30, 2010 were as follows:

Governmental activities Capital assets Land, not being depreciated Site improvements Buildings and building improvements Fumiture and equipment Construction in progress, not being depreciated

Total capital assets

Less accumulated depreciation for Site improvements Buildings and building improvements Fumiture and equipment

Total accumulated depreciation

Governmental activities capital assets, net of accumulated depreciation

Business-type activities Capital assets Furniture and eqUipment

Less accumulated depreciation

Business-type activities capital assets, net of accumulated depreciation

Balances· July 1 2009

$ 681,516 1,404,005

18,541,697 3,124,417

~23 751635

$ 653,809 7,600,083 2449683

~10 703 575

$13048060

$ 284,062

211138

~ Z29:M

Balances Deletions June 30 2010

$ $ $ 681,516 1,404,005

18,541,697 142,955 112,517 3,154,855 213639 213639 ---

$ 356594 $112517 123995712

$ 65,203 $ $ 719,012 376,448 7,976,531 124766 112517 2461932

$ 566417 $112517 ~11157 475

~ $ - $12838237

$ $ 284,062

12322 223460 ---

~ ~ $ 6Q6Q2

The furniture and equipment category listed in the governmental activities includes the gross amount of $134,941 for computers and software purchased under a capital lease. Accumulated depreciation on the capital lease totals $86,528 as of June 30, 2010.

Page 36

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 4. Capital Assets - Continued

Depreciation expense was charged to governmental functions as follows:

Regular instruction Vocational instruction Special instruction Other instruction Pupil services Instructional staff services General administration services Building administration services Business services Operations, maintenance and remodeling Pupil transportation Central services Community services Depreciation-unallocated

Total depreciation for governmental activities

Note 5: Long-Term Liabilities

$ 39,274 13,162 2,589

45,190 421

3,126 662

1,629 104

19,564 1,584

13,611 150

425351

Long-term liability balances and activity for the year ended June 30, 2010 were as follows:

Balances Balances Ivlli! July 1 2009 Additions Reductions June 30 2010

Bonds~ $6,815,000 $ $ 910,000 $5,905,000 State trust fund loan" 498,078 115,395 382,683 Capital lease ~ ---~

Subtotal $7,337,494 $ $1,049,811 $6,287,683

Other post-employment benefits (1) 387,147 16,777 370,370 Vested sick pay ---- 156480 ---- 156480

Total ~ ~ ~ ~

Amounts DueWilhin One Year

$645,000 123,207

$768,207

---

~

(1) Balance as of July 1,2009 has been restated to comply with GASB Statement No. 45. See note 16.

Bond and the State trust fund loan payments are made by the debt service fund. Other post­employment benefits and vested sick pay will be paid by various funds.

The above long-term liabilities are reported in the governmental activities on the government-wide statements. The District does not currently have any long-term liabilities in its business-type activities.

Page 37

Cedar Grove-Belgium Area School District Noles to the Basic Financial Statements

Year ended June 30,2010

Note 5. Long-Term Liabilities - Continued

Total interest paid and accrued during the year on long-term liabilities was as follows:

Bonds State trust fund loan Capital lease

Total

General Obligation Debt

Paid $255,071

21,206 ~

~

Accrued $247,091

16,229

---

~

All general obligation debt is secured by the full faith and credit and unlimited taxing powers of the District, including business-type activity debt, if any. General obligation debt at June 30, 2010 is comprised of the following individual issues:

Description Refunding bonds payable State trust fund loan

Total general obligation debt

General Obligation Debt Limit Calculation

Issue Dates

11-01-04 12-26-08

Interest Rates (%1 3.5-4.0%

3.5%

Dates of Maturity 4-01-18 3-15-13

Balance June 30, 2010

$5,905,000 382683

$6287683

The 2009 equalized valuation of the District as certified by the Wisconsin Department of Revenue is $639,726,755. The legal debt limit and margin of indebtedness as of June 30, 2010 in accordance with Section 67.03 of the Wisconsin Statutes follows:

Legal debt Limit (10% of $639,726,755) Deduct long-tenm debt* applicable to debt margin Margin of indebtedness

Maturities of Long-Term Liabilities

$63,972,675 6287683

$57684992

Aggregate cash flow requirements for the retirement of long-term principal and interest as of June 30, 2010 are as follows:

Year ended June 30 2011 2012 2013 2014 2015

2015-2018

Totals

Governmental Activities

Principal $ 768,207

797,494 821,982 725,000 750,000

2425000

$6287683

Interest $ 236,546

209,684 180,072 149,578 122,390 193430

$1091 700

Total $1,004,753

1,007,178 1,002,054

874,578 872,390

2,618,430

$7379383

Page 38

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 6. Interfund Balances and Activity

Interfund receivable and payable balances in the fund financial statements as of June 30, 2010 are as follows:

Receivable Fund Payable Fund Amount

General fund Special education fund $ 48,014 General fund Capital Projects fu nd 130,513

Total $178527

In the statement of net assets, amounts reported in fund balance sheets as interfund balances have been eliminaled within the governmental type activities column.

During the year the general fund transferred $689,776 to the special education fund to cover any costs not covered by direct revenues of the fund. The special education fund payable balance will be repaid using grant funds receivable from other governments. The capital projects fund payable balance will be repaid using proceeds from long-tenm borrowing for the District's referendum project.

Note 7. Fund Balances

On June 30, 2010, the capital projects fund had a fund balance deficit amount of $213,639 due to preliminary costs of the referendum building project ahead of the borrowing proceeds.

Unreserved fund balance has been designated for future cash flow purposes.

Note 8. Employee Retirement Plans

All eligible District employees participate in the Wisconsin Retirement System (WRS), a cost-sharing, multiple-employer, defined benefit, public employee retirement system. All penmanent employees expected to work at least 600 hours a year (440 hours for teachers and 440 hours for educational support staff effective July 1, 2009) are eligible to participate in the WRS. Covered employees in the general/teacher/educational support personnel category are required by statute to contribute 5.9% of their salary (3.0% for executives and elected officials, 5.0% for protective occupations with social security, and 3.2% for protective·occupations without social security) to the plan. Employers may make these contributions to the plan on behalf of employees. Employers are required to contribute an actuarially determined amount necessary to fund the remaining projected cost of future benefits.

The payroll for District employees covered by the WRS for the year ended December 31, 2009 was $5,497,768, the employe~s total payroll was $5,890,913. The total required contribution for the year ended December 31, 2009 was $571 ,768, which consisted of $247,400 or 4.5% of payroll from the employer and $324,368 or 5.9% of payroll from employees. Total contributions for the years ended December 31, 2008 and 2007 were $550,752 and $518,126, respectively, equal to the required contributions for each year.

Page 39

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 8. Employee Retirement Plans - Continued

Employees who retire at or after age 65 (62 for elected officials and 54 for protective occupation employees with less than 25 years of service, 53 for protective occupation employees with more than 25 years of service) are entitled to receive a retirement benefit. Employees may retire at age 55 (50 for protective occupation employees) and receive actuarially reduced benefits. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service and (3) a formula factor. A final average earnings is the average of the employee's three highest years' earnings. Employees terminating covered employment and submitting application before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 are immediately vested.

The WRS also provides death and disability benefits for employees. Eligibility and the amount of all benefits are determined under Chapter 40 of the Wisconsin Statutes.

The WRS issues an annual financial report that may be obtained by writing to the Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931.

Note 9. Other Post-Employment Benefits

The Cedar Grove-Belgium Area School District administers a single-employer defined benefit health care benefit plan. The plan provides post-employment medical, dental and life insurance coverage to eligible retired employees and their eligible dependents or survivors pursuant through the Districfs group medical, dental and life plans, which covers both active and retired members. The authority to establish and amend benefit provisions is with the Board of Education. The Retiree Health Plan does not issue a publicly available financial report.

The contribution requirements of the District are established through collective bargaining agreements and may be amended only through negotiations between the District and the union or between the District and non-union employees. Eligibility for plan benefits based upon the July 1, 2009 actuarial valuation, the date of the latest actuarial valuation, is a minimum of five years and a maximum of twenty-five years of service. For each five years of service, the District will contribute 55% of one years insurance premium, frozen at the premium rate in effect upon retirement, up to a maximum of five years of contributions.

Plan membership consisted of the following eligible employees and retirees as of July 1,2009:

Retirees receiving benefits Active plan eligible members

Total

1 108

The District provides these contributions on a pay-as-you-go basis. Active plan members are not required to contribute towards these benefits. The contributions for retirees and beneficiaries have been funded on a pay-as-you-go basis. For the year ended June 30,2010; medical, dental arid life premium expenditures, on the pay-as-you-go basis, amounted to $8,975. The contribution of $16,777 noted in the section to follow is the value of these expenditures, based upon the pay-as-you-go amount of $8,975 plus the implicit rate subsidy amount of $7,802. As of June 30, 2010, the Board of Education had decided not to establish a trust for funding the other post employment benefit liability.

Page 40

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30,2010

Note 9. Other Post-Employment Benefits - Continued

The District's annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial accrued liability over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation:

Annual required contribution

Interest on net OPEB obligation

Adjustment to annual required contribution

Annual OPEB cost

Contributions made

Increase in net OPEB obligation

Net OPEB obligation - beginning of year

Net OPEB obligation - end of year

$387,147

$387,147

(16777)

$370,370

The three year history of the District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation are as follows:

Annual Percentage of OPEB AnnualOPEB NetOPEB

Fiscal Year Ended Cost Cost Contributed Obligation

06-30-08 nla nla nla 06-30-09 nla nla nla 06-30-10 $387,147 4.33% $370,370

The funded status of the plan as of the most recent actuarial valuation date, is as follows:

Actuarial valuation date

Actuarial value of assets

Actuarial accrued liability (AAL) projected unit credit

Unfunded AAL (UAAL)

Funded ratio

Covered payroll (annual payroll of active employees covered by the plan)

UAAL as a percentage of covered payroll

July 1, 2009

$

2726390

$2726390

0%

$5,408,320

50.41%

Page 41

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30,2010

Note 9. Other Post-Employment Benefits - Continued

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time related to the actuarial accrued liabilities for benefits.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation.

The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2009 actuarial valuation, the projected unit credit method was used. The actuarial assumptions included a 5% rate of return and annual medical premium cost trend rate of 10% reduced by decrements to an ultimate rate of 5%. These rates included a 4% inflation assumption. The actuarial valuation of assets was $-0- as of the date of the actuarial valuation. The plan's unfunded actuarial liability is being amortized using the open level dollar method. The remaining amortization period at June 30,2010 was thirty years.

Note 10. Operating Lease, As Leasee

The District, as leasee, leases four copiers for monthly minimum payments of $1 ,608. The lease expires May 2012. Rental expenditures totaled $24,546 for the year ended June 30, 2010. Minimum annual rentals are as follows:

Year ended June 30,

2011 2012

Total

$19,297 17,689

Page 42

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30,2010

Note 11. Excess of Actual Expenditures Over Budget in Individual Funds

The following functions/subfunctions had an excess of actual expenditures over budget for the year ended June 30, 2010.

Individual Fund/Function

General fund Regular instruction Building administration services Insurance Transfer to special education fund

Special education fund Regular instruction Vocational instruction Special instruction Pupil services Instructional staff services Operations, maintenance and remodeling Pupil transportation Central services Other support services

Capital projects fund Operations, maintenance and remodeling

Other governmental funds Special revenue trust

Other instruction Pupil transportation

Note 12. Commitments

Excess Expenditures

$148,410 7,293 3,534

78,666

29,918 3,443

16,813 60,284

8,287 52

15,532 26

33,747

213,639

4,570 208

The District has signed architectural and engineering contracts with a balance unpaid of $116,857 to start its $6 million referendum building renovation and remodeling project which will continue in the fiscal year ending June 30, 2011. The District also has signed an agreement with a general contractor for the anticipated $6 million referendum project.

Note 13. Subsequent Events

In July 2010, the District issued $2,700,000 of bond anticipation notes for its $6 million referendum building renovation and remodeling project. In November 2010, the District issued $2,700,000 of General Obligation Refunding Bonds to refinance the bond anticipation notes. The payoff for the refunded anticipation notes is scheduled to occur in February 2011.

Page 43

Cedar Grove-Belgium Area School District Notes to the Basic Financial Statements

Year ended June 30, 2010

Note 14, Limitation on School District Revenues

Wisconsin statutes limit the amount of revenues school districts may derive from general school aids and property taxes unless a higher amount is approved by a referendum, This limitation does not apply to revenues needed for the payment of any general obligation debt service (including refinanced debt) authorized by either of the following:

• A resolution of the School Board or by referendum prior to August 12,1993, • A referendum on or after August 12, 1993,

Note 15, Risk Management

The District is exposed to various risks of loss related to torts, theft of, damage to or destruction of assets, errors and omissions, workers compensation and health care of its employees, All of these risks are covered through the purchase of commercial insurance, with minimal deductibles, Settled claims have not exceeded the commercial coverage in any of the past three years, There were no significant reductions in coverage compared to the prior year,

Note 16, Restatement of Net Assets

In July 2004, the Governmental Accounting Standards Board (GAS B) issued Statement No, 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions, This statement establishes standards which requires state and local governments to measure and disclose the cost of other post-employment benefits (OPEB) on the accrual basis of accounting while employees are performing services for the District, During fiscal year ending June 30, 2010, the District implemented GASB Statement No, 45,

The District has restated its beginning net assets in the governmental activities in the government-wide financial statements to comply with GASB Statement No, 45, Prior to implementing GASB Statement No, 45 the District recorded a liability and expense for its other post-employment benefits in the year an eligible employee retired and this existing liability has been removed and brought to zero,

Below is the related restatement as of June 30, 2009:

Net assets - June 30, 2009 (as previously reported)

Remove existing liability for other post-employment benefits

Net assets - June 30, 2009 (restated)

Note 17, New GASB Accounting Standard

Governmental Activities

$8,241,407

35900

$8277 307

In March 2009, the Governmental Accounting Standards Board (GAS B) released Statement No, 54, Fund Balance Reporting and Governmental Fund Type Definitions, This Statement establishes fund balance classifications that comprise a hierarchy primarily based on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds, This Statement also provides guidance for classifying stabilization amounts on the face of the balance sheet and requires disclosure of certain information about stabilization arrangements in the notes to the financial statements, The District will implement this Statement beginning with fiscal year ending June 30, 2011,

Page 44

Supplementary Information

Cedar Grove-Belgium Area School District Comparative Balance Sheets

General Fund

Assets Cash and investments Taxes receivable Accounts receivable Due from other funds Due from other governments Prepaid expense

Total assets

Liabilities and fund balance Liabilities

Accounts payable Accrued salaries and related items Deferred revenue

Total liabilities

Fund balance Reserved Unreserved - Designated for cash flows

Total fund balance

Total liabilities and fund balance

June 30,2010 and 2009

2010 2009

$ 880,944 $ 944,382 1,610,237 1,491,527

860 1,835 178,527 166,942 139,799 61,705 207

ili2 aaa 2j5 $2577 750

$ 24,393 $ 5,130 474,010 320,813

2,303

:Ii 500706 $ 325,943

$ 61,705 $ 207 2336804 2,251600

:li2398,509 $2251807

$2 899 215 $2577750

Page 45

Cedar Grove-Belgium Area School District Comparative Statements of Revenues, Expenditures and Changes in Fund Balance

General Fund Years ended June 30, 2010 and 2009

2010 Revenues

Property taxes 3,975,155 Other local sources 104,564 Interdistrict sources 139,589 Intermediate sources 2,514 State sources 5,588,230 Federal sources 370,242 Other sources 20252

T oIal revenues $10200546

Expenditures Instruction

Regular instruction $ 5,076,658 Vocational instruction 419,310 Special instruction 6 other instruction 480808

Total instruction $ 5976782

Support services Pupil services $ 199,994 Instructional staff services 221,116 General administration services 316,915 Building administration services 571,344 Business services 170,020 Operations, maintenance and remodeling 1,238,498 Pupil transportation 409,288 Central services 87,194 Insurance 110,534 Principal, interest and related expense 26,414 Other support services 35969

Total support services $ 3387286

Total expenditures $ 9364 068

Excess of revenues over expenditures $ 836478

other financing sources (uses) Transfer to special education fund $ (689,776) Compensation for fixed assets

Net other financing sources (uses) $ (689776)

Net change in fund balance $ 146,702

Fund balance - Beginning of year 2251807

Fund balance - End of year $ 2398509

2009

$3,932,178 113,847 85,317

509 4,929,161

671,831 -----.1Mll

$9,749270

$4,775,337 444,705

2,619 451605

$5674266

$ 189,220 257,081 281,887 540,371 163,277

1,246,140 446,310 110,486 104,919 62,518 ~

$3455010

$9129276

$ 619994

$ (613,941) ------.1Q§

$ (613 836)

$ 6,158

2245649

~

Page 46

Assets Cash and investments Due from other governments

Total assets

Liabilities and fund balance Liabilities

Cedar Grove-Belgium Area School District Comparative Balance Sheets

Special Education Fund June 30, 2010 and 2009

Accrued salaries and related items Due to other funds Due to other governments

Tolalliabilities

Fund balance Reserved

Tolalliabilities and fund balance

2010 2009

$ $ 24,919 148599 94579

~ ~

$ 51,507 $ 92,685 48,014 49078 26813

$148,599 $119,498

--- ---$148599 $119498

Page 47

Cedar Grove-Belgium Area School District Comparative Statements of Revenues, Expenditures and Changes in Fund Balance

Special Education Fund Years ended June 30, 2010 and 2009

2010

Revenues Interdistrict sources $ 57,573 Intermediate sources 7,993 Slate sources 260,960 Federal sources 263,260 Other sources

Tolal revenues $ 589786

Expenditures Instruction

Regular instruction $ 29,918 Vocational instruction 3,443 Special instruction 964713

Tolal instruction $ 998074

Support services Pupil services $ 118,275 Instructional staff services 113,856 Operation, maintenance and remodeling 52 Pupil transportation 15,532 Central services 26 Other support services 33,747

Total support services $ 281,488

Tolal expenditures $1279562

Excess (deficiency) of revenues over expenditures $ (689,776)

Other financing sources Transfer from general fund 689776

Net change in fund balance $

Fund balance - Beginning of year

Fund balance - End of year $

2009

$ 110,699 7,944

254,402 159,685

2486

$ 535216

$ 3,955 693

953332

$ 957980

$ 76,370 105,852

109 1,500

7346

$ 191,177

§1,149157

$ (613,941)

613941

$

$

Page 48

Assets Cash and investments

Liabilities and fund balance Fund balance

Reserved

Cedar Grove-Belgium Area School District Combining Comparative Balance Sheets

Debt Service Fund June 30, 2010 and 2009

Referendum Debt Non-Referendum Debt 2010 2009 2010 2009

$346,341 $345.454 $ $

$346341 ~345 ~5~ $ $

Total Debt Service 2010 2009

$346341 $345454

~3~6 3~1 ~345 454

Page 49

Revenues Property taxes Other local sources

Total revenues

Expenditures Support services

Cedar Grove-Belgium Area School District Combining Comparative Statements of Revenues, Expenditures and Changes in Fund Balance

Debt Service Fund Years ended June 30, 2010 and 2009

Referendum Debt Non-Referendum Debt Total Debt Service 2010 2009 2010 2009 2010 2009

$1,165,071 $1,162,222 $136,601 $ $1,301,672 $1,162,222 887 5.303 887 5,303

$1.165,958 $1,167.525 $136,601 $ $1 ,302,559 $1 ,167,525

Principal, interest and related expense Princjpal $ 910,000 $ 880,000 $115,395 $ $1,025,395 $ 880,000 Interest 255.071 282,221 21.206 276.277 282,221

Total expenditures $1 ,165.071 $1,162.221 $136.601 $ $1,301.672 $1 ,162,221

Net change in fund balance $ 887 $ 5,304 $ $ $ 887 $ 5,304

Fund balance - Beginning of year 345,454 340.150 345,454 340.150

Fund balance - End of year $ 346 3~J $ 345454 $ $ $ 346341 $ 345454

Page 50

Assets Cash and investments

Liabilities and fund balance Liabilities

Accounts payable Due to other funds

Total liabilities

Fund balance

Cedar Grove-Belgium Area School District Comparative Balance Sheets

Capital Projects Fund June 30, 2010 and 2009

Total liabilities and fund balance

2010 2009

$ - $ -

$ 83,126 $ 130,513 ---

$ 213,639 $

(213,639)

$ - $ -

Page 51

Cedar Grove-Belgium Area School District Comparative Statements of Revenues, Expenditures and Changes in Fund Balance

Capital Projects Fund Years ended June 30, 2010 and 2009

2010

Revenues $

Expenditures Su pport services

Operations, maintenance and remodeling 213639

Excess (deficiency) of revenues over expenditures $(213,639)

Other financing sources Debt proceeds

Net change in fund balance $(213,639)

Fund balance - Beginning of year

Fund balance - End of year $(213639)

2009

$

498078

$(498,078)

498078

$

$ -

Page 52

Assets Cash and investments Accounts receivable Prepaid expense

Total assets

Liabilities and fund balances Liabilities Deferred revenue

Fund balances Reserved

Cedar Grove-Belgium Area School District Combining Comparative Balance Sheets

Other Governmental Funds June 30, 2010 and 2009

Special Community Revenue Service

Trust Fund

$1,025 $63,584 2,506

--$1025 ~

$ $10,780

1025 55310

Total liabilities and fund balances ~ ~

Total Other Governmental

2010 2009

$64,609 $51,569 2,506 ~

~ ~

$10,780 $10,225

56335 43,145

lli.11§, ~

Page 53

Cedar Grove-Belgium Area School District Combining Comparative Statements of Revenues, Expenditures and Changes in Fund Balances

Other Governmental Funds Years ended June 30, 2010 and 2009

Special Community Total Revenue Service Other Governmental

Trust Fund 2010 2009

Revenues Property taxes $ $33,372 $33,372 $35,000 Other local sources 5,803 37,551 43,354 41,888

Total revenues $5803 $70923 $76,726 $76888

Expenditures Instruction

other instruction $4570 ~ $ 4,570 ~

Support services Pupil tnansportation $ 208 $ $ 208 $ Community services 58,758 58,758 67332

Total support services Llllli $58758 $58966 $67332

Total expenditures ~ $58758 $63536 $67332

Net changes in fund balances $1,025 $12,165 $13,190 $ 9,556

Fund balances - Beginning of year -- 43,145 43,145 33589

Fund balances - End of year ~ ~ ~ ~

Page 54

Cedar Grove-Belgium Area School District Schedule of Changes in Assets and Liabilities - Student Organizations' Fund

Year ended June 30, 2010

Balance Balance July 1 2009 Receipts Disbursements June 30 2010

Assets Cash and investments

Liabilities Due to student organizations

Page 55

Actuarial Actuarial Valuation Value of

Date Assets

07-01-07 nla 07-01-08 nla 07-01-09 $-0

Cedar Grove-Belgium Area School District Schedule of Funding Progress for Other

Post-Employment Benefit Plans Year ended June 30, 2010

Actuarial Accrued Unfunded Liability AAL Funded (AALl (UAALl Ratio

nla nla nla nla nla nla

$2,726,390 $2,726,390 0%

UAALasa Percentage

Covered of Covered Payroll Pavroll

nla nla nla nla

$5,408,320 50.41%

Note: The District is required to present the above infotmation for the three most recent actuarial studies. The first study was performed as of July 1, 2009 and was reported on the financial statements ending June 30, 2010.

Page 56

Cedar Grove-Belgium Area School District Schedule of Expenditures of Federal Awards

Year ended June 30, 2010

Administering Agency Federal Accrued Accrued Pass-Through Agency Catalog Program or Receivable Grantor Grantor Receivable Award Description Number Award Amount ~ Reimbursements Expenditures June 30 2010

U.S. Department of Agriculture

Wisconsin Department of Public Instruction National School Lunch Program 10.555

July 1, 2008 - June 30, 2009 $ 60,042 $ 3,681 $ 3,681 $ July 1, 2009 - June 30, 2010 85,502 85,502 85,502

Food Donation 10.555 July 1,2009 - June 30, 2010 27,812 27812 27812

Single Audit Section Total U.S. Department of Agriculture UM1 $116995 $113314 L-.c

U.S. Departmel1t of Education

Wisconsin Department of Public Instruction Title I Grants to Local Educational Agencies 84,010

July 1,2008· June 30, 2009 17,006 $17,006 $ 17,006 July 1,2009 - June 30, 2010 17,443 17,443 17,443

Migrant Education - Basic State Grant 84.011 September 1, 2009 - June 30, 2010 7,000 7,000 7,000

Special Education - Grants to States 84.027 July 1, 2008 • June 30, 2009 188,609 22,383 22,383 July 1,2009· June 30, 2010 233,914 78,212 185,345 107,133

Special Education" Preschool Grants 84.173 July 1, 2008 - June 30, 2009 16,655 5,536 5,536 July 1,2009· June 30, 2010 16,609 4,208 11,064 6,856

Education Technology State Grants 84.318 July 1, 2008 " June 30, 2009 154 154 154 July 1,2009 - June 30, 2010 154 154 154

Improving Teacher Quality State Grants 84.367 July 1,2008 - June 30, 2009 38,055 24,603 24,603 July 1,2009 - June 30, 2010 38,125 36,509 36,509

Education Technology State Grants, Recovery Act 84.386 February 17, 2009 - June 30, 2011 226 226 226

Special Education - Grants to States, Recovery Act 84.391 February 17, 2009 - September 30, 2011 207,114 64,157 64,157

State Fiscal Stabilization Fund -Education State Grants, Recovery Act 84.394 July 1, 2009 - May 15, 2010 308,660 308,660 308,660

Plymouth Joint School District Career and Technical Education· Basic Grants to States 84.048 July 1, 2009 - June 30, 2010 500 495 495

Cooperative Educational Services Agency #7 Safe and Drug Free Schools 84.186

July 1,2009" June 30, 2010 514 ----.ill ~

Total U.S. Department of Education $69682 $525928 $631567 $175321

U.S. Department of Health and Human Services

School District of Sheboygan Falls Medical Assistance Program 93.778

July 1,2009 - June 3D, 2010 $ 2,694 $ 7,483

Cooperative Agreements to Support Comprehensive School Health Programs 93.938

July 1,2009 - June 30, 2010 250 ~ ~

Total U.S. Department of Health and Human Services ~ ~ ~ L-.c

Total Federal Awards ~ ~ ~ = Page 57

Administering Agency Pass-Through Agency Award Description

WI Department of Public Instruction

Entitlement Programs

Major State Programs

Cedar Grove-Belgium Area School District Schedule of State Financial Assistance

Year ended June 30, 2010

Special Education and School Age Parents: Intemal District Program Transit of Aids Tuition Program Participant in Package Program at CESA #7 Less Other Districts Portion

Total Special Education and School Age Parents Program

Pupil Transportation General Equalization High Cost Special Education Aid Less Other Districts Portion

Total Major State Programs

Nonmajor State Programs

State School Lunch Common School Fund Library

Total Nonmajor Programs

Total WI Department of Public Instruction

WI Department of Natural Resources

Aid in lieu of taxes

WI Department of Revenue

Tax Exempt Computer Aid

WI Environmental Education Board

Focus on Energy

Total State Financial Assistance

State 1.0.

Number

255.101

255.107 255.201 255.210

255.102 255.103

370.506

• The delayed equalization aid payments as of June 30, 2010 and 2009 have been adjusted in this amount.

•• The delayed tax exempt computer aid as of June 30, 2010 and 2009 have been adjusted in this amount.

State Reimbursements

$ 252,908 4,401 7,993 ~

$ 250,112

35,899 5,503,957 •

8,052 ~

$5789968

$ 4,785 36225

~

$5830978

~ ..

Page 58

Note 1. Basis of Presentation

Cedar Grove-Belgium Area School District Notes to the Schedules of Expenditures of

Federal Awards and State Financial Assistance Year ended June 30, 2010

The accompanying schedules of expenditures of federal awards and state financial assistance include the federal and state grant activity of the Cedar Grove-Belgium Area School District and are presented on the modified accrual basis of accounting. The information in these schedules is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and State Single Audit Guidelines. Therefore, some amounts presented in these schedules may differ from amounts presented in, Dr used in the preparation of, the financial statements.

Note 2. Special Education and School Age Parents Program

The 2009-2010 eligible costs under the State Special Education Program are $923,354.

Note 3. Food Donations

Nonmonetary assistance is reported in the schedule of expenditures of federal awards at the fair market value of the commodities received.

Page 59

PAUL CORSON, C.P.A. GREG PETERSON, c.p.A.

DA VlD HAMANN, C.P.A.

CORSON, PETERSON & HAMANN S.C. CERTIFIED PUBLIC ACCOUNTANTS

2203 SOUTH MEMORIAL PLACE

SHEBOYGAN, WISCONSIN 53081

TELEPHONE

(920) 457-36+1 FAX

(920) 457-8148

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Education Cedar Grove-Belgium Area School District Cedar Grove, Wisconsin

We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Cedar Grove-Belgium Area School District as of and for the year ended June 30, 2010, which collectively comprise the Cedar Grove-Belgium Area School District's basic financial statements and have issued our report thereon dated November 30, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing standards, issued by the Comptroller General of the. United States.

Internal Control Over Financial Reporting

In planning and perfomning our audit, we considered the. Cedar Grove-Belgium Area School District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's intemal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant defiCiencies, or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in intemal control over financial reporting that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the nomnal course of performing their assigned functions to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of defiCiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses. Finding 1 0-01 and 10-02.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We did not identify any deficiencies in internal control over financial reporting other than the two material weaknesses reported in the preceding paragraph.

Compliance and Other Matlers

As part of obtaining reasonable assurance about whether the Cedar Grove-Belgium Area School District's financial statements are free of material misstatement, we perfomned tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We also reported to management of the District in a separate letler dated November 30, 2010 our comments and recommendations.

The District's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Cedar Grove-Belgium Area School District's response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of the School Board, management, Wisconsin Department of Public Instruction and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Sheboygan, Wisconsin November 30,2010

PAUL CORSON, C.P.A. GREG PETERSON, C.P.A.

DAVID HAMANN, C.P.A.

CORSON, PETERSON & HAMANN S.C. CERTIFIED PUBLIC ACCOUNTANTS

2203 SOUTH MEMORIAL PLACE

SHEBOYGAN, WISCONSIN 53081

TELEPHONE

(920) 457-3641

FAX (920) 457-8148

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND STATE SINGLE AUDIT GUIDELINES

To the Board of Education Cedar Grove-Belgium Area School District Cedar Grove, Wisconsin

Compliance

We have audited the Cedar Grove-Belgium Area School District's (the "District") compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the State Single Audit Guidelines that could have a direct and material effect on each of the District's major federal and state programs for the year ended June 3D, 2010. The District's major federal and state programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to e.ach of its major federal and state programs is the responsibility of the District's management. Our responsibility is to express an opinion on the District's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the State Single Audit Guidelines. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal or state programs occurred. An audit includes examining, on a test basis, evidence about the Cedar Grove-Belgium Area School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the District's compliance with those requirements.

In our opinion, the Cedar Grove-Belgium Area School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal and state programs for the year ended June 3D, 2010.

Intemal Control Over Compliance

Management of Cedar Grove-Belgium Area School District is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal and state programs. In planning and performing our audit, we considered the District's internal control over compliance with requirements that could have a direct and material effect on a major federal or state program to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Cedar Grove-Belgium Area School District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a fe.deral or state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal or state program will not be prevented, or detected and corrected, on a timely basis.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

This report is intended solely for thE;! information and use of the School Board, management, the Wisconsin Department of Public Instruction and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

~/!~..;''rf~ $,C,

Sheboygan, Wisconsin November 30, 2010

Summarv of Audit Results

Financial Statements

Type of auditor's report issued:

Cedar Grove-Belgium Area School District Schedule of Findings and Questioned Costs

Year ended June 30; 2010

Unqualified

Internal control over financial reporting:

Material weaknesses identified? -LYes No

Significant deficiencies identified not considered to be material weaknesses? __ Yes ~ None reported

Noncompliance material to the financial statements? Yes~No

Federal Awards

Internal control over major programs:

Material weakness(es) identified? Yes ~No

Significant deficiencies identified that are not considered to be material weakness(es)? Yes ~ None reported

Type of auditor's report issued on compliance for rnajor programs:

Any audit findings disclosed that are required to be reported in accordance with Circular A-133 Section 510(a)?

Identification of major federal programs:

CFDANumber Name of Federal Program or Cluster

Unqualified

Yes

Special Education - Grants to States - IDEA, Part B Special Education - Preschool Grants - IDEA Preschool

~No

Special Education - Grants to States - IDEA, Part B, Recovery Act

84.027 84.173 84.391 84.394 State Fiscal Stabilization Funds (SFSF) - Education State Grants, Recovery Act

Dollar threshold used to distinguish between type A and type B programs

Auditee qualified as a low-risk auditee?

$300,000

Yes ~No

Page 64

State Awards

Cedar Grove-Belgium Area School District Schedule of Findings and Questioned Costs

Year ended June 30, 2010

Intemal control over financial reporting:

Material weakness identified? Yes -LNo

Significant deficiencies identified not considered to be material weaknesses? __ Yes -L None reported

Type of auditor's report issued on compliance for major programs:

Identification of major state prog rams:

State ID Number Name of State Program

Unqualified

255.101 255.107 255.201 255.210

Special Education and School Age Parents Pupil Transportation General Equalization High Cost Special Education

Financial Statement Findings

10-01 Audit Journal Entries and Adjustments

Condition - During the audit, several adjusting journal entries were proposed to management, including journal entries material to the individual funds involved. Many of these entries are standard joumal entries to adjust balance sheet accounts to actual at year end. We recommend that the District record all necessary transactions to adjust balance sheet accounts before the audit and not rely on the auditor to make the journal entries during the audit.

COlT9ctive Action for finding 10-01 - We will record transactions and not rely on our auditor to make year end journal entries.

·10-02 Internal control over the preparation of the financial statements

Condition - District staff currently maintains financial records that generate fund financial statements. The Governmental Accounting Standards Board requires the District to report Government-Wide financial statements in addition to fund financial statements. Currently, the auditor prepares the necessary entries needed to convert fund balance statements to the Govemment-Wide financial statements and the District also relies on the auditor's knowledge of current accounting principles and regulatory requirements to draft the District's financial statements and related notes.

Corrective Action for Finding 10-02 - We have relied on the expertise of our auditors to provide us with financial statements prepared in accordance with Generally Accepted Accounting Principles. We feel that it is cost effective to have our auditors prepare our financial statements instead of hiring an independent party to prepare them. We understand that the auditor cannot be part of our intemal control process when it relates to reporting deficiencies, but management does work with the auditor in the preparation of the financial statements and also reviews it to accept responsibility for the final presentation.

Page 65

Financial Statement Findings

Cedar Grove-Belgium Area School District Summary of Prior Year Findings

Year ended June 30, 2010

09-01 Audit Adjustments - During the audit, several adjusting journal entries were proposed to management, one of those being a material journal entry to record the purchase of land with proceeds from a loan. We recommend that the District record all necessary transactions during the year as events occur and not rely on the auditor to record transactions with a journal entry during the audit.

This condition has not changed as of June 30, 2010.

09-02 Internal control over the prepanation of the financial statements - The Governmental Accounting Standards Board requires the District to report government-wide financial statements in addition to fund financial statements. Currently, the auditor prepares the necessary entries needed to convert fund balance statements to the government-wide financial statements and also drafts the financial statements and related notes.

This condition has not changed as of June 30, 2010.

State Award Findings

09-03 Pupil transportation aid, pupils transported - The District has a data base of students that includes mileage by the necessary mileage categories. This list is kept based on the pupils that indicated they wanted to ride the bus. During our audit, we requested the District to get a list from the bus company that documents which pupils rode the bus during the year. The District provided a reconciliation summary between the two lists and found sevenal discrepancies between them. We recommend that the District use the list provided by the bus company, which uses bus drivers documenting during the year that an individual pupil actually rode the bus, to compile the final list at the end of the year.

This condition has been corrected as of June 30, 2010.

09-04 Pupil transportation aid, mileage categories - Our sample testing of thirty pupils found that seven pupils were reported in an incorrect mileage category. All incorrect counts were reported in a higher category. We recommend that the District review all of its pupil mileage categories for accunacy.

This condition has been corrected as of June 30, 2010.

09-05 Pupil transportation aid, non-public category - Students attending non-public schools within 5 miles of the Districfs boundaries are required to be offered transportation either by busing or parent contracts. The District did not report these pupils on its annual pupil transportation report submitted to DPI.

This condition has been corrected as of June 30, 2010.

09-06 Pupil transportation aid, hazardous plan - The District did not report pupils in the 0-2 mile (hazardous) category on its annual pupil transportation report submitted to .DPI. However, based on our testing, we found that transportation is being provided to pupils less than 2 miles from school in· hazardous situations and in a few cases are being included in the 2-5 mile category in error. The District currently has a transportation policy (#4060) that discusses its rules for transporting pupils in hazardous situations, but the District has not submitted a plan for approval to DPI and therefore is not entitled to receive aid on these pupils.

This condition has been corrected as of June 30, 2010. Page 66

[THIS PAGE IS INTENTIONALLY BLANK]

APPENDIX B

FORM OF CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and

delivered by the Cedar Grove-Belgium Area School District, Ozaukee and Sheboygan Counties,

Wisconsin (the “Issuer”) in connection with the issuance of $3,300,000 General Obligation

Promissory Notes, dated March 29, 2011 (the “Securities”). The Securities are being issued

pursuant to a Resolution, dated March 9, 2011 (the “Resolution”). The Issuer covenants and

agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being

executed and delivered by the Issuer for the benefit of the holders and beneficial owners of the

Securities and in order to assist the Participating Underwriters in complying with S.E.C. Rule

15c2-12(b)(5).

Section 2. Definitions. In addition to the defined terms set forth in the Resolution,

which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined

in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and

as described in, Sections 3 and 4 of this Disclosure Certificate.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure

Certificate.

“National Repository” shall mean the Municipal Securities Rulemaking Board

electronically through the Electronic Municipal Market Access system, available at

www.emma.msrb.org, or such other website as may be determined from time to time by the

Securities and Exchange Commission.

“Obligated Person” shall mean any person, including an issuer of municipal securities,

who is either generally or through an enterprise, fund, or account of such person committed by

contract or other arrangement to support payment of all, or part of the obligations on the

Securities.

“Participating Underwriter” shall mean any of the original underwriters of the Securities

required to comply with the Rule in connection with the offering of the Securities.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange

Commission under the Securities Exchange Act of 1934, as the same may be amended from time

to time including any official interpretations thereof.

Section 3. Provision of Annual Reports.

(a) The Issuer shall, at least annually no later than April 1 of each year

commencing April 1, 2012, provide to the National Repository in an electronic format as

prescribed by the National Repository, an Annual Report which is consistent with the

requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as

2

a single document or as separate documents comprising a package, and may cross-reference

other information as provided in Section 4 of this Disclosure Certificate.

(b) Documents provided to the National Repository shall be accompanied by

identifying information as prescribed by the National Repository.

(c) The Issuer shall determine each year prior to providing the Annual Report

the electronic address of the National Repository.

Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or

incorporate by reference the following:

(a) The Issuer’s audited financial statements. The financial statements will be

prepared in accordance with Generally Accepted Accounting Principles.

(b) Updates of the following sections of the final official statement:

(1) The District-Employment Relations

(2) Tax Levies, Rates and Collections

(3) Equalized Valuations

(4) Indebtedness of the District-Direct Indebtedness

Any or all of the items listed above may be incorporated by reference from documents,

including official statements of debt issues of the Issuer or related public entities, which have

been submitted to the National Repository or the Securities and Exchange Commission. If the

document incorporated by reference is a final official statement, it must be available from the

Municipal Securities Rulemaking Board. (Currently located at 1900 Duke Street, Suite 600,

Alexandria, VA 22314, (703) 797-6600.) The Issuer shall clearly identify each document so

incorporated by reference.

Section 5. Reporting of Significant Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any

of the following events to the extent applicable to the Securities:

(1) Principal and interest payment delinquencies;

(2) Non-payment related defaults, if material;

(3) Unscheduled draws on debt service reserves reflecting financial

difficulties;

(4) Unscheduled draws on credit enhancements reflecting financial

difficulties;

3

(5) Substitution of credit or liquidity providers, or their failure to

perform;

(6) Adverse tax opinions, the issuance by the Internal Revenue Service

of proposed or final determinations of taxability, Notices of

Proposed Issue (IRS Form 5701-TEB) or other material notices or

determinations with respect to the tax status of the Securities or

other material events affecting the tax status of the Securities;

(7) Modification to rights of holders of the Securities, if material;

(8) Bond calls, if material, and tender offers;

(9) Defeasances;

(10) Release, substitution, or sale of property securing repayment of the

Securities, if material;

(11) Rating changes;

(12) Bankruptcy, insolvency, receivership or similar event of the

Obligated Person;

(13) The consummation of a merger, consolidation, or acquisition

involving an Obligated Person or the sale of all or substantially all

of the assets of the Obligated Person, other than in the ordinary

course of business, the entry into a definitive agreement to

undertake such an action or the termination of a definitive

agreement relating to any such actions, other than pursuant to its

terms, if material; and

(14) Appointment of a successor or additional trustee or the change of

name of a trustee, if material.

(For the purposes of the event identified in subsection (a) (12), the event is considered to occur

when any of the following occur: the appointment of a receiver, fiscal agent or similar officer

for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other

proceeding under state or federal law in which a court or governmental authority has assumed

jurisdiction over substantially all of the assets or business of the Obligated Person, or if such

jurisdiction has been assumed by leaving the existing governing body and officials or officers in

possession but subject to the supervision and orders of a court or governmental authority, or the

entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or

governmental authority having supervision or jurisdiction over substantially all of the assets or

business of the Obligated Person.)

(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed

Event, the Issuer shall as soon as possible determine under applicable legal standards if such

event would constitute material information, within the meaning of the Rule, for holders or

4

beneficial owners of the Securities, provided, that any event under subsection (a) (1), (3), (4),

(5), (8) (tender offers only), (9), (11) or (12) will always be deemed to be material.

(c) If the Issuer determines that knowledge of the occurrence of a Listed

Event would be material, the Issuer shall, in a timely manner not in excess of ten business days

after the occurrence of the event, file a notice of such occurrence with the National Repository.

Notwithstanding the foregoing, notice of Listed Events described in subsections (a) (8) and (9)

need not be given under this subsection any earlier than the notice (if any) of the underlying

event is given to holders of affected Securities pursuant to the Resolution.

Section 6. Termination of Reporting Obligation. The Issuer’s obligations under this

Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in

full of all of the Securities.

Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a

dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate,

and may discharge any such agent, with or without appointing a successor dissemination agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure

Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this

Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion

of counsel expert in federal securities laws, to the effect that such amendment or waiver would

not, in and of itself, cause the undertakings herein to violate the Rule.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be

deemed to prevent the Issuer from disseminating any other information, using the means of

dissemination set forth in this Disclosure Certificate or any other means of communication, or

including any other information in any Annual Report or notice of occurrence of a Listed Event,

in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to

include any information in any Annual Report or notice of occurrence of a Listed Event in

addition to that which is specifically required by this Disclosure Certificate, the Issuer shall

have no obligation under this Agreement to update such information or include it in any future

Annual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the Issuer to comply with any provision

of this Disclosure Certificate any holder or beneficial owner of the Securities may take such

actions as may be necessary and appropriate, including seeking mandate or specific

performance by court order, to cause the Issuer to comply with its obligations under this

Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any

failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel

performance

5

Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of

the Issuer, the Participating Underwriters and holders and beneficial owners from time to time

of the Securities, and shall create no rights in any other person or entity.

Date: March 29, 2011

CEDAR GROVE-BELGIUM AREA SCHOOL

DISTRICT, OZAUKEE AND SHEBOYGAN

COUNTIES, WISCONSIN

By_______________________________________

Aileen Dahlke, Clerk

(SEAL)

6031832_2

APPENDIX C

FORM OF LEGAL OPINION

March 29, 2011

LEGAL OPINION

We have served as bond counsel with regard to:

$3,300,000

CEDAR GROVE-BELGIUM AREA SCHOOL DISTRICT

OZAUKEE AND SHEBOYGAN COUNTIES, WISCONSIN

GENERAL OBLIGATION PROMISSORY NOTES

DATED MARCH 29, 2011

We hereby certify that we have examined a transcript of proceedings of the Cedar Grove-

Belgium Area School District relative to the authorization, issuance and sale of the aforesaid

Notes. We have also examined the law and such other documents furnished to us as we deem

necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon the transcript of

proceedings and other certifications furnished to us without undertaking to verify the same by

independent investigation.

The Notes are numbered 1 and upward; are in the denomination of $5,000 or any integral

multiple thereof; bear interest at the rates set forth below; and mature serially on October 1, 2011

and on April 1, 2012 through April 1, 2020, in the principal amounts as follows:

Year Principal Amount Interest Rate

2011 $ 35,000 2.000%

2012 175,000 2.000

2013 195,000 2.000

2014 190,000 3.000

2015 195,000 3.000

2016 205,000 3.000

2017 210,000 3.000

2018 220,000 3.000

2019 1,095,000 3.000

2020 780,000 3.125

Interest is payable commencing on October 1, 2011 and semi-annually thereafter on April 1 and

October 1 of each year.

At the option of the District, the Notes maturing on April 1, 2019, and thereafter are

subject to redemption prior to maturity on April 1, 2018 or on any date thereafter. Said Notes are

Cedar Grove-Belgium Area School District

Legal Opinion

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redeemable as a whole or in part, from maturities selected by the District and within each

maturity by lot, at the principal amount thereof, plus accrued interest to the date of redemption.

We further certify that we have examined a sample of the Notes and find the same to be

in proper form.

We have not been engaged or undertaken to review the accuracy, completeness or

sufficiency of the Official Statement or other offering material relating to the Notes (except to

the extent, if any, stated in the Official Statement), and we express no opinion relating thereto

(excepting only the matters set forth as our opinion in the Official Statement).

Based on the foregoing, we are of the opinion, as of the date hereof and under existing

law that:

1. The Notes are valid and binding general obligations of the District.

2. All taxable property in the territory of the District is subject to ad valorem

taxation without limitation as to rate or amount to pay the Notes. The District is required by law

to include in its annual tax levy the principal and interest coming due on the Notes except to the

extent the necessary funds have been irrevocably deposited into the debt service fund account

established for the payment of the principal of and interest on the Notes.

3. The interest on the Notes is excluded from gross income for federal income tax

purposes and is not an item of tax preference for purposes of the federal alternative minimum tax

imposed on individuals and corporations; it should be noted, however, that for the purpose of

computing the alternative minimum tax imposed on corporations (as defined for federal income

tax purposes), such interest is taken into account in determining adjusted current earnings. The

opinions set forth in the preceding sentence are subject to the condition that the District comply

with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied

subsequent to the issuance of the Notes in order that interest thereon be, or continue to be,

excluded from gross income for federal income tax purposes. The District has covenanted to

comply with each such requirement. Failure to comply with certain of such requirements may

cause the inclusion of interest on the Notes in gross income for federal income tax purposes to be

retroactive to the date of issuance of the Notes. We express no opinion regarding other federal

tax consequences arising with respect to the Notes.

It is to be understood that the rights of the holders of the Notes and the enforceability

thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar

laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally

applicable and that enforcement of the Notes may also be subject to the exercise of judicial

discretion in appropriate cases.

GODFREY & KAHN, S.C.

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