DATED JANUARY 8, 2020 NEW ISSUE RATING Electronic Bidding ... · corporate and municipal debt...
Transcript of DATED JANUARY 8, 2020 NEW ISSUE RATING Electronic Bidding ... · corporate and municipal debt...
DATED JANUARY 8, 2020NEW ISSUE RATINGElectronic Bidding via Parity® Moody’s: " "Bank Interest Deduction EligibleBOOK-ENTRY-ONLY SYSTEM
In the opinion of Bond Counsel, under existing law (i) interest on the Bonds will be excludable from gross income of the holders thereof for purposes of federal taxation and (ii) interest onthe Bonds will not be a specific item of tax preference for purposes of calculating the alternative minium tax under the code,all subject to the qualifications described herein under the heading "TaxExemption." The Bonds and interest thereon are exempt from income taxation and ad valorem taxation by the Commonwealth of Kentucky and political subdivisions thereof (see "Tax Exemption" herein).
$305,000*UNION COUNTY SCHOOL DISTRICT FINANCE CORPORATION
SCHOOL BUILDING REVENUE BONDS,SERIES OF 2020
Dated: FEBRUARY 6, 2020 Due: as shown below
Interest on the Bonds is payable each August 1 and February 1, beginning August 1, 2020. The Bonds will mature as toprincipal on February 1, 2021, and each February 1 thereafter as shown below. The Bonds are being issued in Book-Entry-OnlyForm and will be available for purchase in principal amounts of $1,000 and integral multiples thereof.
Maturing Interest Reoffering Maturing Interest Reoffering
1-Feb Amount* Rate Yield CUSIP 1-Feb Amount* Rate Yield CUSIP
2021 $12,000 % % 2031 $15,000 % %
2022 $12,000 % % 2032 $16,000 % %
2023 $12,000 % % 2033 $16,000 % %
2024 $12,000 % % 2034 $16,000 % %
2025 $13,000 % % 2035 $17,000 % %
2026 $13,000 % % 2036 $18,000 % %
2027 $13,000 % % 2037 $18,000 % %
2028 $14,000 % % 2038 $19,000 % %
2029 $14,000 % % 2039 $20,000 % %
2030 $15,000 % % 2040 $20,000 % %
The Bonds are subject to redemption prior to their stated maturity as described herein.
Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to call the Bonds in wholeor in part for redemption on any date at par upon the total destruction by fire, lightning, windstorm or other hazard of any of thebuilding(s) constituting the Project(s) and apply casualty insurance proceeds to such purpose.
The Bonds constitute a limited indebtedness of the Union County School District Finance Corporation and are payablefrom and secured by a pledge of the gross income and revenues derived by leasing the Project on an annual renewable basis to theUnion County Board of Education.
The Union (Kentucky) County School District Finance Corporation will until January 16, 2020, at 11:30 A.M., E.S.T.,receive competitive bids for the Bonds at the office of the Executive Director of the Kentucky School Facilities ConstructionCommission, 700 Louisville Road, Carriage House, Frankfort, Kentucky 40601.
*As set forth in the "Official Terms and Conditions of Bond Sale," the principal amount of Bonds sold to thesuccessful bidder is subject to a Permitted Adjustment by increasing or decreasing the amount not to exceed $30,000.
PURCHASER'S OPTION: The Purchaser of the Bonds, within 24 hours of the sale, may specify to the Financial Advisorthat any Bonds may be combined immediately succeeding sequential maturities into a Term Bond(s), bearing a single rate ofinterest, with the maturities set forth above (or as may be adjusted as provided herein) being subject to mandatory redemption insuch maturities for such Term Bond(s).
The Bonds will be delivered utilizing the BOOK-ENTRY-ONLY-SYSTEM administered by The Depository TrustCompany.
The Corporation deems this preliminary Official Statement to be final for purposes of the Securities and ExchangeCommission Rule 15c2-12(b)(1), except for certain information on the cover page hereof which has been omitted in accordancewith such Rule and which will be supplied with the final Official Statement.
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PRELIMINARY OFFICIAL STATEMENT
UNION COUNTYBOARD OF EDUCATION
Jennifer Buckman, ChairpersonEvelyn Meacham, Vice-Chair
Drennan Cowan, MemberDonnie Gatten, MemberLaunyai Martin, Member
Patricia Sheffer, Superintendent/Secretary
UNION COUNTY (KENTUCKY) SCHOOL DISTRICTFINANCE CORPORATION
Jennifer Buckman, PresidentEvelyn Meacham, Vice-President
Drennan Cowan, MemberDonnie Gatten, MemberLaunyai Martin, Member
Patricia Sheffer, SecretaryAmy Morris, Treasurer
BOND COUNSEL
Steptoe & Johnson PLLCLouisville, Kentucky
FINANCIAL ADVISOR
Ross, Sinclaire & Associates, LLCLexington, Kentucky
PAYING AGENT AND REGISTRAR
Old National BankEvansville, Indiana
BOOK-ENTRY-ONLY-SYSTEM
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REGARDING USE OF THIS OFFICIAL STATEMENT
This Official Statement does not constitute an offering of any security other than the original offering ofthe Union County School District Finance Corporation School Building Revenue Bonds, Series of 2020, identifiedon the cover page hereof. No person has been authorized by the Corporation or the Board to give any informationor to make any representation other than that contained in the Official Statement, and if given or made such otherinformation or representation must not be relied upon as having been given or authorized. This Official Statementdoes not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Bondsby any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale.
The information and expressions of opinion herein are subject to change without notice, and neither thedelivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the Corporation or the Board since the date hereof.
Neither the Securities and Exchange Commission nor any other federal, state or other governmental entityor agency, except the Corporation will pass upon the accuracy or adequacy of this Official Statement or approvethe Bonds for sale.
The Official Statement includes the front cover page immediately preceding this page and all Appendiceshereto.
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TABLE OF CONTENTS Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Book-Entry-Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1The Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Kentucky School Facilities Construction Commission . . . . . . . . . . . . . . . . . . . . . 3Biennial Budget For Period Ending June 30, 2020 . . . . . . . . . . . . . . . . . . . . . . . . 4Outstanding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Registration, Payment and Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6The Lease; Pledge of Rental Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
State Intercept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Commission's Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6The Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Additional Parity Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Estimated Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Estimated Use of Bond Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8District Student Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8State Support of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Support Education Excellence in Kentucky (SEEK) . . . . . . . . . . . . . . . . . . . . 8Capital Outlay Allotment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Facilities Support Program of Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Local Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Homestead Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Limitation on Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Local Thirty Cents Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Additional 15% Not Subject to Recall. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Assessment Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Special Voted and Other Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Local Tax Rates, Property Assessments, and Revenue Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Overlapping Bond Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11SEEK Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12State Budgeting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Potential Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Continuing Disclosure; Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Tax Exemption; Bank Qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Original Issue Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Absence of Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Approval of Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15No Legal Opinion Expressed as to Certain Matters . . . . . . . . . . . . . . . . . . . . . . 15Bond Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Approval of Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Demographic and Economic Data. . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX AFinancial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX BOfficial Terms & Conditions of Bond Sale. . . . . . . . . . . . . . . . . . . APPENDIX COfficial Bid Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX D
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OFFICIAL STATEMENTRelating to the Issuance of
$305,000*
UNION COUNTY SCHOOL DISTRICT FINANCE CORPORATIONSCHOOL BUILDING REVENUE BONDS,
SERIES OF 2020
* Subject to Permitted Adjustment
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and Appendices hereto, is to setforth certain information pertaining to the Union County School District Finance Corporation (the "Corporation")School Building Revenue Bonds, Series of 2020 (the "Bonds").
The Bonds are being issued to finance district wide safety and security upgrades to include installationof a new communication and intercom system at Union County High School, Union County Vocational School,Union County Middle School, Uniontown Elementary School, Morgantown Elementary School and SturgisElementary School (the "Projects").
The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds willbe secured by a pledge of the rental income derived by the Corporation from leasing the Project to the UnionCounty Board of Education (the "Board") on a year to year basis (see "Security" herein).
All financial and other information presented in this Official Statement has been provided by the UnionCounty Board of Education from its records, except for information expressly attributed to other sources. Thepresentation of financial and other information is not intended, unless specifically stated, to indicate future orcontinuing trends in the financial position or other affairs of the Board. No representation is made that pastexperience, as is shown by financial and other information, will necessarily continue or be repeated in the future.
This Official Statement should be considered in its entirety, and no one subject discussed should beconsidered more or less important than any other by reason of its location in the text. Reference should be madeto laws, reports or other documents referred to in this Official Statement for more complete information regardingtheir contents.
Copies of the Bond Resolution authorizing the issuance of the Bonds, the Participation Agreement andthe Lease Agreement dated February 6, 2020, may be obtained at the office of Steptoe & Johnson PLLC, BondCounsel, 700 N. Hurstbourne Parkway, Ste. 115, Louisville, Kentucky 40222.
BOOK-ENTRY-ONLY-SYSTEM
The Bonds shall utilize the Book-Entry-Only System administered by The Depository Trust Company(“DTC”).
The following information about the Book-Entry only system applicable to the Bonds has been suppliedby DTC. Neither the Corporation nor the Paying Agent and Registrar makes any representations, warranties orguarantees with respect to its accuracy or completeness.
DTC will act as securities depository for the Bonds. The Securities will be issued as fully-registeredsecurities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may berequested by an authorized representative of DTC.
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DTC, the world's largest depository, is a limited-purpose trust company organized under the New YorkBanking Law, a "banking organization" within the meaning of the New York Banking Law, a member of theFederal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code,and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues,corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participantsof sales and other securities transactions in deposited securities, through electronic computerized book-entrytransfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement ofsecurities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of TheDepository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participantsof DTC and Members of the National Securities Clearing Corporation, Government Securities ClearingCorporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC,and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American StockExchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is alsoavailable to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, andclearing corporations that clear through or maintain a custodial relationship with a Direct Participant, eitherdirectly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rulesapplicable to its Participants are on file with the Securities and Exchange Commission. More information aboutDTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which willreceive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Ownerswill not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected toreceive written confirmations providing details of the transaction, as well as periodic statements of their holdings,from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfersof ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and IndirectParticipants acting on behalf of Beneficial Owners.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered inthe name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorizedrepresentative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or suchother DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actualBeneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whoseaccounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and IndirectParticipants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participantsto Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governedby arrangements among them, subject to any statutory or regulatory requirements as may be in effect from timeto time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of noticesof significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendmentsto the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holdingthe Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the Paying Agent and Registrar and requestthat copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC's practiceis to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bondsunless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTCmails an Omnibus Proxy to the Corporation as soon as possible after the record date. The Omnibus Proxy assignsCede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on therecord date (identified in a listing attached to the Omnibus Proxy).
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Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., orsuch other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit DirectParticipants' accounts upon DTC's receipt of funds and corresponding detail information from the Corporation orthe Paying Agent and Registrar, on payable date in accordance with their respective holdings shown on DTC'srecords. Payments by Participants to Beneficial Owners will be governed by standing instructions and customarypractices, as is the case with Bonds held for the accounts of customers in bearer form or registered in "street name"and will be the responsibility of such Participant and not of DTC or its nominee, the Paying Agent and Registraror the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee asmay be requested by an authorized representative of DTC) is the responsibility of the Corporation or the PayingAgent and Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct and IndirectParticipants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by givingreasonable notice the Corporation or the Paying Agent and Registrar. Under such circumstances, in the event thata successor depository is not obtained, Bond certificates are required to be printed and delivered. The Corporationmay decide to discontinue use of the system of book-entry transfers through DTC (or a successor securitiesdepository). In that event, Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's Book-Entry system has been obtained fromsources that the Corporation believes to be reliable but the Corporation takes no responsibility for the accuracythereof.
THE CORPORATION
The Corporation has been formed in accordance with the provisions of Sections 162.120 through 162.300and Section 162.385 of the Kentucky Revised Statutes ("KRS"), and KRS Chapter 273 and KRS 58.180, as anon-profit, non-stock corporation for the purpose of financing necessary school building facilities for and onbehalf of the Board. Under the provisions of existing Kentucky law, the Corporation is permitted to act as anagency and instrumentality of the Board for financing purposes and the legality of the financing plan to beimplemented by the Board herein referred to has been upheld by the Kentucky Court of Appeals (Supreme Court)in the case of White v. City of Middlesboro, Ky. 414 S.W.2d 569.
Any bonds, notes or other indebtedness issued or contracted by the Corporation shall, prior to the issuanceor incurrence thereon, be specifically approved by the Board. The members of the Board of Directors of theCorporation are the members of the Board. Their terms expire when they cease to hold the office and anysuccessor members of the Board are automatically members of the Corporation upon assuming their public offices.
KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION
The Commission is an independent corporate agency and instrumentality of the Commonwealth ofKentucky established pursuant to the provisions of Sections 157.611 through 157.640 of the Kentucky RevisedStatutes, as repealed, amended, and reenacted (the "Act") for the purpose of assisting local school districts inmeeting the school construction needs of the Commonwealth in a manner which will ensure an equitabledistribution of funds based upon unmet need.
Pursuant to the provisions of the Act, the Regulations of the Kentucky Board of Education and theCommission, the Commission has determined that the Board is eligible for participation from the Commission inmeeting the costs of construction of the Projects and has entered into a Participation Agreement with the Boardwhereunder the Commission agrees to pay an annual Agreed Participation equal to approximately $15,250 to beapplied to the annual debt service requirements for the Bonds herein identified each year until their retirement;provided, however, that the contractual commitment of the Commission to pay the annual Agreed Participationis limited to the biennial budget period of the Commonwealth, with the first such biennial period terminating onJune 30, 2020; the right is reserved in the Commission to terminate its commitment to pay the Agreed Participationafter the initial biennial period and every two years thereafter. The obligation of the Commission to makepayments of the Agreed Participation shall be automatically renewed each two years for a period of two yearsunless the Commission shall give notice of its intention not to participate not less than sixty days prior to the endof the biennium; however, by the execution of the Participation Agreement, the Commission has expressed itspresent intention to continue to pay the Agreed Participation in each successive biennial budget period until theretirement of all of the Bonds, but such execution does not obligate the Commission to do so.
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The General Assembly of the Commonwealth adopted the State's Budget for the biennium ending June30, 2020. Inter alia, the Budget provides $129,504 in FY 2018-19 and $128,672,400 in FY 2019-20 to pay debtservice on existing and future bond issues; $58,000,000 of the Commission's previous Offers of Assistance madeduring the last biennium; and authorizes $58,000,000 in additional Offers of Assistance for the current bienniumto be funded in the Budget for the biennium ending June 30, 2020.
The 1986, 1988, 1990, 1992, 1994, 1996, 1998, 2000, 2003, 2005, 2006, 2008, 2010, 2012, 2014, 2016and 2018 Regular Sessions of the Kentucky General Assembly appropriated funds to be used for debt service ofparticipating school districts. The appropriations for each biennium are shown in the following table:
Biennium Appropriation1986-88 $18,223,2001988-90 14,050,7001990-92 13,542,8001992-94 3,075,3001994-96 2,800,0001996-98 4,996,0001998-00 12,141,5002000-02 8,100,0002002-04 9,500,0002004-06 14,000,0002006-08 9,000,0002008-10 10,968,0002010-12 12,656,2002012-14 8,469,2002014-16 8,764,0002016-18 23,019,4002018-20 7,608,000
Total $180,914,300
In addition to the appropriations for new financings as shown, appropriations subsequent to that for 1986included additional funds to continue to meet the annual debt requirements for all bond issues involvingCommission participation issued in prior years.
BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2020
The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium endingJune 30, 2020 which was approved and signed by the Governor. Such budget was effective beginning July 1, 2018.
OUTSTANDING BONDS
The following table shows the outstanding Bonds of the Board by the original principal amount of eachissue, the current principal outstanding, the amount of the original principal scheduled to be paid with thecorresponding interest thereon by the Board or the School Facilities Construction Commission, the approximateinterest range; and, the final maturity date of the Bonds:
Current Principal Principal Approximate
Bond Original Principal Assigned to Assigned to Interest Rate Final
Series Principal Outstanding Board Commission Range Maturity
2011-REF $3,480,000 $1,020,000 $3,480,000 $0 2.750% - 3.000% 2022
2013-REF $2,440,000 $1,700,000 $1,884,627 $555,373 2.000% - 2.150% 2026
2014 $355,000 $270,000 $0 $355,000 3.700% 2034
2016 $1,045,000 $865,000 $0 $1,045,000 1.650% - 3.125% 2036
TOTALS: $7,320,000 $3,855,000 $5,364,627 $1,955,373
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AUTHORITY
The Board of Directors of the Corporation has adopted a Bond Resolution which authorized among otherthings:
i) the issuance of approximately $305,000 of Bonds subject to a permitted adjustment of $30,000;
ii) the advertisement for the public sale of the Bonds;
iii) the Official Terms and Conditions for the sale of the Bonds to the successful bidder; and,
iv) the President and Secretary of the Corporation to execute certain documents relative to the saleand delivery of the Bonds.
THE BONDS
General
The Bonds will be dated February 6, 2020, will bear interest from that date as described herein, payablesemi-annually on August 1 and February 1 of each year, commencing August 1, 2020, and will mature as toprincipal on February 1, 2021, and each February 1 thereafter in the years and in the principal amounts as set forthon the cover page of this Official Statement.
Registration, Payment and Transfer
The Bonds are to be issued in fully-registered form (both principal and interest). Old National Bank,Evansville, Indianan, the Bond Registrar and Paying Agent, shall remit interest on each semiannual due date toCede & Co., as the nominee of The Depository Trust Company. Please see Book-Entry-Only-System. Intereston the Bonds will be paid at rates to be established upon the basis of competitive bidding as hereinafter set forth,such interest to be payable on August 1 and February 1 of each year, beginning August 1, 2020 (Record Date is15th day of month preceding interest due date).
Redemption
The Bonds maturing on or after February 1, 2029, are subject to redemption at the option of theCorporation prior to their stated maturity on any date falling on or after February 1, 2028, in any order ofmaturities (less than all of a single maturity to be selected by lot),in whole or in part, upon notice of such priorredemption being given by the Paying Agent in accordance with DTC requirements not less than thirty (30) daysprior to the date of redemption, upon terms of the face amount, plus accrued interest, but without redemptionpremium.
RedemptionRedemption Date Price
February 1, 2028 and thereafter 100%
Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to callthe Bonds in whole or in part for redemption on any day at par upon the total destruction by fire, lightning,windstorm or other hazard of any of the building(s) constituting the Project(s) and apply casualty insuranceproceeds to such purpose.
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SECURITY
General
The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds arepayable as to both principal and interest solely from the income and revenues derived from the leasing of theProject financed from the Bond proceeds from the Corporation to the Board. The Bonds are secured by pledgesof revenues on and from the site of the Project; provided, however, said lien and pledge are on parity with a similarlien and pledge securing the Corporation’s School Building Revenue Bonds previously issued to improve certainof the building(s) in which the Project is located (the “Parity Bonds”).
The Lease; Pledge of Rental Revenues
The Board has leased the school Project securing the Bonds for an initial period from February 6, 2020,through June 30, 2020, with the option in the Board to renew said Lease from year to year for one year at a time,at annual rentals, sufficient in each year to enable the Corporation to pay, solely from the rental due under theLease, the principal and interest on all of the Bonds as same become due. The Lease provides further that so longas the Board exercises its annual renewal options, its rentals will be payable according to the terms and provisionsof the Lease until February 1, 2040, the final maturity date of the Bonds. Under the lease, the Corporation haspledged the rental revenue to the payment of the Bonds.
STATE INTERCEPT
Under the terms of the Lease and any renewal thereof, so long as the Bonds remain outstanding and inconformance with the intent and purpose of KRS 157.627(5) and KRS 160.160(5), in the event of a failure by theBoard to pay the rentals due under the Lease, and unless sufficient funds have been transmitted to the PayingAgent, or will be so transmitted, for paying said rentals when due, the Board has granted under the terms of theLease and Participation Agreement to the Corporation and the Commission the right to notify and request theKentucky Department of Education to withhold from the Board a sufficient portion of any undisbursed funds thenheld, set aside, or allocated to the Board and to request said Department or Commissioner of Education to transferthe required amount thereof to the Paying Agent for the payment of such rentals.
COMMISSION'S PARTICIPATION
The Commission has determined that the Board is eligible for an average annual participation equal toapproximately $15,250 from the Commission's appropriation by the Kentucky General Assembly which will beused to meet a portion of the debt service of the Bonds. The plan for financing the Project will require theCommission to pay one-hundred percent (100%) of the debt service of the Bonds.
The Participation Agreement to be entered into with the Board will be limited to the biennial budgetperiod of the Commonwealth of Kentucky, with the first such biennial period terminating on June 30, 2020. Theright is reserved in the Commission to terminate the commitment to pay the agreed participation every two yearsthereafter. The obligation of the Commission to make payments of the agreed participation shall be automaticallyrenewed each two years thereafter unless the Commission gives notice to the Board of its intention not toparticipate not less than sixty days prior to the end of the biennium. However, the Commission has expressed itsintention to continue to pay the agreed participation in successive biennial budget periods until the Bonds areretired, but the Commission is not required to do so.
THE PROJECTS
After payment of the Bond issuance costs, the Board plans to deposit the net Bond proceeds to finance district wide safety and security upgrades to include installation of a new communication and intercom system atUnion County High School, Union County Vocational School, Union County Middle School, UniontownElementary School, Morgantown Elementary School and Sturgis Elementary School (the "Projects").
The Board has reported construction bids have been let for the Projects and approval of the KentuckyDepartment of Education, Buildings and Grounds, to award the construction contract is expected prior to the saleand delivery of the Bonds.
Contractors for the Projects are required to furnish to the Board a one hundred percent completion bondto assure their performance of the construction contract.
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ADDITIONAL PARITY BONDS
The Corporation has reserved the right and privilege of issuing additional bonds from time to time payablefrom the income and revenues of said lands and school building Project and secured by the same pledges ofrevenues, but only if and to the extent the issuance of such additional parity bonds are in accordance with the plansand specifications approved by the Board, Commissioner of Education, and filed in the office of the Secretary ofthe Corporation.
ESTIMATED BOND DEBT SERVICE
The following table shows by fiscal year the current bond payments of the Board. The plan of financingprovides for the Board to pay 0% of the debt service of the Bonds.
Fiscal Current -----------Series 2020 Revenue Bonds (100% SFCC)---------- Total
Year Local Local
Ending Bond Principal Interest Total Bond
June 30 Payments Portion Portion Payment Payments
2021 $566,817 $12,000 $9,655 $21,655 $566,817
2022 $561,916 $12,000 $9,455 $21,455 $561,916
2023 $201,717 $12,000 $9,119 $21,119 $201,717
2024 $201,917 $12,000 $8,783 $20,783 $201,917
2025 $202,016 $13,000 $8,447 $21,447 $202,016
2026 $212,016 $13,000 $8,083 $21,083 $212,016
2027 $0 $13,000 $7,719 $20,719 $0
2028 $0 $14,000 $7,355 $21,355 $0
2029 $0 $14,000 $6,963 $20,963 $0
2030 $0 $15,000 $6,571 $21,571 $0
2031 $0 $15,000 $6,121 $21,121 $0
2032 $0 $16,000 $5,671 $21,671 $0
2033 $0 $16,000 $5,191 $21,191 $0
2034 $0 $16,000 $4,711 $20,711 $0
2035 $0 $17,000 $4,199 $21,199 $0
2036 $0 $18,000 $3,638 $21,638 $0
2037 $0 $18,000 $3,026 $21,026 $0
2038 $0 $19,000 $2,360 $21,360 $0
2039 $0 $20,000 $1,600 $21,600 $0
2040 $0 $20,000 $800 $20,800 $0
TOTALS: $1,946,399 $305,000 $119,467 $424,467 $1,946,399
Note: Numbers are rounded to the nearest $1.00.
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ESTIMATED USE OF BOND PROCEEDS
The table below shows the estimated sources of funds and uses of proceeds of the Bonds, other than anyportions thereof representing accrued interest:
Sources:
Par Amount of Bonds $305,000.00
Total Sources $305,000.00
Uses:
Deposit to Construction Fund $282,900.00 Underwriter's Discount (2%) 6,100.00 Cost of Issuance 16,000.00
Total Uses $305,000.00
DISTRICT STUDENT POPULATION
Selected school census and average daily attendance for the Union County School District is as follows:
Average Daily Average DailyYear Attendance Year Attendance
1989-90 2,743.7 2004-05 2,149.11990-91 2,761.4 2005-06 2,136.31991-92 2,753.5 2006-07 2,147.31992-93 2,761.8 2007-08 2,126.31993-94 2,760.8 2008-09 2,088.71994-95 2,659.1 2009-10 2,064.51995-96 2,590.0 2010-11 2,094.61996-97 2,551.7 2011-12 2,067.61997-98 2,473.1 2012-13 2,099.21998-99 2,473.1 2013-14 2,073.31999-00 2,242.0 2014-15 2,081.42000-01 2,242.0 2015-16 2,058.02001-02 2,167.3 2016-17 2,008.52002-03 2,161.0 2017-18 1,948.72003-04 2,148.5 2018-19 1,943.6
_____________Source: Kentucky State Department of Education.
STATE SUPPORT
Support Education Excellence in Kentucky (SEEK). In determining the cost of the program to SupportEducation Excellence in Kentucky (SEEK), the statewide guaranteed base funding level is computed by dividingthe amount appropriated by the prior year's statewide average daily attendance. The SEEK fund is a guaranteedamount of money per pupil in each school district of Kentucky. The current SEEK allotment is $3,866 per pupil. The $100 capital outlay allotment per each average daily attendance is included within the guaranteed amounts.Each district's base funding from the SEEK program is adjusted for the number of at-risk students, the number andtypes of exceptional children in the district, and cost of transporting students from and to school in the district.
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Capital Outlay Allotment. The per pupil capital outlay allotment for each district from the public schoolfund and from local sources shall be kept in a separate account and may be used by the district only for capitaloutlay projects approved by the State Department of Education. These funds shall be used for the followingcapital outlay purposes:
a. For direct payment of construction costs.b. For debt service on voted and funding bonds.c. For payment or lease-rental agreements under which the board will eventually acquire ownership
of the school plant.d. For retirement of any deficit resulting from over-expenditure for capital construction, if such
deficit resulted from certain declared emergencies.e. As a reserve fund for the above named purposes, to be carried forward in ensuing budgets.
The allotment for each school board of education in the Commonwealth for fiscal year 1978-79 was$1,800 per classroom unit. The 1979 Session of the Kentucky General Assembly approved increases in thisallotment in 1979-80 to $1,900 per classroom unit. This rate remained unchanged in 1980-81. The 1981 Sessionof the Kentucky General Assembly decreased the allotment per classroom to $1,800 and this allotment rate didnot change from the 1981-82 rate, until the 1990-91 school year. Beginning with 1990-91, the Capital Outlayallotment for each district is based on $100 per average daily attendance.
The following table shows the computation of the capital outlay allotment for the Union County SchoolDistrict for certain preceding school years. Beginning 1990-91, the allotment is based on average daily attendanceas required by law.
Capital CapitalOutlay Outlay
Year Allotment Year Allotment
1990-91 276,140.0 2005-06 213,630.01991-92 275,350.0 2006-07 214,730.01992-93 276,180.0 2007-08 212,630.01993-94 276,080.0 2008-09 208,867.01994-95 265,910.0 2009-10 206,448.01995-96 259,000.0 2010-11 209,457.01996-97 255,170.0 2011-12 206,762.01997-98 247,310.0 2012-13 209,923.01998-99 247,310.0 2013-14 207,325.01999-00 224,200.0 2014-15 208,136.02000-01 224,200.0 2015-16 205,804.02001-02 216,730.0 2016-17 200,850.02002-03 216,100.0 2017-18 194,870.02003-04 214,850.0 2018-19 194,360.02004-05 214,910.0
If the school district has no capital outlay needs, upon approval from the State, the funds can be used forschool plant maintenance, repair, insurance on buildings, replacement of equipment, purchase of school buses andpurchase of modern technological equipment for educational purposes. If any district has a special levy for capitaloutlay or debt service that is equal to the capital outlay allotment or a proportionate fraction thereof, and spendsthe proceeds of the levy for eligible purposes, the State may authorize the district to use all or a proportionatefraction of its capital outlay allotment for current expenses (school districts which use capital outlay allotmentsto meet current expenses are not eligible to participate in the School Facilities Construction Commission funds).
Facilities Support Program of Kentucky. School districts may be eligible to participate in the FacilitiesSupport Program of Kentucky (FSPK), subject to the following requirements:
1) The district must have unmet needs as set forth and approved by the State Department ofEducation in a School Facilities Plan;
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2) The district must commit to establish an equivalent tax rate of at least 5 cents, in addition to the30 cents minimum current equivalent tax rate; and,
3) The new revenues generated by the 5 cent addition, must be placed in a restricted account forschool building construction bonding.
LOCAL SUPPORT
Homestead Exemption. Section 170 of the Kentucky Constitution was amended at the General Electionheld November 2, 1971, to exempt from property taxes $6,500 of value of single unit residential property oftaxpayers 65 years of age or older. The 1972 General Assembly amended KRS Chapter 132 to permit countiesand school districts to adjust their local tax revenues lost through the application of this Homestead Exemption. The "Single Unit" qualification has been enlarged to subsequent sessions of the General Assembly to provide thatsuch exemption shall apply to such property maintained as the permanent resident of the owner and the dollaramount has been construed to mean $6,500 in terms of the purchasing power of the dollar in 1972. Every two yearsthereafter, if the cost of living index of the U.S. Department of Labor has changed as much as 1%, the maximumexemption shall be adjusted accordingly. Under the cost of living formula, the maximum was increased to $39,300effective January 1, 2019.
Limitation on Taxation. The 1979 Special Session of the Kentucky General Assembly enacted HouseBill 44 which provides that no school district may levy a general tax rate, voted general tax rate, or voted buildingtax rate which would generate revenues that exceeds the previous years revenues by four percent (4%).
The 1990 Regular Session of the Kentucky General Assembly in enacting the "School Reform" legislativepackage amended the provisions of KRS 160.470 which prohibited school districts from levying ad valoremproperty taxes which would generate revenues in excess of 4% of the previous year's revenues without said levysubject to recall to permit exceptions to the referendum under (1) KRS 160.470(12) [a new section of the statute]and (2) an amended KRS 157.440.
Under KRS 160.470(12)(a) for fiscal years beginning July 1, 1990 school districts are required to levya "minimum equivalent tax rate" of thirty cents ($.30) for general school purposes. The equivalent tax rate isdefined as the rate which results when the income collected during the prior year from all taxes (includingoccupational or utilities) levied by the district for school purposes divided by the total assessed value of propertyplus the assessment for motor vehicles certified by the State Revenue Cabinet. Failure to levy the minimumequivalent rate subjects the board of the district to removal.
The exception provided by KRS 157.440(1)(a) permits school districts to levy an equivalent tax rate asdefined in KRS 160.470(12)(a) which will produce up to 15% of those revenues guaranteed by the program tosupport education excellence in Kentucky. Levies permitted by this section of the statute are not subject to publichearing or recall provisions as set forth in KRS 160.470.
Local Thirty Cents Minimum. Effective for school years beginning after June 30, 1990, the board ofeducation of each school district shall levy a minimum equivalent tax rate of thirty cents ($0.30) for general schoolpurposes. If a board fails to comply, its members shall be subject to removal from office for willful neglect ofduty.
Additional 15% Not Subject to Recall. Effective with the school year beginning July 1, 1990, eachschool district may levy an equivalent tax rate which will produce up to 15% of those revenues guaranteed by theSEEK program. Effective with the 1990-91 school year, the State will equalize the revenue generated by this levyat one hundred fifty percent (150%) of the statewide average per pupil equalized assessment. For 1993-94 andthereafter, this level is set at $225,000. The additional 15% rate levy is not subject to the public hearing or recallprovisions.
Assessment Valuation. No later than July 1, 1994, all real property located in the state and subject tolocal taxation shall be assessed at one hundred percent (100%) of fair cash value.
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Special Voted and Other Local Taxes. Any district may, in addition to other taxes for school purposes,levy not less than four cents nor more than twenty cents on each one hundred dollars ($100) valuation of propertysubject to local taxation, to provide a special fund for the purchase of sites for school buildings and the erection,major alteration, enlargement, and complete equipping of school buildings. In addition, districts may levy taxeson tangible and intangible property and on utilities, except generally any amounts of revenues generated abovethat provided for by House Bill 44 is subject to voter recall.
Local Tax Rates, Property Assessments and Revenue Collections
Combined Total PropertyTax Equivalent Property RevenueYear Rate Assessment Collections
1991-92 55.7 431,105,031 2,401,2551992-93 55 451,142,965 2,481,2861993-94 54.1 465,796,703 2,519,9601994-95 55.5 467,903,099 2,596,8621995-96 56.8 504,419,822 2,865,1051996-97 54.2 519,815,177 2,817,3981997-98 54.1 537,860,193 2,909,8241998-99 54.1 554,138,768 2,997,8911999-00 53 573,402,607 3,039,0342000-01 54.2 615,336,197 3,335,1222001-02 53 633,886,887 3,359,6012002-03 55 655,272,544 3,603,9992003-04 55 676,302,499 3,719,6642004-05 57.4 696,314,928 3,996,8482005-06 59.2 711,147,735 4,209,9952006-07 65.1 666,644,136 4,339,8532007-08 59.2 701,214,110 4,151,1882008-09 67.8 727,868,199 4,934,9462009-10 67.8 762,527,810 5,169,9392010-11 66.5 854,071,431 5,679,5752011-12 66.1 924,818,524 6,113,0502012-13 66.9 994,148,636 6,650,8542013-14 67.5 1,029,704,464 6,950,5052014-15 67 1,049,776,414 7,033,5022015-16 67.4 1,081,623,122 7,290,1402016-17 66.4 1,097,342,765 7,286,3562017-18 71.1 984,171,166 6,997,4572018-19 80 988,776,248 7,910,210
OVERLAPPING BOND INDEBTEDNESS
The following table shows any other overlapping bond indebtedness of the Union County School Districtor other issuing agency within the County as reported by the State Local Debt Officer for the period endingJune 30, 2020.
Original Amount Current
Principal of Bonds Principal
Issuer Amount Redeemed Outstanding
County of Union
General Obligation 7,205,000 1,680,000 5,525,000
Health Care Facility Revenue 3,124,000 1,535,966 1,588,034
Refunding Revenue 6,863,333 669,593 6,193,740
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City of Morganfield
Improvement Project Revenue 2,634,000 44,500 2,589,500
City of Sturgis
Refunding Revenue 800,000 745,000 55,000
City of Uniontown
Water & Sewer Revenue 245,000 218,000 27,000
City of Waverly
Sewer Revenue 153,000 128,000 25,000
Special Districts
Union County Public Library 500,000 155,000 345,000
Union County Water District 2,019,000 786,000 1,233,000
Totals: 23,543,333 5,962,059 17,581,274
______________Source: 2020 Kentucky Local Debt Report.
SEEK ALLOTMENT
The Board has reported the following information as to the SEEK allotment to the District, and asprovided by the State Department of Education.
Base Local Total State &Funding Tax Effort Local Funding
2018-19 SEEK 8,548,636 7,910,210 16,458,8462017-18 SEEK 8,451,812 6,997,457 15,449,2692016-17 SEEK 8,368,770 7,286,356 15,655,1262015-16 SEEK 8,622,182 7,290,140 15,912,3222014-15 SEEK 8,597,888 7,033,502 15,631,3902013-14 SEEK 8,483,973 6,950,505 15,434,4782012-13 SEEK 8,550,552 6,650,854 15,201,4062011-12 SEEK 8,901,226 6,113,050 15,014,2762010-11 SEEK 8,688,640 5,679,575 14,368,2152009-10 SEEK 9,018,149 5,169,939 14,188,0882008-09 SEEK 10,458,315 4,934,946 15,393,2612007-08 SEEK 10,631,528 4,151,188 14,782,7162006-07 SEEK 9,898,819 4,339,853 14,238,6722005-06 SEEK 9,583,256 4,209,995 13,793,2512004-05 SEEK 9,130,155 3,996,848 13,127,0032003-04 SEEK 9,087,428 3,719,664 12,807,0922002-03 SEEK 8,800,268 3,603,999 12,404,2672001-02 SEEK 8,555,238 3,359,601 11,914,8392000-01 SEEK 8,932,393 3,335,122 12,267,5151999-00 SEEK 8,539,094 3,039,034 11,578,1281998-99 SEEK 8,459,757 2,997,891 11,457,6481997-98 SEEK 8,188,113 2,909,824 11,097,9371996-97 SEEK 8,124,611 2,817,398 10,942,0091995-96 SEEK 7,833,606 2,865,105 10,698,7111994-95 SEEK 7,881,232 2,596,862 10,478,0941993-94 SEEK 7,895,224 2,519,960 10,415,1841992-93 SEEK 7,653,730 2,481,286 10,135,0161991-92 SEEK 7,288,629 2,401,255 9,689,884
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(1) Support Education Excellence in Kentucky (SEEK) replaces the minimum foundation program and power equalization funding. Capital Outlay is now computed at $100 per average daily attendance (ADA). Capital Outlay is included in the SEEK base funding.
(2) The Board established a current equivalent tax rate (CETR) of $1.097 for FY 2018-19. The equivalenttax rate" is defined as the rate which results when the income from all taxes levied by the district forschool purposes is divided by the total assessed value of property plus the assessment for motor vehiclescertified by the Commonwealth of Kentucky Revenue Cabinet.
STATE BUDGETING PROCESS
i) Each district board of education is required to prepare a general school budget on formsprescribed and furnished by the Kentucky Board of Education, showing the amount of moneyneeded for current expenses, debt service, capital outlay, and other necessary expenses of theschool during the succeeding fiscal year and the estimated amount that will be received from allsources.
ii) By September 15 of each year, after the district receives its tax assessment data from theDepartment of Revenue and the State Department of Education, 3 copies of the budget areforwarded to the State Department for approval or disapproval.
iii) The State Department of Education has adopted a policy of disapproving a school budget if itis financially unsound or fails to provide for:
a) payment of maturing principal and interest on any outstanding voted schoolimprovement bonds of the district or payment of rental in connection with anyoutstanding school building revenue bonds issued for the benefit of the school district;or
b) fails to comply with the law.
POTENTIAL LEGISLATION
No assurance can be given that any future legislation, including amendments to the Code, if enacted intolaw, or changes in interpretation of the Code, will not cause interest on the Bonds to be subject, directly orindirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full currentbenefit of the tax exemption of such interest. In addition, current and future legislative proposals, if enacted intolaw, may cause interest on state or local government bonds (whether issued before, on the date of, or afterenactment of such legislation) to be subject, directly or indirectly, to federal income taxation by, for example,changing the current exclusion or deduction rules to limit the amount of interest on such bonds that may currentlybe treated as tax exempt by certain individuals. Prospective purchasers of the Bonds should consult their own taxadvisers regarding any pending or proposed federal tax legislation.
Further, no assurance can be given that the introduction or enactment of any such future legislation, orany action of the IRS, including but not limited to regulation, ruling, or selection of the Bonds for auditexamination, or the course or result of any IRS examination of the Bonds or obligations which present similar taxissues, will not affect the market price for the Bonds.
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CONTINUING DISCLOSURE; EXEMPTION
As a result of the principal amount of Bonds being offered not exceeding $1,000,000 Bond Counsel hasadvised the Corporation and the Board that they are exempt from application of the Rule 15c2-12c2-12(b)(5) ofthe Securities and Exchange Commission with respect to the Bonds.
The Board and Corporation have been timely in making required filings under the terms of the ContinuingDisclosure Agreement for the past five years.
Financial information regarding the Board may be obtained from Superintendent, Union County SchoolDistrict Board of Education, 510 Mart Street, Morganfield, KY 42437, Telephone 270-389-1694.
TAX EXEMPTION; BANK QUALIFIED
Bond Counsel is of the opinion that:
(A) The Bonds and the interest thereon are exempt from income and ad valorem taxation by theCommonwealth of Kentucky and all of its political subdivisions.
(B) The interest income from the Bonds is excludable from the gross income of the recipient thereof forFederal income tax purposes under existing law and will not be a specific item of tax preference for purposes ofFederal income tax.
(C)As a result of designations and certifications by the Board and the Corporation, indicating the issuanceof less than $10,000,000 of tax-exempt obligations during the calendar year ending December 31, 2020, the Bondsare "qualified tax-exempt obligations" within the meaning of the Internal Revenue Code of 1986, as amended.
The Corporation will provide the purchaser the customary no-litigation certificate, and the final approvingLegal Opinions of Steptoe & Union PLLC, Bond Counsel, Louisville, Kentucky approving the legality of theBonds. These opinions will accompany the Bonds when delivered, without expense to the purchaser.
Original Issue Premium
Certain of the Bonds are being initially offered and sold to the public at a premium (“AcquisitionPremium” from the amounts payable at maturity thereon. "Acquisition Premium" is the excess of the cost of abond over the stated redemption price of such bond at maturity or, for bonds that have one or more earlier calldates, the amount payable at the next earliest call date. The Bonds that bear an interest rate that is higher than theyield (as shown on the cover page hereof), are being initially offered and sold to the public at an AcquisitionPremium (the "Premium Bonds"). For federal income tax purposes, the amount of Acquisition Premium on eachbond the interest on which is excludable from gross income for federal income tax purposes ("tax-exempt bonds")must be amortized and will reduce the bondholder's adjusted basis in that bond. However, no amount of amortizedAcquisition Premium on tax-exempt bonds may be deducted in determining bondholder's taxable income forfederal income tax purposes. The amount of any Acquisition Premium paid on the Premium Bonds, or on any ofthe Bonds, that must be amortized during any period will be based on the "constant yield" method, using theoriginal bondholder's basis in such bonds and compounding semiannually. This amount is amortized ratably overthat semiannual period on a daily basis.
Holders of any Bonds, including any Premium Bonds, purchased at an Acquisition Premium shouldconsult their own tax advisors as to the actual effect of such Acquisition Premium with respect to their own taxsituation and as to the treatment of Acquisition Premium for state tax purposes.
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Original Issue Discount
Certain of the Bonds (the "Discount Bonds") are being initially offered and sold to the public at a discount("OID") from the amounts payable at maturity thereon. OID is the excess of the stated redemption price of a bondat maturity (the face amount) over the "issue price" of such bond. The issue price is the initial offering price to thepublic (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers)at which a substantial amount of bonds of the same maturity are sold pursuant to that initial offering. For federalincome tax purposes, OID on each bond will accrue over the term of the bond. The amount accrued will be basedon a single rate of interest, compounded semiannually (the "yield to maturity") and, during each semi-annualperiod, the amount will accrue ratably on a daily basis. The OID accrued during the period that an initial purchaserof a Discount Bond at its issue price owns it is added to the purchaser's tax basis for purposes of determining gainor loss at the maturity, redemption, sale or other disposition of that Discount Bond. In practical effect, accrued OIDis treated as stated interest, that is, as excludible from gross income for federal income tax purposes.
In addition, original issue discount that accrues in each year to an owner of a Discount Bond is includedin the calculation of the distribution requirements of certain regulated investment companies and may result insome of the collateral federal income tax consequences discussed above. Consequently, owners of any DiscountBond should be aware that the accrual of original issue discount in each year may result in an alternative minimumtax liability, additional distribution requirements or other collateral federal income tax consequences although theowner of such Discount Bond has not received cash attributable to such original issue discount in such year.
Holders of Discount Bonds should consult their own tax advisors as to the treatment of OID and the taxconsequences of the purchase of such Discount Bonds other than at the issue price during the initial public offeringand as to the treatment of OID for state tax purposes.
ABSENCE OF MATERIAL LITIGATION
There is no controversy or litigation of any nature now pending or threatened (i) restraining or enjoiningthe issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of theBonds or any proceedings of the Board or Corporation taken with respect to the issuance or sale thereof or (ii)which if successful would have a material adverse effect on the financial condition of the Board.
APPROVAL OF LEGALITY
Legal matters incident to the authorization and issuance of the Bonds are subject to the approving legalopinion of Steptoe & Johnson PLLC, Bond Counsel. The form of the approving legal opinion of Bond Counselwill appear on each printed Bond.
NO LEGAL OPINION EXPRESSED AS TO CERTAIN MATTERS
Bond Counsel has reviewed the information contained in the Official Statement describing the Bonds andthe provisions of the Bond Resolution and related proceedings authorizing the Bonds, but Bond Counsel has notreviewed any of the financial data, computations, tabulations, balance sheets, financial projections, and generalinformation concerning the Corporation or District, and expresses no opinion thereon, assumes no responsibilityfor same and has not undertaken independently to verify any information contained herein.
BOND RATING
As noted on the cover page of this Official Statement, Moody’s Investors Service has given the Bondsthe indicated rating. Such rating reflects only the respective views of such organization. Explanations of thesignificance of the rating may be obtained from the rating agency. There can be no assurance that such rating willbe maintained for any given period of time or will not be revised or withdrawn entirely by the rating agency, ifin their judgement circumstances so warrant. Any such downward revision or withdrawal of such rating may havean adverse effect on the market price of the Bonds.
15
FINANCIAL ADVISOR
Prospective bidders are advised that Ross, Sinclaire & Associates, LLC ("Ross Sinclaire") has beenemployed as Financial Advisor in connection with the issuance of the Bonds. Ross Sinclaire's fee for servicesrendered with respect to the sale of the Bonds is contingent upon the issuance and delivery thereof. Bidders maysubmit a bid for the purchase of the Bonds at the time of the advertised public sale, either individually or as amember of a syndicate organized to submit a bid for the purchase of the Bonds.
APPROVAL OF OFFICIAL STATEMENT
The Corporation has approved and caused this "Official Statement" to be executed and delivered by itsPresident. In making this "Official Statement" the Corporation relied upon information furnished to it by theBoard of Education of the Union County School District and does not assume any responsibility as to the accuracyor completeness of any of the information in this Official Statement except as to copies of documents denominated"Official Terms and Conditions" and "Bid Form." The financial information supplied by the Board of Educationis represented by the Board of Education to be correct. The Corporation deems this preliminary Official Statementto be final for purposes of Securities Exchange Commission Rule 15c2-12(b)(1) as qualified by the cover hereof.
No dealer, broker, salesman, or other person has been authorized by the Corporation, the Union CountyBoard of Education or the Financial Advisor to give any information or representations, other than those containedin this Official Statement, and if given or made, such information or representations must not be relied upon ashaving been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or thesolicitation of any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitationor sale. Except when otherwise indicated, the information set forth herein has been obtained from the KentuckyDepartment of Education and the Union County School District and is believed to be reliable; however, suchinformation is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation bythe Financial Advisor or by Counsel. The delivery of this Official Statement at any time does not imply thatinformation herein is correct as of any time subsequent to the date hereof.
This Official Statement does not, as of its date, contain any untrue statement of a material fact or omit tostate a material fact which should be included herein for the purpose for which the Official Statement is to be usedor which is necessary in order to make the statements contained herein, in the light of the circumstances underwhich they were made, not misleading in any material respect.
By /s/ President
By /s/ Secretary
16
APPENDIX A
Union County School District Finance CorporationSchool Building Revenue Bonds
Series of 2020
Demographic and Economic Data
UNION COUNTY, KENTUCKY
Union County, with a 2017 estimated population of 14,668, is located in the westernmost part of WesternKentucky. The Ohio River flows along the northern and western boundary of the county while the TradewaterRiver forms the southern boundary. The county covers a total land area of 345 square miles. The topographyvaries from broad, flat-flood plains to island-like hill masses
Morganfield, the county seat of Union county, is located 33 miles southwest of Evansville, Indiana; 145miles southwest of Louisville, Kentucky; 158 miles northwest of Nashville, Tennessee; and 175 miles southeastof St. Louis, Missouri. Sturgis is located 11 miles southwest of Morganfield and Uniontown is six miles northof Morganfield. Morganfield had an estimated 2017 population of 3,466.
The Economic Framework
The total number of Union County residents employed in 2017 averaged 5,436. Natural resources andmining employed 827 people; construction provided 98 jobs; manufacturing in the county reported 707 employees; trade, transportation, and utilities provided 844 jobs; 10 jobs were reported in information; financialactivities accounted for 139 employees; 1,162 people were employed in services; leisure and hospitality provided324 jobs; and 79 people reported working in other services or unclassified roles.
Transportation
Major highways serving Union county include U.S. 60, Kentucky 56 and Kentucky 109, all “AAA”-ratedtrucking highways. The Pennyrile and Audubon Parkways, multi-lane highways, are both located 23 miles eastof Morganfield. The Western Kentucky Parkway, another multi-land highway, is accessible 54 miles south ofMorganfield. Twenty common carrier trucking companies provide interstate and/or intrastate service to UnionCounty. The Western Kentucky Parkway Company provides short line rail service to adjacent counties, whereconnections with main line rail are operated by CSX Transportation. The nearest commercial airline service isavailable at Evansville Regional Airport, 36 miles northeast of Morganfield. The Morganfield Airport, four mileseast of Morganfield, maintains a 2,700-foot paved runway and the Sturgis Airport, one mile southeast of Sturgis,provides three 5,000-foot paved runways.
Power and Fuel
Kentucky Utilities Company provides electric power to Morganfield, Sturgis, Uniontown, and portionsof Union County. Big Rivers Electric Corporation also provides electric power to Union County. Natural gas isprovided to Morganfield and Uniontown by the City of Morganfield Municipal Gas System and to Sturgis by theSturgis Municipal Gas System.
LOCAL GOVERNMENT
Structure
The cities of Morganfield, Sturgis, and Uniontown are each governed by a mayor and six councilmembers. The mayors are each elected to a four-year term, while the council members each serve two-year terms. Union County is governed by a county judge/executive and six magistrates. Each county official serves a four-year term.
Planning and Zoning
Joint agency - Union County Planning CommissionParticipating cities - Morganfield, Sturgis and WaverlyZoning enforced - Within corporate limits of Morganfield, Sturgis and Waverly Subdivision regulations enforced - All areasLocal codes enforced - Building (all areas)Mandatory state codes enforced - Kentucky Plumbing Code, National Electric Code, Kentucky Boiler Regulations and Standards, Kentucky Building Code (modeled after BOCA code)
(A-1)
LABOR MARKET STATISTICS
The Union County Labor Market Area includes union County and the adjoining Kentucky counties ofCrittenden, Henderson, and Webster. In addition, the labor market area is supplemented by Gallatin County,Illinois, which forms the western boundary of Union County.
Population
Area 2015 2016 2017
Labor Market Area 295,671 294,877 293,730Union County 15,053 14,880 14,668Morganfield 3,579 3,543 3,466Sturgis 1,913 1,890 1,833
Source: U.S. Department of Commerce, Bureau of the Census, Annual Estimates.
Population Projections
Area 20 2 5 2030 2035
Union County 14,654 14,290 13,811 Source: Kentucky State Data Center, University of Louisville.
EDUCATION
Public SchoolsUnion County
Total Enrollment (2016-17) 2,104Pupil-Teacher Ratio 13.8 - 1
Vocational - Technical EducationEnrollment
Institution Location (2017-2018)
Union County ATC Morganfield, KY 1,091Webster County ATC Dixon, KY 562Henderson County ATC Henderson 2,188Caldwell County ATC Princeton, KY 461Muhlenberg County CTC Greenville 385Ohio County ATC Hartford, KY 647Paducah ATC Paducah, KY 629
Colleges and UniversitiesEnrollment
Institution Location (Fall 2018)
Henderson Community College Henderson, KY 1,490Madisonville Community College Madisonville, KY 3,404Owensboro Community & Technical College Owensboro, KY 3,787University of Evansville Evansville, IN 2,516University of Southern Indiana Evansville, IN 11,004Kentucky Wesleyan College Owensboro, KY 716Brescia College Owensboro, KY 1,231West Kentucky Community & Technical College Paducah, KY 6,038
(A-2)
FINANCIAL INSTITUTIONS
Institution Total Assets Total Deposits
United Community Bank of West Kentucky, Inc. $262,052,000 $206,278,000 Source: McFadden American Financial Directory, June - December 2019 Edition.
EXISTING INDUSTRY
Firm Product Employment
Morganfield:Carroll Engineering Mining safety, communications, network
design, motor, power & electrical needs 7Custom Feed Mill LLC Livestock feed 9EZ-Access Manufactures portable wheelchair ramps for
van conversions and modular wheelchair ramps for home use 42
Huff Technologies, Inc. Custom industrial assembly 13Rayloc Remanufacture starters, alternators, brakes,
caliper, wiper motors 43Security Seed and Chemical LLC Wholesale farm supplies, seed chemical
treatment, repackage bulk chemical 8Sonoco Spiral paper tubing 43The Union County Advocate Newspaper publishing & typesetting 3Trelleborg Vibracoustic Adhesive Plant Metal prep for automotive industry 90Trelleborg Vibracoustic, Inc. Automotive ball joint seals, rubber bumpers,
electrical connectors & miscellaneous molded rubber products 215
Pride: Pride Industries, Inc. Steel & aluminum standing seam roofing, performed metal shingles 27
Sturgis:Ervin Cable Construction, LLC Construction company doing cable tv design,
Engineering, aerial & underground construction 94Liberty Tire Recycling LLC Rubber tire recycling facility producing rubber
mulch and tire-derived fuel 40Mine-Safe Electronics, Inc. Methane monitoring equipment, fire sensing &
voice communication equipment 12Saturn Machine & Welding Company Speciality machinery, structural jam cleaners &
pollution control equipment; steel fabricating 33
Uniontown:Jim David Meats Ham & deer processing - wholesale, retail 88The Little Kentucky Smokehouse Process hams and meat products 160Mid South Sales Production of five salads, including chicken
salad and pimento cheese 40Waverly:
River View Coal LLC Coal production 865 Source: Kentucky Cabinet for Economic Development (12/10/2019).
(A-3)
APPENDIX B
Union County School District Finance CorporationSchool Building Revenue Bonds
Series of 2020
Audited Financial Statement ending June 30, 2019
..
~ Passwn for ~xce«ence
REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
for the year ended June 30, 2019
4.lford~ anceJ oneso/O akley, llp Certified Public Accountants
I-
UNION COUNTY SCHOOL DISTRICT TABLE OF CONTENTS
For the year ended June 30, 2019
Independent Auditor's Report
Required Supplementary Information:
Management's Discussion and Analysis
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position
Statement of Activities
Fund Financial Statements:
Balance Sheet - Governmental Funds
Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Position
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities
Statement of Net Position- Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Position -Proprietary Funds
Statement of Cash Flows - Proprietary Funds
Statement of Fiduciary Net Position-Fiduciary Funds
Notes to the Basic Financial Statements
Required Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual- Special Revenue Fund
Summary of Significant Accounting Policies for Budgetary Process
1-2
3-9
11
12
13
14
15
16
17
18
19
20-51
52
53
54
UNION COUNTY SCHOOL DISTRICT TABLE OF CONTENTS, continued
For the year ended June 30, 2019
Pension and other Postemployment Benefits Schedules:
Teachers Retirement System of Kentucky
County Employees Retirement System
Supplementary Information:
Combining Statements/Individual Schedules - Nonmajor Funds:
Combining Balance Sheet-Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds
Combining Schedule of Receipts, Disbursements and Fund Balances - All Agency Funds
Schedule of Receipts, Disbursements and Fund Balances - Union County High School
Schedule of Expenditures of Federal Awards
Independent Auditor's 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
Independent Auclitor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance
Schedule of Findings and Questioned Cost
Management Letter
55-60
61-65
66
67
68
69-70
71-72
73-74
75-76
77
78-80
4 1ford,._anceJ oneso/O akley, llp J. Wesley Alford, Jr.,CPA Jacqueline L. Nance, CPA
Certified Public Accountants Theresa A. Jones, CPA
Lori A. Oakley, CPA
108 S. Main St., Ste 101 • Madisonville, Kentucky 42431 • Tel:270-825-4578 • Fax:270-821-3521 • www.anjocpa.com
State Committee for School District Audits Members of the Board of Education Union County School District Morganfield, Kentucky
Report on the Financial Statements
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying financia l statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining f1md information of the Union C0unty School Disll'ict, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which co)lectively comprise the Union County School District' basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Managemei.1t is responsible for the preparation and fair presenta tion of these financial statements in accordance with accounting principles generally accepted in the United tates of America; this includes the design, implementation, and maintenance of internal control rel.evant to the prepa ration and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
0 Lu· responsibility is to express opin ions on these financia l statements based on our audit. We conducted our audit in accordance with auditing standards genera lly accepted in the United States of America and the standards applicable to financial. audits contained in Government Auditing tandnrds, issued by the Comptrnller General of the United States and the audit reqniJ:ements prescribed by the Kentucky State Committee for chool District Audits Fiscal Year 2018-20 19 Financial Auclit Contract Th se standards require that we µ lan aud perform the audit to btain reasonable assurance about whether the financ ial statements are free from material misstatement.
An audit involves perfo1ming procedw·es to obtain audit evidence about the amounts and disc losw-es in the fi11anc ial statements. The procedures selected depend on U1e auditor 's j udgment, including the assessment of the risks of rnatedal misstatement of the 6na:ncial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the en.tity s preparation and fa ir presentation of the financial statements in orcler to design audit procedures that are appropriate in the circumstances, but uot for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we exptess 1,0 such opinion. An audit also inc ludes valuating the apptOJ)riateness of accoun ting policies used and the reasonableness of significant accounting estimates made by managerne1\t, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
1n our opinion tl1e fina ncial statem nts referred to above p:resent fair ly, in all material respects, lhe respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Union County School District as of June 30, 20 l9, and the respective changes in financ ial position, and, where applicable, cash flows thereof fodhe year then ended in accordance with acco'm1ting principles generally accepted in t:h.e United Slates of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, pension schedules, and OPEB schedules on pages 3 th.rough 9 and pages 52 through 65 be presented to supplement the basic financial statements. Sucl1 information, altho ugh not a part of the basic financial statements, is required by the Governmenta l Accounting Standards Board, who considers it to be an essenlial part of financial reporting for placing the ba~ic financial statements in an appropriate operational, economic, or hjstorical context We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the Un:ited States of America, which consisted of inqu iries of management about the methods of preparing the ulformation and comparing the information for consistency with management's responses to our inquities, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide ru1y assurance on the information because the linliled procedures do .not provide us with sltfficicmt evidence to express nn opinion or provide any assurance.
Other Information
Our audit was conducted for Lhe purpose of forming opiruons on the financial statements that collectively comprise the Union County School District's basic fu1ancial statements. The combining and individual nonmajor fund financ ial statements/schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the ba,; i.c financiaJ statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as requiJed by Title 2 U.S·. Code of .Federal Regulations (CFR) Part 200 Uniform Administrative Requil'ements, Cost Principles, and Audit Requirements for Federal Awards, and is also 1101 a required part fthe basic financial statements.
The combining and individual nonmajor fund .financial statements/ chedules and the schedule of expenditures of federa l awards are the responsibility of management and were derived from and relate directly to the tmderlying accounting and other records used to prepare the 'bas ic financfa l statements. Such information has been subjected to the auditing procedw-es applied in the audit of the basic financial statements and certaJn additional procedures, including comparing and reconciling such information di.rectly to the underlyiJ1g accounting and otbcr records used to prepare the basic finai,cial statements or to the basic frnanciaJ. statements themselves, and other additionaJ procedures in accordance with auditing standards generally accepted in the United tates America. Ln our opinion lhe combining and individual nonmajor fond financial statements and the schedule of expenditures of federal awards are fairly stated in all matecial respects.in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
Jn accordance with Government Auditing Standards, we have also issued mu· report dated November 8, 2019, on our consideration of the Union County School District 's internal contro l over financial reporting and on ow· tests of its compliance with certain provisions of laws, regulations, contracts, a11d grant agreements and other matters. The purpose oftbat report is l>O lely to describe tbe scope of our testing of internal contro l over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Union County School Distl'ict's intemal control over fu1ancial reporting or 0.11
compliance. That report is an integra l part of an audit performed in accordance with Government Au.diting Standards in considering Union County School District's internal cmrtrol over financial reporting and compliance.
A~:~C~,ur Madisonville, Kentucky November 8, 2019
2
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
As management of the Union County School District (Distdct), we offer readers of the Distiict's financjal statement this narrative overview and analysis of the financial activities of the District for the Ciscal year ended June 30, 2019. The int nt of this discussion and ar.1alysis is to review the District's financial performance as a whole. We encom·age readers to consider the information presented here in coajunction w.ith the additional informati n found wilhin the audit Teport.
Financial Highlights
• The District continues to maintain a solvent financial condition and has been able to withstand the financial pressures of numerous unfunded Stale mandates. Through budget reductions, cost containment, conununity partnershlps and effectjve utilization of grant funding, the district continues to diligently monitor all staffing, instructional and support programs. In total, net position_ of the District increased $852,600. Net position of governmental activities increased by $803,666, and the net position of business-type activities increased by $48,934.
• During fiscal year 2019 the Disfrict received $8,354,275 iu general fund state SEEl<.. fonding. The guaranteed per pupil base for 2019 was $4,000. Transportation was not fully funded through the SEEK calculation. dtu·ing lhe fiscal year 2019. Transportation funding received in the amount 0f $1,007,507 was prorated at 65.22% of tb.e total cost of $1,544,692 with leaving a balance of unfunded costs of $537,185 to be funded at the local !eve.I.
• Local taxes continue to provide approximately 33% of the aJJnual general fond budget and are critical to the General Fund. For the 2019 tax year, both property and motor vehlc!e assessed values experienced a slight decrease of .5% or $660,000.
Assessment of property subject to taxation on January 1, 2018, wJ, ich was certified to lhe District Board of Education by the Commissioner, reported total real and personal pro-perty valuatiC>,n of $862,673,109 and motor vehicle valuation of $126,103,139. The reaJ estate and personal property rate assessed was 68.10 cents per $100 of assessed property. The total properly tax collected was $5,608,621. The motor vehlcle property tax rat was 55.7 cents per $100 of assessed property, and tl1e total collected was $758,864. The growth and stability of the real estate market as well as indust,y activity in the county remains critical In sustaining local tax revenues and stabilizing tax rates for Union County taxpayers.
• Utility receipts decreased 2.05% OT $24 131 from the prior year. The total collection for the year was $1,152,482. During any given year tl1e change can be attributed to a combinaliQn of usage, fluctuating prices and rate of collection. The Department of Revenue collects the utilities tax on behalf of the school districts in Kentucky for a fee not to exceed one percent.
• Tbe Annual Financial Report and 2019 Audit report includes the on behalf payments in revenue due to GASB 34 regulation. The revenue amount was $6,049,L23 of that amOLmt $5,675, I l6 was expensed to the General Fund, $108,294 Food Service, $14, 136 Day Care and $251,577 was expensed to lbe Debt Service Fund.
• TotaJ capita l assets of governmental activities decreased in the net amount of $198,462. A net increase in total assets consisted of depreciable asset additions of $1,043,433 less disp sals of $30,629 and a net decrease in construction in progress of$60,789. The net cbange jn accumulated depreciation was $1,150,477 which consisted of $1,181,106 of depreciation expense offset by a $30,629 reduction in accumulated depreciation for as ·et disposals.
• Total assets of business type activities decreased in the 11et amount of $2,026. The 11el increase in total assets of .$7,918 consisted of asset additions of $9,600 less asset disposals of $1,682. The net change in accumulated depreciation of $9,944 consisted of $11,626 of depreciation expense offset by a $1,682 reduction in accumuJated depreciation for asset disposals.
• As with most school districts our unmet needs exceeds our current bonding potential. The District will continue to monitor facilities and refer to its long-range facility plan established with community input as stipulated by the Kentucky Department of Educations' regulations. The cun·ent District Facility Plan was completed in 2019 by the District's Local Planning Committee and will be reevaluated in 2023.
3
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
Financial Highlights, continued
• During the fiscal year the District completed a project at the Union County .High School baseball field upgrading the facility to address safety concerns thereby making the facility accessible for the general public. The total project cost was $780,614 and was funded by the use ofrestricted Capital Outlay funds p rmitted by means of a Capital Funds Request approved by the Kentucky Deparbnent of Education.
Using the Basic Financial Statements
This discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The District's basic financial statements are comprised of three components: 1) government-wide financial tateme11ts, 2) ftu1d financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements. The government-wide financial statements are designed to provide the readers with a broad overview of the District's finances, in a manner similar to a private sector business.
• The Statement of Net Position presents inti rmation on all of the District's assets and liabilities, with the difference between llie two rep rted as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the district is improving or deteriorating.
• The Statement of Activities presents information showing how the District's net position changed during llie most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change
ccurs, regardless of the timing of the related cash flows. Thus, revenues a11d expenses are reported i.o this statement for some items that will rnsult in cash flows in futur fiscal periods.
Both of these district-wide statements are divided into two district kinds of activities:
• Government Activities - The government-wide financial statements outline functions of the District that are principa.lly supported by property taxes and intergovernmental revenues (governmental activities) . Tbe governmental activities of the Districl include instruction, support services, operation and ma.intenance f plant, student transportation, and operation of non-instrnctional se1vices. Capital Assets and related debt that are also supported by taxes and intergovernmental revenues are reported within this section.
• Business Type Act/11/ties - These services are provided on a charge for goods or services basis to recover aJI of the expenses of the goods or services provided. The types f activities reported in this category are the food service operations and childcare centers. These activities are funded througb fee. charged and supported by federal grants and federal commodities used in the fo d service operations.
Futtd Fi11ancial Stfttements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. This is a state mandated uniform system and chart of accounts for all Kentucky public school districts utilizing the MUNIS adn:iinisb·ative software system. The District uses fund accotmting to ensure and demonstrate comp liallce with fina1 ce related legal requirements. All of the funds of the District can be divided into three categories: governmental, proprietary, and fiduciary funds.
• Govcmme11tal Fmuls - Most o.f the School District's activities are reported in the governmenta.1 funds that include: general fw1d, special revenue (grants), capital outlay, bui lding fund (F'S.PK), c011slruction fond, an,d debt service fund. hese funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted into cash. The governmental fund statements provide a detailed short-term view of tl1e School District's general government operations and the basic services it provides. Govemmental fund inform tion helps determine whether there are more or fewer financial resources that can be spent in the near foture to finance educatioual programs. The relationship (or difference) between governmental activities (reported in the Statement o[Net Position and the Statement of Activities) and governmenta l funds is reconciled in the financial statements provided.
4
-
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
• Using the Basic Financial Statements, continued
• Governmental Funds, continued
• Proprietary Funds - The proprietary fund includes the food service and childca.J,'e centers Lhat are also fmmd in the business type activities fund. 111ese funds use the same basis of accounting as business type acLiVilies; lilerefore, the statements for tl1e proprietary fund will essentially match.
• Fiduciary Funds - The fiduciary funds are trust funds established by benefactors to aid in student education and student welfare. The District's fiduciary funds are the school activity fw1ds roain:tained. at the school level. Fund Balance for schools' activity amount due to student groups increased during fiscal year by $34,997 ending the year with a total Fund Balance of$376,916.
• Notes to the jluancial stateme11ts. The notes provide additional information that is essential to a full understanding of tbe data provided in the government-wide and fund fmancial statements.
Government-wide Financial Analysis
The largest po1iion of the Dis lTict's net position reflects its investment in cap,ital assets (e.g. land and improvements, buildings and improvements, vehicles, fumitur and equipment) less any related debt used to acquire those assets, which is outstanding at year-end.
The District's !inancial position is the producl of several financia l b·ansactions including the net results of activitit1s, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of those capital assets. In I.he prim fiscal year 2018, the District implemented GASB Statement No. 75, Accounting and Reporting for Postemployrnent Benefits Other than Pensions and included the District's liability for the uel pension obligation and the liabili y for other postemployment benefits.
The following table is a summary of the District's net position.
Governmental Activities Business T~ec Activities District Total 2019 2018 2019 2018 2019 2018
Current Assets $ 8,578,412 $ 8,032,193 $ 581,608 $ 375,176 $ 9,160,020 $ 8,407,369 Capital or Non-current Assets D,135,978 13,334,440 102,128 104,154 13,238,106 13,438,594 Total Assets 2 1,7 14,390 21,366,633 683,736 479,330 22,398,126 21,845,963
Deferred Outflows of Resources 2,948,208 3,602,918 411,680 505,280 3,359,888 4,108,198
Current Liabilities 1,048,829 1,423,067 2,261 1,373 1,051,090 1,424,440 Non-current Liabilities 18,133,619 19,627,100 1,644,012 1,607,63 1 19,777,631 21,234,731 Total Liabilities 19,182,448 21,050,167 1,646,273 1,609,004 20,828,721 22,659,171
Deferred Inflows of Resources 1,817,258 1,060,159 185,785 161 ,182 2,003,043 1,221,341
Net investment in capital assets 9,346,790 8,747,314 102,128 104,154 9,448,918 8,851,468 Restricted for Capital Outlay 455,826 1152,285 455,826 852,285 Unrestricted (6,139,7241 (6,740,374l (838,770~ !889,730} ~6,978,494) (7,630, 104 l Total Net Position $ 3,662,892 $ 2,859,225 ·s (736,642) $ (785,576) $ 2,926,250 $ 2,073,649
5
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
Government-wide Financial Analysis, continued
The following is a summary of the District's changes in net position.
- -1 Governmental Activities IIBusiness-'fype Activities!; r 2019 2018 T 2019 r 2018 Ii"
District Total
2019 ,.
2018 Program Revenues L .... . . 1 __ ll___ -c- _
l Charges fo~ces - --
Operating grants and contributions Capital grants ~d contributiJn_s __
$ 326,563 ---- -2,266,556 1· 762,037
$ 271,634 I $ 265,072 i $ 238,705 !l $ 591,635 $ 510,339 , 1,509,063 1,520,649 - 3275,619 _ - 3,991,742 : 2,471,093
718,189 I 762,037 : 718,189 Total Program Reve~e
General R;venues
I Taxes Intergovernmental Earnings on investme~ts ivrf~~eiiii;~otis .. . . ---. . -··•- · ~-
Total General Revenue
Total Revenues and Transfel's
Program Expenses I~stiu~tio;;: . .. .. .
Support services , Facilitie_:: aoq~ifslion and construction
Inte~est _on l~n~-tcrm debL Food services
~om~i~y Serl ice Tot~Program Exyenses
Transfers Increase (Dec1:-cnse) In Net Position Net P~ siti
0
on- B_egin ni!_lg Net Position- Ending
Governmental Activities
3,355,156 3,460,916 11 l,774,135
' ]
I
,.m:••• 1 7,845,572 I
14~ 0,607 14,446,433 7,3 8~ I 160,363 1,s9s K -131,420 I 242,786 11
22,230,014 I 22,s42,3&9 11 7,386 l
l I 25,585,230 26,003,305 i: 1,781,521
- - -~ --- J
14,625,624 13,971,681 I 9,779,664 10,821 ,931
-1 - I 30,509 I -~r 134,os6 L 152,427
1,732,587
I 242, 190 I 214.ss6 'I -1 24,781 ,564 25,191,404 ! 1, 132,ss1 r I I I
11- T - ~
I ' 803,666 1 811,901 I 48,934 l
I: - 2,ss9,22s 2})47,324 , c1ss,s16) i $3,662,891 $2,859,225 ;; $ (736,642)
•• l
I, 759,354 /I 5,129,291 5,220,270 I - -
I - I - I -7,827,684 1 7,845,572 - ,, 14~ I, l 0,607 14,446,433
1,044 I 167,749 f 8,642 '13!,420 r 242,786
1,044 I 22,237,460 I 22,543,433
I - I 1,160,398 11 27,366,751 ! 27,763,70'3
II 14,625,62~ i 13,971/,81
: 11
9,779,664 1 10,821,93 1
134.<fai I ~_30 ,so9 I • I 152,427
1,626,493 l ,732J 87 I t ,626,493 (1 ,944) 242,190 I 212,912
1,624,549 :; 26,514,151 I 26,815,953
I - I - I
135,849 852,600 947,750 (921 ,425) 11 2,073 ,649 I, 125,899
$ (785,576) ii $2,926,249 $2,073,649 1
• The beginning fund balance in the Governmental funds at July 1, 201 8 'Vas $7,463,924. The ending fond balance as of June 30, 20 l9 was $8, 178,621. This is a net increase of $7'14,697 and was due to an increase in the General fund balance of $1 l21,588 offset by a decrease in the Construction fun.cl of $715,797 and an increase in the other restricted Non-major Governmental funds of $308,906.
• Toe Special Revenue fund expenditures for the year were $2,266,556. The primary sources of revenues for these grants were federal grants totaling $1, L37,070 and state grants totaling $1, I 02,346,
• The Governmental Fund expenditures for Debt Service payments were a total of $945,752 that included $825,000 for principal payments and $120,752 for interest payments.
• The Governmental Fund expenditures for Construction were a total of $719,826 for lhe pm1,ose of a project at the Un'on County High School baseball field upgi·ading the facility- to adcb·ess safety concerns thereby making the facility accessible for the general public.
6
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
Governmental Activities, continued
Total revenue for the governmental funds was $25,575,097. The following schedule provides a comparison of the Districtwide revenues for governmental activities for the current and previous years.
Revenues ---Local Sources:
Taxes: ---Property
Motor Vehicle
Utility
Unmined mineral
2019
$ 5,608,621
758,864
1,152,482
307,717
Earining; on investments 160,363 -- ---- ----Other local revenues 155,145
Intergov~·nmentnl-L~cal___ 1- 82,146 Intergovernmental-Local 15,935,941
Inte1·governmental-L caJ 1,137,070
lntergovernmental-Local - ---1 276,748
Total revenues
2018 Change
_$ 5,515,245 1 $ 93,376
_?35,68~ -f 23,180 1,116,613 ! (24,131)
---=-418,030 l I <110,3131 7,598 I 152,765
- ~o.!.:_9o5 I __ .J46,160)
86,080 r (3,934) - -16,343,sn I (407,931)
r 1,260,380 I (123,310)
256,202 r 20,546 I
1$ 26,001,609 I 1$ (426,512) 1
------- ·-' ___ I L_ ]
Instruction costs comprise 59% of governmental program expenses. Support services comprise 40% of governmental expenses. Non-instructional expense for community services, interest and other items accounts for 1 % of governmental expenses. The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services .. The table below shows the total cost of services and the net cost of services for government activities. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. The total cost of services includes state on-behalf.P.~xments in the amount of$5,675,116 for fiscal year 2019.
'r :rota) Cost of Services I L NetCostorfSe2rvi01.e8s _ ~T Instruction
es ~-Support servic
Facilities acqui stion and cons truction - -Interest on Ion g-term debt
Total Progra m Expenses -- -
2019 r 2018 r 2019
I 12,604,333 11,115,351 -- ~~~~==: ~ 625,62~ 13,971,681_
I 8,194,124 9 419 878
7 ~ 510,4~~ - ·435:202 - [ ~~ -t- 117,491 100,051
.,-,= -=2-l=,-4=2=6-,=4-0=8== =21=,7=3=0,:48:8: - ··----·--'
10,021,854 11,036,787
- l34.08~ I 30,509
152,427
24,181,s64 I 2s,191,4o4 -
Capital Assets and Debt Administration
As of June 30, 2019 the district held $13,238,106 in capital assets (net of accumulated depreciation). This included land, construction in progress, school buildings, athletic facilities, maintenance facilities, transportation facilities, administrative facilities and other equipment. The cumulative total depreciable assets were $53 million with accumulated depreciation of $40 million.
7
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
Summary of Capital Assets (net of accumulated depreciation~
Governmental Bus incss-Tyee Total District 2019 2018 2019 2018 2019 2018
Land $ 323,153 $ 323,153 $ - $ - $ 323,153 $ 323,153 Land Improvements 833,687 886,726 - $ 833,687 $ 886,726 Buildings & Improvements 10,338,244 10,303,142 - $ 10,338,244 $ 10,303,142 Technology Equipment 113,584 196,039 - $ 113,584 $ 196,039 Vehicles 1,015,251 1,025,749 - $ 1,015,251 $ 1,025,749 General 512,059 538,842 102,128 104,154 $ 614,187 $ 642,996 Construction in Progress 60,789 - $ - $ 60,789
Total Capital Assets $ l3,135,978 $ 13,334,440 $ 102,128 $ 104,154 $ 13,238,106 $ 13,438,594
Summary of Long-Term Debt
At the fiscal year-end the district had $20,472,806 _in long- term debt with $8,694,641 in pension liability (effect ofGASB 68 implementation), $7,615,623 in posternploymenL benefits other than pensions (effect of GASB 75 implementation), $3,915,000 bonds ou.tstandin,g offset by $7,381 or bond discount, compensated absences of $156,200, capital lease obligations of $67 315 and KSBlT assessment of $3 1,408.
Comments on General Fund Budget Comparisons
General Fund Revenues
The total General fund operating revenues budgeted for fiscal year 2019 in the original budget was $20,204,958 . The final operating revenue budget for the General fund was $20,3 09,382. The actual perating revenue received was $21,993,293. That is an increase of $1,683,911 under the final General fund revenue budget which .is primarily attributed to variances in the amount of state on behalf payments received.
General Fund Expenses
The original general fund budget for expenditures was $2l,L18,003. The original contingency amotmtbudgeted in lhal total was $1,282,022. The final genera l fond budget for expenditures was $20,37 1,126. The final budgeted amouol for contingencies was $1,282,022. Actual expenditures fOJ' the general fund for fiscal year 2019 were $20,882,789. The district's general fund had favorable variance for actual expenditures resulting from the preservation of the amount budgeted. for contingency offset by an unfavorable variance of on-behalf expenditures.
General Fund Budgetary Implications and District Challenges for the Future
As mentioned in the introduction of this report, the legislative body of the tate has 11ot fully funded many of the mandates passed on to local school districts. This bas presented a significant financial challenge as the District has worked to fund an as. ortment of mandates with inadequate state fonding. This practice, over Lime, has placed a significant strain on the Dislrict s resources. The District mai11t·ains a contingency plan to deal with inadequacies in , tate funding, but the oonti,ngency plan wou ld only address funding shorlfalls for a sho1t-term tirnc period. A long-term solution at the state level must be developed and enacted by the state legislature to ensure adequate funding for Kentucky's public school districts. To balance inadequate state funding, local boards have been forced to ir1crease taxes, placing a burden on local taxpayer and local school districts.
In additions to inadequate funding by the State, tbe District also faces rising retirement/pension costs and the overall furnncial instability in the state pension fund. Kentucky school boards now contribute 3% for certified staff in order t stabilize the KTRS medical fund and is faced with an increasing county retirement employer match for support personnel. The District has been forced to cover the increased costs at a local level with no additional funding provided by the State.
As the level of funding provided by the State declines, local districts are forced to rely upon local tax revenue. Local taxes co11tinue to provide approximately 33% of the annual get1eral1 fund budget and are critical to the General Fund. Although both property and motor vehicle assessed values experienced a slight increase for the 2018 tax year, a significant decrease in
8
UNION COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2019
General Fund Budgetary Implications and District Challenges for the Future, continued
assessments for 2019 has forced local tax rates to increase dramatically. The growth and stability of the real estate market as well as industry activity remains critical in sustaining local tax revenues and reasonable tax rates for taxpayers.
The financial impact of declining emollment has also been a difficult challenge for the school d:istrict over the past few years. The district's student emollment, which drives the majority of our funding, has experienced a d w11ward trend over the past few years. Decreased funding has resulted in reduced instructional resources and positions, professional development opportunities and the inabiHty to fund cost of living sa lary adjustments.
Another challenge facing the District is the ability to recruit and retain quality teachers and to continue to deliver a quaJity and ever imprnving education for our students with limited revemtc resomces. Due to budget constraints many benefits have been ceased or reduced and teacher salaries are no longer competitive.
In the upcoming budget cycle for fiscal year 2020 the management team in cooperation with the Board of Education must continue to implement plans to stabilize the Genera l •tmd to provide a quality education for our students and secure a positive financial future for the District.
Report purpose and contact information .
This financial report is designed to provide our cilizens, taxpayers, and investors and creditors with a general overview of the School District's finances and to show the School District's accoimtability for the money it receives. If you have any questions about this report or need additional information, these inquiries should be directed to:
Amy Morris, Director of Finance Union Cou nty Schools at 510 South Mart Street, Morganfield, Kentucky Phone: 270-389-[694 or Email: [email protected] ls.us
9
UNION COUNTY SCHOOL DISTRICT STATEMENT OF NET POSITION
JUNE 30, 2019
GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL
Assets Current Assets
Cash $ 7,257,742 $ 515,044 $ 7,772,786 Investments Accounts receivable:
Taxes 471,756 471,756 Accounts, net 217 217 Intergovernmental - state 17,562 17,562 Intergovernmental - federal 221,715 21,813 243,528
Inventory 44,534 44,534 Prepaid insurance 80,078 80,078 Restricted cash 529,559 529,559
Total Current Assets 8,578,412 581 ,608 9,160,020
Noncurrent Assets Capital assets, net of accumulated depreciation 13,135,978 102,128 13,238,106
Total Noncurrent Assets 13,135,978 102,128 13,238,106
Total Assets 21,714,390 683,736 22,398,126
Deferred Outflows of Resources Deferred outflows from pension contributions 1,791,315 305,827 2,097,142 Deferred outflows from OPEB contributions 961,983 105,853 1,067,836 Deferred savings from refunding bonds 194,910 194,910
Total Deferred Outflows 2,948,208 411,680 3,359,888
Liabilities Current Liabilities
Accounts payable 62,140 1,161 63,301 Accrued liabilities 120,220 120,220 Unearned revenue 148,259 148,259 Current portion of :
Bond obligations 620,000 620,000 Accrued interest 24,135 24,135 Accrued sick leave 54,200 1,100 55,300 Capital lease obligations 19,875 19,875
Total Current Liabilities 1,048,829 2,261 1,051,090
Noncurrent Liabilities Noncurrent portion of:
Outstanding bonds 3,287,619 3,287,619 Accrued sick leave 86,200 14,700 100,900 Capital lease obligations 47,440 47,440 KSBIT assessment 31,408 31,408 Net OPEB liability 7,247,356 368.267 7,615,623 Net pension liability 7,433.,596 1,261,045 8,694,641
Total Noncurrent Liabilities 18,133,619 1,644,01 2 19,777,631
Total Liabllltles 19,182,448 1,646,273 20,828,721
Deferred Inflows of Resources Deferred inflows from OPEB contributions 1,158,239 73,988 1,232,227 Deferred inflows from pension contribution 659,019 111,797 770,816
Total Deferred Inflows 1.817.258 185,785 2,003,043
Net Position
Net investment in capital assets 9,346,790 102,128 9,448,918 Restricted for:
Capital outlay 455,826 455,826 Unrestricted (6 ,139,724) (838,770) (6,978 ,494)
Total Net Position $ 3,662,892 $ (736,642) $ 2,926,250
The accompanying notes are an integral part of the financial statements
10
FUNCTIONS/PROGRAMS Governmental Activities:
Instruction $
Support Seivices: Student Instructional staff District administration School administration Business Plant operations and maintenance Student transportation
Community seivice Facilities acquisition and construction Interest on long-term debt
Total Governmental Activities Business-Type Activities
Food seivices Daycare services
Total Business-Type Activities
Total Primary Government $
Expenses
14,625,624
1,490,566 645,453 767,130
1,493,071 896,573
2,614,350 1,872,521
242,190
134,086 24,781,564
1,592,481 140,106
1,732,587
26,514,151
UNION COUNTY SCHOOL DISTRICT STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2019
Program Revenues
Operating Grants Capital Grants Charges for and and
Services Contributions Contributions
$ 236,748 $ 1,784,543
18,165 147,122
4,442 -545
3,227 82,146 77,170
239,011 $ 510,460
251 ,577 326,563 2,266,556 762 ,037
130,376 1,485,709 134,696 23,354 265 ,072 1,5_09,063 -
$ 591,635 $'-- 3_,775,619 $ 762,037
General Revenues: Taxes:
Property taxes Motor vehicle taxes Utility taxes Unmined minerals
Other local revenue Earnings on investments Gain ( Loss) on disposal fixed assets State and formula grants
Total general revenues
Transfers
Change in net position Net position - beginning Net position - ending
Net (Expense) Revenue and Changes in Net Position
Governmental Business-Type Activities Activities Total
$ (12,604,333) $ (12,604,333)
(1,472,401) (1,472,401) (498,331) (498,331) (767,130) (767,130)
(1,488,629) (1 ,488,629) (896,028) (896,028)
(2,611,123) (2,611,123) (1,713,205) (1,713,205)
(3,179) (3,179) 510,460 510,460 117,491 117,491
(21 ,426,408) - (21,426,408)
23,604 23,604 17,944 17,944 41,548 41,548
(21 ,426,408) 41,548 (21,384,860)
5,608,621 5,608,621 758,864 758,864
1,152,482 1,152,482 307,717 307,717 120,336 120,336 160,364 7,386 167,750
11,084 11,084 14,110,606 14,110,606
22,230,074 7,386 22,237,460 --- --
803,666 48,934 852,600 2,859,226 (785,576) 2,073,650
s 3,662,892 $ (736,642) S 2,926,250
The accompanying notes are an integral part of the financial statements
11
r
UNION COUNTY SCHOOL DISTRICT BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2019
Special General Revenue
Fund Grant Fund
Assets
Cash and cash equivalents $ 7,257,742 Receivables:
Taxes 471,756 Miscellaneous $ Intergovernmental - State 2,591 Intergovernmental - Federal 221,715
Due from other funds 115,480 Prepaid insurance 80,078 Restricted cash $
Total assets $ 7,925,066 $ 224,306 $
Liabilities and Fund Balances
Llabllltles
Accounts payable $ 61,573 $ 567 Accrued payroll and related expenses 120,220 Retainage payable Due to other funds 115,4B0 Current portion of accrued sick leave 54,200 Unearned revenue 40,000 108,259 Payable from restricted assets Current portion of KSBIT Assessment
Total llabllltles 275,993 224,306
Fund Balances
Nonspendable, Prepaid assets 80,Q78 Restricted for:
Capital Projects Committed for:
Sick Leave 140,400 Site based CFWD Middle School roof 2,000,000 Transportation Buses 1,200,000 Phone system 300,000 Technology equipment 700,000 Debt Service
Assigned to: Encumbrances 209,793
Unassigned General fund 3,018,792
Total fund balances 7,649,063
Total llabllltles and fund balances s 7,925,056 $ 224,308 $
The accompanying notes are an integral part of the financial statements
12
Nonmajor Total Construction Governmental Governmental
Fund Funds Funds
$ 7,257,742
471,756
2,591 221,715 115,480 80,078
73,318 $ 456,241 529,559
73,316 $ 456,241 $ 8,678,921
$ $ 62,140 120,220
115,480 54,200
148,259
500,299
B0,07B
73,318 382,508 455,826
140,400
2,000,000 1,200,000
300,000 700,000
73,733 283,526
3,018,792
73,318 456,241 B, 17B,622
73,318 $ 456,241 $ 8,678,921
UNION COUNTY SCHOOL DISTRICT RECONCILIATION OF THE BALANCE SHEET -
GOVERNMENTAL FUNDS TO STATEMENT OF NET POSITION
JUNE 30, 2019
Total governmental fund balance per fund financial statements.
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets are not reported in this fund financial statement because they are not current financial resources, but they are reported in the statement of net position.
Certain assets are not reported in this fund financial statement because they are not available to pay current-period expenditures, but they are reported in the statement of net position. (Deferred savings from refunding bonds $194,910, Intergovernmental - state receivable for KSFCC portion of accrued interest $14,971)
Certain amounts related to the net pension and OPES liabilities are not reported in the governmental funds but are deferred in the statement on net position
Pension deferred outflows
OPES deferred outflows
Pension deferred inflows
OPES deferred inflows
Certain liabilities are not reported in this fund financial statement because they are not due and payable, but they are presented in the statement of net position. Long-term liabilities at year end consist of:
Bond obligations Net pension liability Net TRS OPES liability Net CERS OPES liability Capital lease obligations Accrued interest Compensated absences KSBIT assessment
Net position of governmental activities
The accompanying notes are an integral part of the financial statements
13
$
$
8,178,622
13,135,978
209,881
1,791,315
961,983
(659,019)
(1, 158,239)
(3,907,619) (7,433,596) (5,081,000) (2,166,356)
(67,315) (24,135) {86,200) (31,408)
3,662,892
UNION COUNTY SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
Special Nonmajor Total General Revenue Construction Governmental Governmental
Fund Grant Fund Fund Funds Funds
Revenues: From local sources:
Taxes: Property $ 5,114,233 $ 494,38B $ 5,608,621 Motor vehicle 75B,864 758,864 Utility 1,152,482 1,152,482 Unmined mineral 307,717 307,717
Earnings on investments 147,670 $ 4,030 8,664 160,364 Other local revenues 81,875 $ 27,140 46,130 155,145
Intergovernmental - Local 82,146 82,146 Intergovernmental - State 14,071,558 1,102,346 762,037 15,935,941 Intergovernmental - Indirect federal 1,137,070 1,137,070 Intergovernmental - Direct federal 276,748 276,748
Total revenues 21,993,293 2,266,556 4,030 1,311 ,219 25,575,098
Expenditures: Current:
Instruction 12,188,623 1,784,543 54,361 14,027,527 Support services:
Student 1,444,760 18,165 1,462,925 Instruction staff 485,760 147,122 2,200 635,082 District administrative 758,617 758,617 School administrative 1,424,720 1,424,720 Business 821,484 545 822,029 Plant operation and maintenance 2,106,918 2,106,918 Student transportation 1,647,726 77,170 1,724,896
Community service activities 4,181 239,011 243,192 Capital outlay:
Facilities acquisition and construction 719,826 719,826 Debt service:
Principal 825,000 825,000 Interest 120,752 120,752
Total expenditures 20,882,789 2,266,556 719,826 1,002,313 24,871 484
Excess (deficiency) of revenues over (under) expenditures 1,110,504 (715,7981 308,906 703,614
Other Financing Sources (Uses) Proceeds from sale of assets 11,084 11 ,084 Transfers in 48,674 48,674 694,175 791,523 Transfers out (48,674) (48,674) (694,175) (791,523)
Total other financing sources (uses) 11 ,084 11,084
Net change In fund balance 1,121,588 (715,796) 308,906 714,698
Fund balance, July 1, 2018 6,527,475 789,114 147,335 7,463,924
Fund balance, June 30, 2019 $ 7,649,063 $ $ 73,318 $ 456,241 $ 8,178,622
The accompanying notes are an integral part of the financial statements
14
UNION COUNTY SCHOOL DISTRICT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2019
Net change in fund balance - total governmental funds
Amounts reported for governmental activities in the statement of activities are different because:
Capital outlays are reported as expenditures in this fund financial statement because they use current financial resources, but they are presented as assets in the statement of activities and depreciated over their estimated economic lives. The difference is the amount by which depreciation expense exceeds capital outlays for the year.
Certain accruals do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental fund statements.(Change in accrued sick leave and change in KSBIT assessment payable)
Bond and capital lease payments are recognized as expenditures of current financial resources in the fund financial statements, but are reductions of liabilities in the statement of net position.
Capitalized savings from bond refundings must be amortized over the remaining life of the bonds
Net effect on pension expense of the allocation of pension expense per GASB 68
Net effect on employee benefits of the allocation of OPEB expense per GASB 75
Accruals of interest payments on long-term debt do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental fund statements. (Net of receivable for KSFCC for their share of accrued interest)
Change in net position of governmental activities
The accompanying notes are an integral part of the financial statements
15
$ 714,698
(198,462)
59,510
843,703
(47,624)
(562,225)
(7,863)
1,929
$ 803,666
UNION COUNTY SCHOOL DISTRICT STATEMENT OF NET POSITION
PROPRIETARY FUNDS JUNE 30, 2019
I .
TOTAL SCHOOL FOOD CHILD CARE ENTERPRISE
SERVICES PROGRAM FUNDS Assets:
Current Assets:
Cash and cash equivalents $ 399,981 $ 115,063 $ 515,044 Accounts receivable
Accounts, net 217 217 lntergovermental - Indirect Federal 21,813 21,813
Inventories 44,534 44,534 Total Current Assets 466,545 115,063 581 ,608
Noncurrent Assets:
Capital assets 539,976 539,976
Less: accumulated depreciation (437,848) (437,848)
Total Noncurrent Assets 102,128 102,128
Total Assets 568,673 115,063 683,736
Deferred Outflows of Resources:
Deferred Outflows from OPEB 95,107 10,746 105,853
Deferred Outflows from GERS Contribution 274,338 31,489 305,827
Total Deferred Outflows 369,445 42,235 411 ,680
Total Assets and Deferred Outflows $ 938,118 $ 157,298 $ 1,095,416
Liabilities
Current Liabilities:
Accounts payable $ 1,161 $ $ 1,161
Current portion of accrued sick leave 1,100 1,100
Total Current Liabilities 2,261 2,261
Noncurrent Liabilities:
Accrued sick leave 14,700 14,700
Net OPEB liability 330,880 37,387 368,267
Net pension liability 1,133,023 128,022 1,261,045
Total noncurrent liabilities 1,478,603 165,409 1,644,012
Total Liabilities 1,480,864 165,409 1,646,273
' Deferred Inflows of Resources:
Deferred Inflows from OPEB Contribution 66,477 7,511 73,988
Deferred Inflows from CERS Contribution 100,447 11,350 111 ,797
Total Deferred Inflows 166,924 18,861 185,785
Net Position: Net investment in capital assets 102,128 102,128
Restricted
Unrestricted (811,798) (26,972) (838,770)
Total Net Position (709,670) (26,972) (736,642)
Total Llabllitles, Deferred Inflows, and Net Position $ 938,118 $ 157,298 $ 1,095,416
The accompanying notes are an integral part of the financial statements
16
"'""'
UNION COUNTY SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2019
SCHOOL FOOD CHILD CARE
SERVICES PROGRAM Operating Revenues:
Lunchroom sales $ 125,376
Community service activities $ 134,696
Other operating revenues 5,000
Total Operating Revenues 130,376 134,696
Operating Expenses: Salaries and wages 456,847 59,635
Employee benefits 363,907 70,606
Professional and contract services 21,107 688
Materials and supplies 735,122 9,177
Depreciation 11,626
Other operating expenses 3,872
Total Operating Expenses 1,592,481 140,106
Operating loss (1,462,105) (5,410)
Non-Operating Revenues: Federal grants 1,270,719
Donated commodities 94,445
State grants 120,545 23,354
Interest income 6,162 1,224
Total Non-Operating Revenues 1,491,871 24,578
Operating transfers in
Change in Net Position 29,766 19,168
Total Net Position - Beginning (739,436) (46,140)
Total Net Position - Ending $ (709,670) $ (26,972)
The accompanying notes are an integral part of the financial statements
17
TOTAL
ENTERPRISE
FUNDS
$ 125,376
134,696
5,000
265,072
516,482
434,513
21,795
744,299
11,626
3,872
1,732,587
(1,467,515)
1,270,719
94,445
143,899
7,386
1,516,449
48,934
(785,576)
$ (736,642)
f-r-
UNION COUNTY SCHOOL DISTRICT STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2019
SCHOOL FOOD
SERVICES
Cash Flows from Operating Activities:
Cash received from lunchroom sales $ 125,159
Cash received from user charges and other 5,000
Cash payments to employees for services (597,499)
Cash payments to suppliers for goods and services (678,425)
Cash payments for other operating activities (3,872}
Net cash provided Provided (Used) for operating activitie! (1,149,637)
Cash Flows from Noncapital Financing Activities:
Non-operating grants received 1,279,235
Operating transfers in(out)
Decrease in dL,Je to other fund
Net cash provided for noncapital financing activities 1,279,235
Cash Flows from Capital and Related Financing Activities:
Acquisition of capital assets (9,600)
Cash Flows from Investing Activities:
Interest on investments 6,162
Net increase(decrease) in cash and cash equivalents 126,160
Cash and cash equivalents - Beginning of the year 273,821
Cash and cash equivalents - End of the year $ 399,981
Reconciliation of Operating Loss to Net Cash Used by Operating Activities:
Operating loss $ (1,462,105) Adjustments to Reconcile Operating Loss to Net Cash Provlded(Used) In Operating Activities:
Depreciation 11,626
Commodities used 94,445
On behalf payments recorded 108,294
Changes in assets and liabilities:
Receivables (217)
Inventory (17,729)
Accounts payable 1,088
Accrued liabilities
Accrued sick leave (1,800)
Net pension liability and deferrals 116,761
Net Cash Provided (Used) by Operating Activities $ (1,149,637)
Schedule of noncash transactions:
Benefits paid by state of Kentucky on behalf of District $ 108,294
Donated commodities received from Federal Government 94,445
$ 202,739
CHILDCARE
PROGRAM
$ 134,696
(76,683)
(9,865)
48,148
9,218
9,218
1,225
58,591
56,472
$ 115,063
$ (5,410)
14,135
39,423
$ 48,148
$ 14,135
$ 14,135
The accompanying notes are an integral part of the financial statements
18
TOTAL
ENTERPRISE
FUNDS
$ 125,159
139,696
(674,182)
(688,290)
(3,872)
(1,101,489)
1,288,453
1,288,453
(9,600)
7,387
184,751
330,293
$ 515,044
$ (1,467,515)
11,626
94,445
122,429
(217)
(17,729)
1,088
(1,800)
156,184
$ (1,101,489)
$ 122,429
94,445
$ 216,874
i--,
Assets:
UNION COUNTY SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2019
Cash and cash equivalents Certificates of deposit Accounts receivable
Total Assets
Liabilities: Accounts pay~ble Due to student groups
Total Liabilities
$
$
$
$
The accompanying notes are an integral part of the financial statements
19
AGENCY FUNDS
295,901 83,406
3 379,310
2,394 376,916 379,310
I-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies
a. Reporting Entity
The Union County Board of Education (Board), a five member group, is the level of government which has oversight responsibilities over all activities related to public elementary and secondary school education within the jurisdiction of the Union ow1ty School District (District). The District receives funding from Local, State and Federal government ources and must comply with the commitment requirements of these funding source entities. However, the District is not included in any other governmental "reporting entity" as defined in Section 2100, Codification of Governmental Accounting and Financial Repolting Standard as Boai:d members are elected by the public ru,d have decision making authority, the power to designate management, the responsibility to develop policies which may influence operations and primary accountability for fiscal matters.
The District, for financial purposes, includes all of the funds and account groups relevant to the operation of the Union County Board of Education. The financial statements presented herein do not include funds of groups and organizations, which although associated with the school system have not origu1ated within the District itself such as Band Boosters, Parent-Teacher Associations, etc.
These financial statements present the District and its component units, entities for which the District entity is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the governmental entity's operations ru1d so data from 1J1ese un'its would be combined with data of the primary governmental entity. The Union County Sebo I District has ne blended c mponent uni.
Blended Component Unit:
Union County School District Finance Corporation - On April 20, 1989, tbe Oni n County, Kentucky, Board of Education r s lved to authorize lhe estab lishment of the Union County Sch ol District Finance
'orporation (a non-pro.fit non-stock public and charjtable corporation organized under the School Bond Act md K.RS 273 and KRS Section 58 .1 80) as ut1 agency of the District for financing the costs of sch ol building facilities. The Board Members of the Union County Board of Education also comprise the Corporation's Board of Directors.
b. Basis of Presentation
Government-wide Financial Statements-The statement of net position and the statement of activities display information about the District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. The statements distinguish between those activities of the District that are governmental and those that are considered business-type activities. The effect of interfund activity has been substantially removed from these statements.
The government-wide financial statements are prepared using the economic resources measurement focus. This is the same approach used in the preparation of the proprietary fund financial statements but differs from the manner in which governmental fund financial statements are prepared. Governmental fund financial statements therefore include reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds.
The government-wide statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the District and for each function or program of the District's governmental activities. Direct expenses are those that are specifically associated with a service program or department and are therefore, clearly identifiable with a specific function or segment. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program.
20
I f
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
b. Basis of Presentation, continued
Revenues that are not classified as program revenues are presented as general revenues of the District, with certain limited exceptions. The comparison of direct expense with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from th general revenues of the District.
Fund Financial Statements - Fund financial statements report detailed information about the District. The ti cus of governmental and enterprise fund financial statements is on major funds rather Lhat reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a ingle column. Fiduciary funds are reported by fund type.
The financial reporting treatment applied to a fund i determined by its measurement focus. AU governmental funds aJe accounted for by using a current financial resources measurement focus. With this measurement focus, only ounent assets and current liabilities generally are included on the balance sheet. Operating statements of the e funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in the fund balance.
The proprietary fw1d is accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with lhe operation of these fund 'an: included n the balance sheet. Proprietary fund type operating tatements present increases (i.e., revenues) and decreases (i.e., expen es) in retained earnings. Operating revenues are those revenue that are generated directly from the primary activity of the proprietruy fund. For the District those revenues arc primarily charges for meals pr vided by the various schools. All revenues not meeting this definition are reported as nonoperating revenu . The District applies all applicable FASB pronouncements in accounting and rep rting for its proprietary operations.
When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed.
The District has the following funds:
Governmental Fw1d Types
1) The General .Ftmd i the primary operatiug fund of the District. It aCCOllnts for financial resomces used for general types of operations. Thi is a budgeted fm1d, and any unreserved fund balances aJe considered as resources avaiJable for use. This is a major fund of the District.
2) Special Revenue Funds account for proceeds of specific revenue somces ( other than expendable trusts or major capital projects) that are legally restricted t disbursements foT specified ptupo es.
a) The Special Revenue (Graut) F,md accou nts for proceeds of federal, state and local grants that are lega lly restTicted to disbursements for specified purp ses. Unused balances are returned to the grantor at the close of specified project peri.ods. Proj ect ace nnting is employed to maintain integrity for th various sources of fonds. The eparate pr ~ects of federally fw1ded grant progrnms are identified in the Schedule of Expenditures of Federal Awards included in this report. This is a major fund of the District.
b) The District Activity Fund i used to account for funds to support co-curricular and extra-curricular activities not raised r expended by student groups.
21
I-<
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
b. Basis of Presentation, continued
3) Capital Project F,md'!i are used to account for financial resources to be used for the acquisition or construclion of major capital facilities and equipment (other than those financed by Proprietary Funds).
a) The Stpport Ed11catio11 Excellence i1I Ke11tucky (SEEK) Capital Outlay F1111tl receives thos funds designated by the state as apital Outlay Funds and is generally restricted for use in financing projects identifi din the District's facility plan and corresponding debt service.
b) The Facility Support Program (FSPT() F11nd accounts for ftmd generated by the bujlding tax levy required to pa1ticipate in the School Facilities Construction Commission 's construction funding and state matching funds, where applicab.le. Fw1ds may be used for projects identified in the District's facility plan and col'l'esponding debt service.
c) The Co11stmction Fund accounts for proceeds from sales of bonds and other revenues to be used for authorized construction. This is a major fond of the District.
4) The Debt Service F1111d is used to account for the accumulation of resources for and payment of, general long-tenn debt, principal and interest and related costs; and for the payment of jJ ter st on general obligation notes payable, as required by Kentucky Law.
Proprietary Fond Types
Ente1prise Fllflds are used to accounl for those operations that are finaJ1ced and operated in a mam1er similar to private business or where the Board has decided that the dete□nination of revenue earned, costs incurred and/or net income is necessary for management accountability. The District has two enterprise fund s: the School Food Services Fund, and the After School Program Fund.
1) The School Food Services F1111d is used to account for school food service activities, including the National School Lunch Program, which is conducted in cooperation with the U. S. Department of Agriculture (USDi\). Amounts have been recorded for in-kind contribution of commodities from the USDA. The School Food Services Fund is a maj r fu1Jd.
2) The Child Cf1re Program Fund is used to account for after school programs established to provide supervi ed activities for children in the afternoon.
Fiduciai:y Fund Types
Fiduciary Fund account fi r assets held by the District in a trustee capacity (trust funds) or as an agent on behalf of others (agency funds). The District has no tmst funds.
The Agency Fund is custodial in nature and does not present results of operations or have a measttrement focus. Agency ftwds are accounted for using the modified accrual ba is of accounting. This fund i used to account for asset~ that the board holds for others in an agency capacity. The Agency Fund consist f Activity funds and accounts for activities of student groups and other types of activjties requiring clearing accounts. These funds are accounted for in accordance with "Uniform Program of Accounting for chooL Activity Funds.
22
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
c. Basis of Accounting
The government-wide financial statements, as weU a the proprietary fund and fiduciary fund financial statements, are reported using- the accrual basis of accounting. Revenue, are recorded when earned and expenses are recorded when a liability is incurrec~ regardless of the timing ofrelated cash flows.
Governmental fund financial statements are reported using the modified accrual basis of accounting, whereby revenues are recognized when they become both mea urable and available. Revenues are cons·id red to be "available" when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the D.istsict oonsiders revenues to be available if they are collected within 60 days of the end of the current fiscal year. Unearned revenue ari es when assets are recognized before r venue recognition criteria have been satisfied. Expenditures are genera lly recognized when the related liability is incurred.
Non-exchange transactions in which the District received value without directly giving equal value in return, include properly taxes granls, 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 is recognized in the fiscal year in wbi.ch all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resource arn required to be used or the fiscal year when use if first permitted, matching requirements, iJ1 wllich the District must provjde local resources to be nsed for a specific purpose, and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. On a modified accrua l basfa, revenues from non-exchange transactions must also be available before it can be recognized.
d. Estimates
The preparation of financial statements in conformity with accounting principles genera lly accepted in the United States of America requires management to make estimates and assumpti ns lhat affect reported amounts of assets liabilities, fund balances and disclosure of contingent assets and liabilities at the date of the financial statements, and ilie reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.
e. Cash and Cash Equivalents/Restricted Cash/Investments
The Board considers demand deposits, money market funds and other investments with an original maturity of 90 days or less, to be cash equivalents. 'ash is restricted in the special r venue funds per grant and other agreements, in the capital projects funds per state requirements and in debt ervjce funds per debt agreements. (See Note 2)
Cash balances of the District's funds are pooled and invested. Interest earned from investments purchased with pooled cash is allocated to the various funds based on the fund's average cash balance. Funds with negative cash balances are not charged interest.
As securjty for deposits of the District, any bank doing sucl1 business is required lo pledge securities in an amow1t to exceed funds on deposit by tile District. In addition, the District's accounts are in ured, subject to .FDI coverage terms and limitations. (See Note 2)
,State statutes authorize the District to invest in obligations of the U.S. Treasury and U.S. Agencies, certain federal in truments, commercial bank's certificates of deposit, sav ings and loan deposits, repurchas agreements, and the Commonwealth of Kentucky Investment Pool.
23
I '
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
e. Cash and Cash Equivalents/Restricted Cash/Investments, continued
The District's general policy is to repo1t money market investments and short-term participating interest-earning investment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using a cost-ba ed measure. Howev r, if tbe fair value of an inveslmenL is sign.ificantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term "short-term" refers to investments, which have a remaining term of one year or less at time of purchase. The term "nonparticipating" means that the investment's value does not vary with market interest rate changes.
The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted price in active markets for identical a sets· Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The district does not have any investments that are measured using Level 2 or Level 3 inputs.
The District has the following recurring fair value measurement as of June 30, 2019:
• Certificates of Deposit of $83,406 are valued using quoted market prices (Level 1 inputs), the carrying amount approximated fair value due to the short-term highly liquid nature.
f. Allowance for Doubtful Accounts
Student accounts receivable are stated net of an allowance for doubtful accounts. The District estimated the allowance based on its historical experience of the uncollected accounts at June 30. The allowance for doubtful accounts was $3,267 at June 30, 2019.
g. Inventories/Commodities
Supplies and materiaJs are charged to expenditures when purchased with the exception of the propri.etary fonds which record inventory using the accrual basis of accounting. Inventories are valued at c . tor at the estin1ated fair value at the date of donation, using the first-in first-out method. For the purposes of the statement of cash flows, federal grants received does not include non-cash commodities received in the amount of $94,445.
h. Capital Assets
General capital as. ets are those assets not specifically related to activities reported in the proprietary funds. These ._. assets generally result from expenditures in the governmental funds. These assets are reported in the
governm ntal activities culu11u1 of the govetnment-wi le Statement of Net Position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business-type activities column of the government-wide Statement of Net Position and in the respective funds.
All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and 1·etirements durjng the year. Donated capital assets m·e recorded at their fair market values as of the date received. 111e District maintains a capitalization threshold f one thousand doUars with the exception of computers, digital cameras and real property for which there is no tlu·eshoJd. The District does not possess any infrastrncture. Improvements are capitalized; the cost of non11aJ maintenance and repairs tl1at do not add to the value of the assets or materially extend an asset's life are not.
24
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
h. Capital Assets, continued
All reported capital assets are depreciated. [mprovements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line 111.ethod over the following useful lives for both general capita l assets and proprietary fund assets:
Description
Buildings and imprO\..ements Land imprO\..ements Technology equipment Vehicles Audio-visual equipment Food service equipment Furniture and fixtures Rolling stock
i. Unearned Revenue
Estimated Uves
25-50 years 20 years
5 years 5-10 years
15 years 10-12 years
7 years 15 years
Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before the eligibility requirements are met are recorded as unearned revenue.
j. Accrued Sick Leave
The Un ion County School District allows employees to accumulate and carry over sick days from year to year. The amount of total days that may be carried over from year to year is unlimited. Upon retirement from the sch ol system, employees will receive an amount up to thirty percent (30%) of the value of accumulated ick leave. Separation of em_ployment fos any r ason other than retirement results in the employee forfeiting accumulated days. Sick leave benefits are accrued as a Liability u ing the vesting method. An accrual fo r earned sick ]eave is made to tbe extent tha it is probable that the benefits will Jesuit in termination payments. It is deemed probable that benefits will be paid to empl yees with more than twenty years of e perience ru1d ru1y employee age 5S or older with at least five years experience.
The entire accrued sick leave liability is reported n the government-wide financial statement . Fm· governmental fond financial statements, the current portion of unpaid accrued sick leave is the amount expected to be paid using e pendable available resources. These ammmt are recorded in the account "Current Portion of Accrned Sick Leave" in the general fund. The non-cw-rent portion oftbe liabiUty is not reported.
k. Accrued Liabilities/Long-Term Obligations
All payables, accrued liabilitie and long-term obligations are reported in the government-wide fi nancial statements, and all payables, accrued liabilities and long-term obligations payable from proprietary funds ar reported on the proprieta1y fund financial statement. Bond discounts and premiums are recorded as deferred outflows of resources (deferred savings from refunding bonds) in tbe government-wide fmancial statem nts and amortized on a straight liue basi over the Life of the bonds.
In general, payables and accrned I iabWties that will be paid from governmental fw1ds are reported n the governmental fund financial statements regardless of whether they will b liquidated wifh current resources. However claims and judgments, the non-current portion of apital leases, accumulated sick leave, contractually
25
I I
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
k. Accrued Liabilities/Long-Term Obligations, continued
required pension contributions and special termination benefits that will be paid from governmental funds are reported as a liability in the ftmd financial statements only to ihe extent that they will be paid with current, ex.pendable, available financial resources. In general, payments made within sixty days after year-end are considered to have beetl made with current available financial resources. B nds and other I ng-tenn obligati ns that will be paid from governmental funds are not recognized as a liability in the fund financial statements until due.
I. Net Position and Fund Balance
District-Wide Financial Statements When the District incurs an expense for which it may use either restricted or unrestricted net position, it uses restricted net position first unless unrestricted net position will have to be returned because they were not used. Net position on the Statement of Net Position include the following:
Net Investment in Capital Assets - The component of restricted net position that reports the dif: erence between capital assets less both the accumulated depreciation and the outstanding balance of debt, excluding unspent proceeds, that is directly attributable to the acquisition, construction or improvement of these capital assets.
Restricted for Capital Outlay - The component of net position that reports the financial resources restricted to pay for construction activities.
Restricted for Debt Service - The component of net position that reports the financial resources restricted to pay for debt service on capital related debt less current accrual of interest.
Unrestricted - The difference between the assets and liabi lilies U1at is not reported in Net Position llwestecl in Capital Assets, Net of Related Debt, Net Position Restricted for Capital.Outlay, or Net P sition est.ricted for Debt Service.
Governmental Fund •inancial Statements In July 2010, tlte District adopted Statement of G vernme11ta.l Accom1ting standards No. 54, Fund Balance Reporting and G01 ernmental Fund Type Definitions. Accordingly in the fund financial sta1ements, governmental fo~ds report fund balances as uonspendable, restricted, committed, assigned or unassigned fund balance. Also, the District has established the order of assigned committed and restricted when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.
Nonspendable fund balanct:s are tho e amounts tJ1at cannot be spent because they are either: (1) generally, amounts thal are not expected to be converted to cash uch as inventories r prepaid am 1.mt:s or (2) amounts that are required to be maintained intact, such as the principal of a pc1manent fund. At June 30, 2019, the District had $80,078 of prepaid insuranc recorded as nonspenda.ble fund balance.
Restricted fund balances arise when constraints placed on the use of resources are either externally imposed by creditor (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imp sed by law thro11gh constitutional provisions or enabling legislation. At June 30, 2019, the District had the foll wing amounts restricted for capital outlay: FSPK $186,347 SEEK $196, I 61 and Construction $73,318.
26
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
I. Net Position and Fund Balance, continued
Committed fund balances are those amounts that can only be used for specific purposes pursuant to con trai11ts imposed by formal action of the government's highest level of decisi n-making authority, which, for tl1e District is the Board of Edttcation. The Board f Education must approve by majodty vote the establishment (and modification or rescinding) of a food balance commitment. The District had the fo llowing commitments at June 30, 20] 9:Sick leave $140,400, Union Counly Middle School roof $2,000 000, Bu es $1 ,200,000, Telephone system $300,000 and Technology equipment $700,000.
Assigned fund balances are those amounts that are con tnined by Lhe government's intent to be used for specific purposes, but are oeither restricted nor committed. The Board of Education allows program supervisors to complete J)w·chase orders which results in the encumbrance of funds. Assigned fund balance also includes (a) aU remaining amounts (except for negative balances) that aro repmted in governmental fonds, other than the general fund, that are not classified as nonspendable and are neither restricted nor committed and (b) amounts in the genernl fond that are intended to be used for a specific pt1rpose. At June 30, 2019, the Di. trict had $283 526 assigned related to encumbrances.
Unassigned fund balance is lhe residual classification for the general fund. This classification represents fund balance that has not been assigned to other fund s and that has not been reslricted, committed, or assigned to specific purposes within the general fund.
m. Property Taxes
Property taxes are levied annually by ordinance usually in October on tl1e assessed value listed as of tbc prope1iy Janua1y l, for aU reaJ and persona l property in the District. The bil lings are considered due upon receipt by the taxpayer; howeve(, lhe actual date is based on a period ending 30 days ai'i er the tax biU mailing. Property taxe collected are recorded as revenues in the fiscal year for which they were levied.
The property tax rates assessed for the year ended June 30, 2019 were 68.1 cents per $100 valuation for real and personal property and 55.7 cents per $100 valuation for motor vehicles, of which 5.8 cents i for participation in Facility Support Program.
'Die District levies a utility gr ss recejpts license tax in the amount of 3% of the gross receipts derived from the furnishings within the Di. trict, of telephonic and telegraphic communications service , cablevisfon services, electric p wer, water and natmal, ar1jficial and mixed gas.
n. Interfund Activity
Exchange transactions between fo 11ds are reported us r venues in the seller fonds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund trMsfers are reported as other financing sow-ces/uses in go ernmental funds and as non-operating revenues/expenses in proprietary funds. Repayments from funds responsible for pru1icular expenditures/expenses to the funds that initially paid for them are not presented on lhe financial statements.
Activity between funds that are representative of lending/borrowing arrangeme11t5 outstanding at the end of the fisca l year are l'eferred to as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financia l statements as "internal balances."
27
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
o. Bonds and Related Premiums, Discounts, and Issuance Costs
Tn the government-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the a1Jplicable bond premiums or discounts. Bond issuance costs are expensed when bonds are issued. In governmental fund financiaJ statements, bond premiums and discounts, as well as debt issuance costs are recognized in the current period. The face amount of the debt is reported as other financing sources. Premiums received on debt issuance are also reported as other financing sources. Discounts related to debt issuance are reported as other financing uses. Issuance costs are reported as debt service expenditures.
p. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the County Employees Retirement System Non-Hazardous ("C • RS") ru1d Teachers Retirement System of the State of Kentucky ("TRS") and add itions to/deductions from fiduciary net position have been determined on the same basis as they are reported by CERS and TRS. For this purpose benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are repo1ted at fair value.
q. Other Postemployment Benefits (OPEB)
For purp ses of measuring the liability, defeffed outflows of resources and deferred inflows of resources related to OPEB, and QllEB expense, information about the fiduciary net positi n of the County Employees Retirement System Non-Hazardous (" ERS") and Teachers' Retirement System of the State of K ntucky ("TRS" a11d addition· to/deductions from CER's and TRS's fiduciary net p ilion bave been determined on the sam.e basis as they are reported by CERS and TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable .in accordance with the b nefit terms. Investments are rep rted at fair value, except for money market in e .. tments and participating interest-earning investment contracts that have a maturity at the llme of purchase of ne year or less, which are reported at cost.
r. Deferred Outflows of Resources and Deferred Inflows of Resources
Deferred Outflows of Resources
In addition to assets, the statement of net position will sometimes rep rl a separate section for deferred outfl ws of resources. This separat financial statement element deferred outflows ofresources, represent a consumption of n t position that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until then.
DeferrtJd outflows related to pensions and OPEB are reported in the statement of net position. A deferred outflow from pension's and OPEB's results from System contributions made subsequent to the measurement date, difference b tween expected and actual experience, net difference between projected and actual jnvestment earnings on pension and OPEB plan investments, changes of assumption , and changes in proportion and differences between employer contributions and proportionate share of contribution . This amount from System contributions made subsequent to the measureme1Jt date are deferred and will be recognized as a reduction of net pension liability and net OPEB liability in the year ending June 30, 2019. The other components of deferred outflows are deferred and will be recognized as a reduction of pension and OPEB expense over the next several years.
Deferred outflows from a bond refunding results from the difference in the carrying value of the refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
28
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies, continued
r. Deferred Outflows of Resources and Deferred Inflows of Resources, continued
Deferred Inflows of Resources
In addition to liabilities, the statement of net position will sometimes report a eparate se tion for defen·ed inflows of resources. This separate financial statement element, deferred inflows ofresour es, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow ofresources (revenue) until that time.
Deferred inflows related to pensions and OPEB are reported in the statement of net position. A deferred inflow from pension's and OPEB s results from net differenoes between expected and actual earning n pension and OPEB plan investments and the change in proportions in differences between employer contributions and prop rLionate share of contributions. This amount is deferred and will be recognized as a reduction of pension and OPEB expense over the next several years.
s. Encumbrance Accounting
Encumbrances are not liabilities and, therefore, are not recorded as expenditures until receipt of materials or services. For budgetary purposes, appropriations lapse at fisca l year-end and outstanding encumbrances at yearend are re-appropriated in the next year. An a sigoment of fund balance equaJ to outstanding encumbrances at year-end is provided for at Ju11e 30, 201.9. Accordingly, no differences exist between actual resu lts and the applicable budgetary data presented in the accompanying combined fo1a11cial statements.
t. Prepaid Expenses
Payments made that will benefit periods beyon I June 30, 201 are recorded as prepaid expenses usiJJg the consumption method. A cmrent asset fir the prepaid amouol i. recorded at the time of the purchase and an expense is repm'led iJJ the year in which the services are consumed.
u. Recently Issued Accounting Standards
The following recently issued accounting standards are expected to impact the financial statements of the District in future periods:
GASBS No. 84 Fiduciary Activities
In January of 2017, the GASB issued Statement No. 84 to improve guidance regarding the identificati n, accounting and financial reporting for fiduciary activities. This Statement establishes criteria for identifying firluciary activiti,es for all state and local guvernments and requir s that activities meeting such criteria should present a statement of fiduciary net posit ion and a tatement of changes in fiduciary net position. The ., tatemenl is effi ctive for reporting periods beginning after December 31, 20 18. This District is ctuTently evaluating the impact the standard will have on its financial statements.
GASBS No. 87 Leases
In June of 2017, the GASB issued Statement No. 87 to improve accounting and financial reporting for leases by governments, by establishing standards for leases that previously were classified as operating leases. It establishes a single model for lease accounting based on the foundational principle that leases are financings of
29
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
u. Recently Issued Accounting Standards, continued
GASBS No. 87 Leases, continued
the right to use an underlying asset, thus requiring lessees to recognize a lease liability and an intangible righUouse lease asset, and lessors to recognize a lease receivable and a deferred inflow of resources. The Statement is effective for reporting periods beginning after December 15, 2019. The District is currently evaluating the impact that the standard will have on its financial statements.
Note 2. Cash and Deposits
At June 30, 2019, the canying amounts of the District's deposits were $8,681,0SS(excluding cash on hand $597) and the bank balances were $9,439,115. Of the bank balances, $344,943 was insured by federal depository insurance, $9,094,172 was covered by collateral held by the pledging bank's escrow agent in District's name.
The District's cash and cash equivalents at June 30, 2019 consisted of the following:
Fifth Third Bank Checking Fifth Third Bank Certificates ofDepos it Old National Bank Certificate ofDeposit Old National Bank Checking United Community Bank Checking United Community Bank Certificate ofDeposit
Restricted cash
Unrestricted cash and cash equivalents
Reported in the financial statement: Governmental funds Proprietary funds Fidiciary funds
Restricted cash at June 30, 2019 consists of the following:
District Activity Fund FSPK SEEK Fund Construction Fund
30
$
$
Bank Balance
$ 13,578 41,174
2,232 191
9,341,940 40,000
$ 9,439,115
73,733 186,347 196,161 73,318
529,559
Book Balance
$ 13,578 41 ,174
2,232 191
8,583,880 40,000
8,681,055
(529,559)
$ 8,151,496
$ 7,257,742 514,447 379,307
$ 8,151,496
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 3. Capital Assets
During the year ended June 30, 2019, the following changes occurred in capital assets:
Beginning Ending Governmental Activities: Balance Additions Deletions Balance Capital assets that are not depreciated:
Land $ 323,153 $ $ $ 323,153 Construction in progress 60,789 60,789
Total Non-depreciable Historical Cost 383,942 60,789 323,153
Capital assets that are depreciated: Land improvements 1,906,810 1,906,810 Buildings and improvements 41,681,312 798,204 42,479,516 Technology equipment 2,627,497 2,627,497 Vehicles 4,209,228 201,312 15,000 4,395,540 General 1,491,860 43,917 15,629 \520,148
Total Depreciable Historical Cost 51 ,916,707 1,043,433 30,629 52,929,511
Less accumulated depreciation for: Land improvements 1,020,084 53,039 1,073,123 Buildings and improvements 31,378,170 763,102 32,141,272 Technology equipment 2,431,458 82,455 2,513,913 Vehicles 3,183,479 211,810 15,000 3,380,289 General 963,018 70,700 15,629 1,008,089
Total Accumulated Depreciation 38,966,209 1, 181 ,106 30,629 40,116,686 Total Depreciable Historical Cost, Net 12,950,498 {137,673} 12,812,825
Governmental Activities: Capital Assets, Net $ 13,334,440 $ {137,673} $ 60,789 $ 13,135,978
Beginning Ending Business-Type Activities: Balance Additions Deletions Balance Capital assets that are depreciated:
Technology equipment $ 55,678 $ $ $ 55,678 General 476,380 9,600 1,682 484,298
r- Total Depreciable Historical Cost 532,058 9,600 1,682 539,976
Less accumulated depreciation for: Technology equipment 55,678 55,678 General 3721226 11 626 1,682 382,170
Total Accumulated Depreciation 427,904 11 ,626 1,682 437,848
Total Depreciable Historical Cost, Net $ 104,154 $ (2,026) $ $ 102,128
31
I I
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 3. Capital Assets, continued
Depreciation expense was charged to governmental functions as follows :
Instruction Support services:
Student support services Instruction staff District administration School administration Business support Plant operations and maintenance Student transportation
Total Depreciation Expense
Note 4. Long-Term Debt
Bonded Debt Obligations
$ 549,807
46,061 636
3,808 12,500 17,589
357,658 193,047
$ 1,181 ,106
On certain bond issues, the District has entered into "participation agreements" with the Kentucky School Facility Construction Commission (KSFCC). The Commission was created by tl1e Kentucky General Assembly for the purpose of assisting local school districts in meeting school construction needs.
The original amount of the issues, the issue dates and interest rates of outstanding bonds at June 30, 2019 are summarized below:
Issue Issue of 2009, Refunding Issue of 2011, Refunding Issue of 2013, Refunding Issue of 2014 Issue of 2016
Original Amount 1,960,000 3,480,000 2,440,000
355,000 1,045,000
Interest Rates 2.00% - 3.50% 1.50% - 3.00% 1.00% - 2.15% 1.00% - 2.15% 1.00% - 3.00%
The bonds may be called prior to maturity dates and redemption premiums are specified in each issue. Assuming no bonds are called to prior to scheduled maturity, the minimum obligations of the District, including amounts to be paid by the Commission at June 30, 2019 for debt service (principal and interest) are as follows:
32
f I
f-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 4. Long-Term Debt, continued
Bonded Debt Obligations, continued School Facility
District Construction Commission Total Interest Principal Interest Principal Interest Principal
2019-20 56,502 508,989 42,479 111,011 98,981 620,000 2020-21 43,847 522,970 40,229 112,030 84,076 635,000 2021-22 29,988 531,929 37,891 113,071 67,879 645,000 2022-23 15,849 185,868 35,465 114,132 51,314 300,000 2023-24 12,132 189,786 32,927 115,214 45,059 305,000 2024-25 8,336 193,680 30,300 121,320 38,636 315,000 2025-26 4,462 207,554 27,494 127,446 31,956 335,000 2026-27 24,344 70,000 24,344 70,000 2027-28 22,104 70,000 22,104 70,000 2028-29 19,864 75,000 19,864 75,000 2029-30 17,474 75,000 17,474 75,000 2030-31 15,084 80,000 15,084 80,000 2031-32 12,544 85,000 12,544 85,000 2032-33 9,819 85,000 9,819 85,000 3033-34 7,019 90,000 7,019 90,000 3034-35 4,063 65,000 4,063 65,000 3035-36 2,03 1 65,000 2,03 l G5 000
$ 17),116 $ 2,340,776 $ 381,131 $ 1,574,224 $ 552,247 $ 3,915,000
During the year ended June 30, 2019, the following changes occurred in long-term liabilities:
Balance Balance July 1, 2018 Additions Reductions June 30, 2019
Governmental Activities: Bonds $ 4,740,000 $ 825,000 $ 3,915,000 Premium (Discounts) (9,588) (2,207) (7,381)
4,730,412 822,793 3,907,619
KSBIT assessment 62,818 31,410 31,408 Capital lease obligation 86,018 18,703 67,315 Net pension liability 7,247,182 186,414 7,433,596 Net OPEB liability 8,230,074 982,718 7,247,356 Accrued sick leave 158,800 9,159 (A) 27,559 140,400
$ 20,515,304 $ 195,573 $ 1,883,183 $ 18,827,694
Business-Type Activities: Net pension liability $ 1,184,507 $ 76,538 $ 1,261,045 Net OPEB liability 406,824 $ 38,557 368,267 Accrued sick leave 17,600 (A) 1,800 15,800
$ 1,608,931 $ 76,538 $ 40,357 $ 1,645,112
(A) This amount represents the net addition in compensated absences, ie, days earned less days taken.
33
Total
718,981 719,076 712,879 351,314 350,059 353,636 366,956
94,344 92,104 94,864 92,474 95,084 97,544 94,819 97,019 69,063 67,031
$ 4,467,247
Due within one year
$ 620,000
620,000
19,875
54,200 $ 694,075
$ 1,100 $ 1,100
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 4. Long-Term Debt, continued
Bonded Debt Obligations, continued
Union County School District Finance Corporation School Building Refunding Revenue Bonds, Series of 2009, dated February 1, 2009 in the amount of $1,960.000, were issued for the pmpose of refunding and defeasing the Union County School District Finance Corporntion School Building Refunding Revenue Bonds, Series of 1999 which have been paid in full. The KSPCC is pru"licipating in approximately 43% of the debt service of the bonds. This current reftmding was undertaken to reduce total debt service payments over the next ten years by $168 825 and resulted in an economic gain of $144,128.
Union County School District Finance Corporation School Building Refunding Revenue Bonds, Series 2011, dated March 1, 2011, in the amount of $3,480,000, were issued for the purpose of refunding the outstanding Union County School District Finance Corporation School Building Refunding Revenue Bonds, Series 2002, dated June 1, 2002, scheduled to mature on and after June 1, 2012. This refunding was undertaken to reduce total debt service payments over the next ten years by $200 692 and resulted in an economic gain of $167,947. In February 2013, the in-substance defeased debt was paid in fu ll.
Uni n County School District •inance orporation School Building Refunding Revenue Bonds, Series 2013, dated Apri l 1, 20] 3, in the amount of $2,440,000, were issued for the purpose of refunding the outstanding l.Jnion
aunty School District Vinance Corporation School Building RefuncLing evenue Bonds, Series 2006, dated April 1, 2006, maturing April 1, 2017 and thereafter. The 2006 Bonds maturing April 1, 2014 through April 1, 2016 will not be defeased and remain payable under the original terms. This refunding was undertaken to reduce total debt service payments over the next twelve years by $147,948 and resulted in an economic gain of $129,437. In April 2016, the in-substance debt was paid in full.
During 2014, Union County School District Finance orporati n School Building Revenue Bond, Series 2014, dated January 16, 2014 in the amount of $355 000, was issued to finance construction of improvements at Uniontown Elementary School. The KSFCC is participating at 100% of the debt service of the bonds.
During 2016, Union County School District Finance Corp ration School Building Revenue Bond, Series. 2016 dated February 1, 2016 in the amount of $1,045,000, was issued to finance HV AC improvements at Union County High, Union County Middle, Sturgis lementary and Morganfield Elementary schools. The KSFCC is parlicipating 100% of the debt service of tbe bonds.
Other Long-Term Debt
The Kentucky School Boards lnsurance rust (KSBIT) notified all past and present members that they will be assessed to make up for a growing deficit in the Workers' Compensation Self-Insurance and/ r Property and Liability pools. Lo 2014, the District recorded a liability of $326,275 ($251,278 for Workers' Compensation liability and $74,997 for Property and Lfabilily coverage). The Property and Liability was paid in full in September of 2014 and the Dist.riot :financed the Workers' Compensation liability portion through an interest free loan from KSBIT over sixyeru·s after a 25% down payment. Annual payments are $31,410.
34
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 5. Capital Lease Obligations
The District has entered into various lease agreements with RICOH for financing the acquisitions of copiers. The RICOH lease payments are paid by the General •un.d and reported as instructional. The capi1al lease obligations are included in depreciation expense and allocated to the instructional, business support, and ch ol administrative functions. The following is an analysis oflease.d properly under capitaJ leases by class:
2017
RICOH Leases Class of Property
Technology (9 Copiers)
Cost
$100,760
Accumulated Depreciation
$38,445
The following is a schedule by years of the future minimum lease payments under the capital leases together with the present value of the net minimum lease payments as of June 30, 2019:
Year Ending June 30,
2020 2021 2022 2023
Total minimum lease payments Less: Amount representing interest
Present Value of Net Minimum Lease Payments
Note 6. Defined Contribution Plans
Capital Lease
$
Obligations
23,426 23,426 23,426
3,906 74,184 (6,869)
67,315
The District makes available various 401 (k) and 403(b) defined contribution pensio11 plans for all regular fi.Jll -time and part-time employees. These Plans are administered by independent third party administrator . Employees are al lowed to contribute any amount to the Plan up t the Internal Revenue ode maximum all wabl runotmL The District can but is not required to contribute to the Plans. In addition, the District retains authority to amend or terminate these plans. During the year ended June 30, 2019, employees of the District contributed $164,983 to 40 l(k) plans and $4,800 to 403(b) plans.
Note 7. Deferred Compensation
The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to all employees, permits them to defer a portion of their salary until future years. This deferred compensation is not availabl.e to employees until termination, retirement, death or unforeseeable emergency. GA.SB Statement No. 32, Accounting and •inancial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, allows entities with little or no administrating i_nvolvement and who do not perform the investing functions for these plans to omit plan assets and related liabilities from their financial statements. The District therefore does not show these assets and liabilities on its financial statements. The District does not contribute to these plans, and employees of the District contributed $4,730 to these plans during the year ended June 30, 2019.
35
UNION COUNTY SCHOOL DISTRICT .NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 8. Pension Benefits-Teachers' Retirement System of the State of Kentucky
Plan description - Teaching-certified employees of the Union County School District are provided pensions through the Teachers' Retirement System of the State of Kenh1cky (TRS}-a cost-sharing multiple-employer defi11ed benefit pension plan witb a specia l funding situation established to provide retirement annuity plan coverage for local school districts and other public educational agencies in the state. TRS was created by the 1938 General Assembly and is governed by Chapter 161 Section 220 through Chapter 161 ection 990 of the Kentucky Revised Stah1te (KRS). TRS is a blended component unit of the Commonwealth of Kentucky and therefore is included in tbe Commonwealth's financiaJ tatements. TRS issue a publicly available financial report that can be obtained at https://trs.ky.gov/financial-reports-information/.
Benefits provided - For members who have established an account in a retirement system administered by tbe ommonwealtb prior to July 1, 2008 members become vested when they complete five (5) years of credited
se1vice. To qualify for monthly retirement benefits, payable for life members must eitl1er:
1.) Attain age fifty-five (55) and complete five (5) years of Kentucky service, or 2.) Complete 27 years of Kentucky service.
Participants tl1at retire before age 60 with less than 27 years of service receive reduced retirement benefits. Nonuniversity members with an account established prior t July 1, 2002 receive monthly payments equal to two (2) percent (seJvice prior to July 1 1983) and two and one-half (2.5) percent (se1vice after July 1, 1983) of their final average salaries for each year of credited service. New members (inclt1dir1g econd retirement ace unts) after July l , 2002 will receive mond1ly benefits equal to 2% of their final average salary for ea h year of service if upon retirement, their totaJ service less than ten yearn. New members after July 1, 2002 who retiJ"e with ten or more years of total service will receive montbly benefits equal to 2.5% of their final averag alary for each year of ervice in.eluding the :first ten years. Jn addition, membei•s who retire July I 2004 and later with more than 30
years of service will have their mulliplier increased for all years over 30 from 2.5% to 3.0% to be used in their benefit calculation. Effective July J, 2008, the System has been amended to change the benefit structure for members hired on or after that date.
Final average salary is defined as the member's five (5) highest annual salaries fi r t11ose witb less than 27 yea.rs f service. Members at least age 55 with 27 or more years of service may use their three (3) highest annual alaries to compute the final average salary. TR.S also provides disability benefits for vested members at the rate of sixty (60) percent of the final average salary. A life insurance benefit, payable upon the death of a member, is $2,000 for active couhibuting members and $5,000 for retired or disabled members.
C st of Uving increases are one and one-half (1.5) percent annually. Additional ad hoc increases and any other benefit amendments must be authorized by the General A sembly.
Contributions- Contrj bution rates are established by Kentucky Revised Statutes (.KRS). Non-university members are required to contribute L2 .855% of their salaries to the System. The ommonwea.ltb of Kentucky, as a n nemployer contributing ntity, pays matching contributions of the amount 13. 105% of salaries for local sch ol district and regional cooperative employees hired before .T uJy 1, 2008 and 14.105% for tho e hired after July 1, 2008. For local school district and regional cooperative members whose salarjes are federally funded, Lhe employer contributes 16.105% of alaries. fan employee leaves covered employment before accumulating five (5) yea.rs of credited service, accwnulated employee pension contributions pJu interest are ref1U1ded to the employee upon the member's request.
36
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 8. Pension Benefits-Teachers' Retirement System of the State of Kentucky, continued
The Union County School District's total payroll for the year was $13,289,751. The payroll for employees covered under TR was $9,696,483. For the year ended June 30, 2019, the Commonwealth contributed $2,715,241 to TRS for the pension benefit of our participating employees. The Districts contributions to TRS for the years ending June 30, 2019 2018 and 2017 were $386,125, $282,104, and $275,845, respectively, which represent 100% of the required contributions for those employees covered by federal programs.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension - Because the State, as a non-employer contributing entity, is required by Kentucky Revised Statutes to contribute 100% of the District's contractually required contributions, the District reports no pension liabilities, pension expenses, deferred outflows ofresources, or deferred inflows ofresources related to TRS.
The portion of the TRS net pension liability that was associated with the District recognized at June 30, 2019, was as follows:
District's proportionate share of the net pension liability
State's proportionate share of the net pension liability associated with the District
Total
$
37 473 487
$ 37,473,487
The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2017. The net pension liability associated with the District was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2018, the measurement date, the State's proportion of the TRS net pension liability associated with the District was 0.2862% percent which was a decrease of .0215% from its proportion measured as of June 30, 2017 of 0.3077%
For the year ended June 30, 2019, the District recognized on-behalf pension expense and revenue of $2,715,241 for contributions provided by the State.
37
I I
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THEYEAR ENDING JUNE 30, 2019
Note 8. Pension Benefits-Teachers' Retirement System of the State of Kentucky, continued
Actuarial Assumptions- The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 3. 00%
Salary increases, including inflation 3.50% to 7.30%
Long-term ln\estment rate of return, net of pension plan in\estment expense & inflation 7.50%
Municipal Bond Index Rate: Prior Measurement Date 3.56% Measurement Date 3.89%
Year FNP is projected to be depleted NIA
Single Equivalent Interest Rate, net of pension plan in\estment expense & inflation: Prior Measurement Date 4.49% Measurement Date 7. 50%
Post-Retirement Benefit Increases 1.50% annually
Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on a projection of Scale BB to 2025, set forward two years for males and one year for females.
The actuarial assumptions used in the June 30, 2017, valuation were based on the results of an actuarial experience study for the period July 1, 2010, to June 30, 2015, adopted by the TRS Board on November 19, 2016.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return ( expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
The target asset allocation and best estimates of arithmetic real rates of return for each major asset class, as provided by TRS's investment consultant, are summarized in the following table:
Target Long-Term Expected Asset Class Allocation Real Rate of Return
U.S. Equity 40.0% 4.2% International Equity 22.0% 5.2% Fixed Income 15.0% 1.2% Additional Categories 8.0% 3.3% Real Estate 6.0% 3.8% Private Equity 7.0% 6.3% Cash 2.0% 0.9%
Total 100.0%
38
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 8. Pension Benefits-Teachers' Retirement System of the State of Kentucky, continued
Discount Rate- The discount rate used to measure the total pension liability (TPL) a of ti e Measurement Date was 7.5%. The projection of cash flows used to determine the discount rate was performed in accordance with GASB 67. TRS assumed that Plan member contri.butions will be made at the cun-ent contribution rates and that employer contributions will be n1ade at Actuarially Determined Contribution rates, adjusted by 95%, for all fiscal year in the future. Based on those assumptions, t11e pension plan's fiduciary net _position was projected to be available to make all projected future benefit payments of current plan members. Therefore the long term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension Liability. The change in the discount rate from 4.49% used in 2017 disclosure report is considered a change in actuarial assumptions or other under inputs under GASB 68.
Sensitivity of the Disb-ict's Proportionate Share of Net Pen. ion iability to hanges in the Discount Rate-The following presents the State's proportionate share of the net pension liability associated with the District calculated using the discount rate of 7.5% as well as what the State's proportionate share of the net pension liability associated with the District would be if it were calculated using a discount rate that is !-percentage-point lower (6.5%) or !-percentage-point higher (8.5%) than the current rate:
State's proportionate share of net pension liability associated with the District
1% Decrease 6.50%
48,034,289
Current Discount Rate 1% Increase 7.50% 8.50%
37,473,487 28,587,983
Plan Fiduciary Net Position- Detailed information about the TRS fiduciary net position is available in the publically available financial report.
Payable to the Pension Plan- Becau e the tate is required by statute to contribute 100% of the District's contractually required pension contributions, the District reports no payable for such pension contributions at June 30, 2019.
Note 9. Other Postemployment Benefits -Teachers' Retirement System of the State of Kentucky
Other Postemployment Benefits (OPEB)
Plan Description - Teaching-certified employees. of the District are provided OPEBs through the Teachers' Retirement System of the Slate of Kentucky (TRS}--a cost-sharing multiple-employer defined benefit OPEB plan with a special funding situation established to prnvicle retirement annuity plan coverage for local school districts and other publi ed11cational agencies in the state. TRS was created by the 1938 General Assembly and is governed by hapter 161 Section 220 through Chapter 161 Section 990 of the Kentucky Revised Statutes (KRS). TRS is a blended component unit of the Commonwealth of Kentucky and therefore is included in the Commonwealth's financial statements. TRS issues a publicly available financial report that can be obtained at https://trs.ky.gov/financial-reports-information.
39
-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 9. Other Postemployment Benefits -Teachers' Retirement System of the State of Kentucky, continued
The state reports a liability, deferred outflows of resources and deferred inflows of resources, and expense as a result of its statutory requirement to contribute to the TRS Medical Insurance and Life Insurance Plans. The following information is about the TRS plans:
M di.cal Insurance Plan (M[P)
Plan description - In addition to the pension benefits described in Note 6, Kentucky Revised Statute 161.675 requires TRS to provide post-employment healthcare benefits to eligible members and dependents. The MTP is a cost-sharing multiple employer defined benefit plan with a special funding situation. hanges made to the medical plan may be made by the IRS Board of Trustees, the Kentucky Department f Employee Insurance and the General Assembly.
Benefits provided - To be eLigible for medical benefits the member must have retired either for service or disability. The MIP offer· coverage to members under the age of 65 through the Kentucky Employees Health Plan administered by the Kentucky Department f Employee Insurance. TR.S retired m mbers are giveD a supplement to be used for payment of their health insurance premium. The amount of the member's supplement is based on a contribulion supplement table approved by the TRS Board of Trust es. The retired member pays premiums in excess of the monthly supplement. Once retired members and eligible spouses attain age 65 and are Medicare eligible, coverage is btained tlu-ough the TRS Medicare Eligible Health Plan.
Contributions - In order to fund the post-retirement healthcare benefit, seven and one half percent (7.50%) of the gross annual payroll of members is contributed. Three percent (3. 75%) is paid by member conlributions and three quarters percent (.75%) from State appr priation and three percent (3.00%) fr m tbe empl.oyer. The State contributes the net cost of heaJth insurance premiums for members who retired on or after July 1 2010., who are in the non-Medicare eligible group. Also, the premiums collected from retirees as described in the plan description and investment interest help meet the medical expenses of the plan.
At June 30, 2019, the District reported a liability for its proportionate share of the collective net OPEB MIP liability and the related deferred ut11 ws or deferred inflows.
Life Insurance Plan (LIP)
Plan description_- TRS also administer a life insurance plan as provided by Kentucky Revise l Statute J 6 l.655 to eligible active and retired members. The LIP i a cost-sharing multiple employer defined benefit plan wjth a special funding situation. Change made to the life insurance plan may be made by the TRS Board of Trnstees and the General Assembly.
13enefits Provided-TRS provides a life insurance benefit of five thousand dollars payable for members who retire based on serv ice or disability. TRS provides a life insurance benefit of two thousand d llars payable for its active contributing members. The life insurance benefit is payable upon death of the member to the member's estate or to a party designated by the member.
Contributions - In order to fund the post-retirement life insurance benefit, three hundredths of one percent (.03%) of the gross annual payroll of members is contributed by the State. Employers do not contribute to the LIP.
40
/ '
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 9. Other Postemployment Benefits -Teachers' Retirement System of the State of Kentucky, continued
At June 30, 2019, the District did not report a liability for a proportionate share of the collective net OPEB LIP liability, nor any related deferred outflows or deferred inflows, because the State of Kentucky provides the OPEB LIP support directly to TRS on behalf of the District, and the District does not contribute to the LIP.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OP ·Bs- At June 30, 2019, the District reported a liability of $5,081,000 for its proportionate share of the collective net MIP OPEB liability that reflected a reduction for state MIP OPEB support provided to the District. The collective net MIP OPEB liability was measured as of June 30, 2018, and the total MIP OPEB liability used to calculate the collective net MIP OPEB liability was based on a projection of the District's longtenn share of contributions to the MlP OPEB plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2018, the District's proportion was 0.146435%, a decrease of .014569% from its proportion measured as of June 30, 2017 of 0.161004%.
The amount recognized by the District as its proportionate share of the OPEB liabilities, the related State support, and the total portion of the net OPEB liabilities associated with the District were as follows:
MIP LIP
District's proportionate share of the net OPEB liability $ 5,081,000 $
State's proportionate share of the net OPEB liability associated with the District 4,379,000 75,000
Total $ 9,460,000 $ 75,000
For Lhe year ended June 30, 2019, the District recognized MIP OPEB expense of $316,811 and on-behalfMIP revenue of $224,794 for support provided by the tate. For the year ended June 30, 2019, the District recogn ized on-behalf UP OPED expense of $2,608 and revenue of $2,608 for support provided by the State. At Jone 30, 2019 the District reported deferred outflows of resources and deferred inflows of resources related to the MIP OPEB from the following sources:
MIP Deferred Deferred
Outflows of Inflows of Resources Resources
Difference between expected and actual experience $ $ 260,000 Assumption changes 70,000 Net difference between projected and actual
investment earnir,gs on OPEB plan investments 21,000 Changes in proporation and differences
between District contributions and proportionate share of contrbutions 442,000
District contributions subsequent to the measurement date 269,297
Total $ 339,297 $ 723,000
41
-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 9. Other Postemployment Benefits -Teachers' Retirement System of the State of Kentucky, continued
Of the total amount reported as deferred outflows ofresources related to the MIP OPEB, $269,295 resulting from Distrjct contributions subsequent to tbe measurement date and before the end of the fiscal year will be included as a reduction of the collective net MIP OPEB liability in the year ended June 30, 2020, Other amounts reported a. deferred outflows of resources and deferred inflows of resources related to MIP OPEB will be recog1tlzed in the District's MIP OPEB expense as follows:
Y~ar ended June 30: 2020 $(124,000) 2021 $(124,000) 2022 $(124,000) 2023 $(114,000) 2024 $(116,000) Thereafter $ (51,000) Total 1(.6.i3.Jillo_)
Actuarial assumptions -The total MIP and LIP OPEB liabilities in the June 30, 2017 actuarial valuation were determined using the following actuarial assumptions, applied to all periods ·included in the measurement:
Investment rate of return, net of OPEB plan investment expense & inflation:
MIP LIP
Projected salary increases Inflation Rate Real Wage Growth Wage Inflation Healthcare cost trend rates, :MJP only:
Under 65 Ages 65 and Older Medicare Part B Premiums
Municipal Bond Index Rate Discount Rate:
MIP LIP Single Equivalent Interest Rate,
8.00% 7.50%
3.50% to 7.20%, including inflation 3.00% 0.50% 3.50%
7.75% for FY 2018 decreasing to an ultimate rate of 5.00% by FY 2024 5.75% for FY 2018 decreasing to an ultimate rate of 5.00% by FY 2021
0% for FY 2018 with an ultimate rate of 5.00% by 2030 3.89%
8.00% 7.50%
at prior measurement date and measurement date MIP 8.00%
7.50% LIP
42
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 9. Other Postemployment Benefits-Teachers' Retirement System of the State of Kentucky, continued
M rtality rates were based on the RP-2000 Combined MmtaJity able projected to 2025 witb projection scale BB and set rorward two years for males and one year for females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table set forward two years for males and seven yeru·s for female is used for the period after disability retirement.
The remaining actuarial assumptions ( e.g. initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2017, valuation were based on a review ofrecent plan experience done concurrently with the June 30, 2015 valuation.
The long-term expected rate of return on OPEB plan ilwestn1ents was determined usiJ1g a I g-nonnal distribution analysis in which best-eslimatc ranges of expected future real rates of return ( expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to pr duce the long-term expect d rate f return by weighting the expected :fut11l'e real rates of return by the target asset allocation percentage and by adding expected inflation.
The target allocation and be t estimates of arithmetic real rates of return for each major asset class, as provided by TRS s investment consultant, are summarized in the following table:
30 Year Expected
Geometric Real
Target Allocation Rate of Return
Asset Class MIP LIP MIP LIP
Global Equity 58.0% 0.0% 4.6% 0.0% U.S. Equity 0.0% 40.0% 0.0% 4.2% International Equity 0.0% 23.0% 0.0% 5.2% Fixed Income 9.0% 18.0% 1.2% 1.2% Real Estate 5.5% 6.0% 3.8% 3.8% Private Equity 6.5% 5.0% 6.3% 6.3% Other Additional Categories 20.0% 6.0% 3.3% 3.3% Cash (LIBOR) 1.0% 2.0% 0.9% 0.9%
Total 100.0% 100.0%
Discount rate- The di count i-ates used tu measure the total MIP and LIP OPEB liabilities were 8.00% and 7.50%, resJ ectively. The projection of cash Dows used to determine the discount rate as umed that pla11 member contributions will be made at the current contribution rates and the MIP employer contributions will be made at statutorily required rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rnte of return on OPEB plan investments was appli d to all periods of pr ~ected benefit payments to determine the total OPEB liabilities.
43
-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 9. Other Postemployment Benefits -Teachers' Retirement System of the State of Kentucky, continued
Sensitivi of the Districts ro )0rtionate share of the coJlective net MIP OPED liabilit to chan es in the di count rate- The following table presents the District's proportionate share of the collective net MIP OPEB liability, calculated using the discount rate of 8.00%, as well as what the District's proportionate share of the collective net MIP OPEB liability would be if it were calculated using a discount rate that is I-percentage-point lower (7 .00%) or I-percentage-point higher (9.00%) than the current rate:
Net MIP OPEB liability
1% Decrease 7.00%
5,958,000
Current Discount Rate 8.00%
5,081,000
1% Increase 9.00%
4,350,000
Sensitivity f the District's proportionate share of the collective net MIP OP B liability to changes in ilie healthcare co t 1rends rates - The following presents the District's proportionate share of the collective net MIP OPEB liability, as well as what the District's proportionate share of the collective net MIP OPEB liability would be if it were calculated using healthcare cost trend rates that were I-percentage-point lower or I-percentage-point higher than the current healthcare cost trend rates:
1% Decrease Current Trend Rate 1% Increase
Net MIP OPEB liability 4,213,000 5,081,000 6,151,000
OPEB pl ns' fiduciary net position - Detailed information about the OPEB plan's fiduciary net position is avai lable in the separately issued TRS financial reports.
Payable to the OPEB Plru1s - The District reported payables of $0 for the outstanding amount of MIP and LIP Ol'EB contributions due to the Plans at June 30, 2019.
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System
Plan Description - Substantially all other employees (classified personnel) are c vered undes the County Employees Retirement System (CERS) a cost-sharing, multiple-employer defined benefit pension / PEB plan administered by Kentucky Retirement Systems (KRS). CERS covers members employed i_n positions of each participating county, city, and school board, and any additional eligible local agencies electing to participate in
ERS. Kentucky Revised Statute Section 61.645 assigns the authority to establish and amen benefit provisions to the BoMd of ru tees of Kentucky Retirement Systems (B ard). KRS issues a publicall avaHable Cinancial report that can be obtained at wv..;w. ret! .gov r by writing to Kentucky Ketirement ystems, 1260 Lunisville Road Frankfort, Kentucky 40601 or by calling l-502-696-8000.
Benefits Provided - CERS provides for retirement, disability, and deatl benefits t system members through its Pension Fund, as well ru; olhes postemployment benefits (OPEB) for hospital and medical in urance through its Insurance Fund.
Retirement benefits may be extended t beneficiaries of members under certain circumstances. Retirement benefits are determined using a formula wh:ich considers the member's final compensation; benefit factors set by statute which vary depending upon the type/ amou11t of service, participation date, and retirem nt elate; and years f service. P lan members with a participati n date pri r to September L, 2008 are eligib le t retire with full
benefits at any time with 27 or more years of service credit, rat age 65 wilh at least 4 years of service credit.
44
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System, continued
Plan members with a participation date on or after September 1, 2008, ar eligible to retire with full b nefits at age 57 if the member's age and years of service equal 87, or at age 65 with at least 5 years of service credit.
Other postemployment benefits provided by CERS consist of prescribed contributions for whole or partial payments ofrequired premiums to purchase hospital and medical insuranc .
Contributions - State stat11te requirns actjve members to contribute 5% of creditable compensation. For members participating on or after September 1, 2008, an additional 1 % of creditable compensation is required. This amount is credited to the insurance Fund and is non-refundable to the member. Employers contribute at the rate determined by the KRS Board to be necessary for the actuarial soundne s of the systems, as required by KRS 61.565 and KRS 61.752.
The District's actuarially detennined contribution amounts, based on annual creditable compensati.oa for the years ended June 30, 20·19 2018 and 2017 were $623,634, $686,131, and $657,754, respectively equal to the required contributions for each year.
The District's actuarially determined contribution rates and contribution amounts, based on annual creditable compensation for the years ended June 30, 2019, were as follows:
Contribution Rates Contributions
Pension 16.22% $ 470,919 OPEB 5.26% 152,715 Total 21.48% $ 623,634
LiabHiti s, Expense, Deferred Outflow of Resources, and Defe□-ed Inflows of Resources Related to Pensions and OPEB -The net pension and OPEB liabilities reported as June 30, 2019, were measured as of June 30, 2018, and the total pension and OPEB liabilities used to calculate the net pension liability and net OPEB liability were determined by an actuarial valuation as of June 30, 2017. The District's proportion of the liabilities was based on a projection of the District's long-term share of contributions to the plan relative to the projected contributions of all participating entities, actuarially determined. At the June 30, 2018, measurement date, the District's pension and OPEB proportion was 0.142762%, a decrease of 0.001288% from its proportion measured as of June 30, 2017, of 0.144050%.
The District's pension and OPEB liabilities and expense as of and for the year ended June 30, 2019, were as follows:
Proportionate Share Pension/OPES Expense
$
$
Net Pension Liability
8,694,641 1,246,891
45
$
$
Net OPEB Liability
2,534,622 316 811
-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System, continued
At June 30, 2019, the District reported deferred outflows ofresources and deferred inflows ofresources related to pensions and OPEB from the following sources:
Pension OPES
Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources
Liability experience $ 283,595 $ 127,271 $ $ 295,377 Assumption changes 849,719 506,202 5,856 Investment experience 404,307 508,561 174,586 Changes in proporation and differences
between District contributions and proportionate share of contrbutions 134,984 40,889 33,408
District contributions subsequent to the measurement date 559,520 181 447
Total $2,097,141 $ 770,816 $ 728,538 $ 509,227
The $559,520 aDd $181 447 of deferred outflows of re ources resulting from the District's pension and OPEB contributions subsequent to the measu ement date will be recogo_jzed as H reduction of the net pension and PEB liabilities in the year endi ng June 30, 2019. Other amounts Jeported as deferred outflows ofresources and deferred inflows of resources will be recognized in pension and OPEB expense as follows:
Year ending June 30,
2020 $ 2021 2022 2023
Thereafter $
Pension
611,287 311,246
(109,062) (46,666)
766,805
$
$
OPEB
2,473 2,473
36,381 (28,556) (18,268)
(5,497)
Actuarial assumption - The total pension I OPEB liabilities in the June 30, 2017 actuarial valuation were determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation
Salary increases, average
Investment rate of return; net of investment expense & inflation
Healthcare cost trend rates (OPEB)
2.30%
3.05%
6.25%
Initial trend starting at 7.50% for Pre-65, or 5.5% for Post-65 ,and gradually decreasing to an ultimate trend rate of 5.0% over a period of 5 years for Pre-65, or 2 years for Post-65
46
-
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System, continued
Liabilities. Expense, Deferred Outflows ofResomces, and Deferred Inflows of Resources Related to Pensions and OPEB, continued
Actuarial assumptions, continued
Mortality rates were based on the following assumptions and assume a margin for future mortality improvement:
Pre-retirement mortality: RP-2000 Combined Mortality Table projected with Scale BB to 2013. Male mortality rates are multiplied by 50% and female mortality rates are multiplied by 30%.
Post-retirement mortality (non-disabled): RP-2000 Combined Mortality Table projected with Scale BB to 2013. Female mortality rates are set back one year.
Post-retirement mortality ( disabled): RP-2000 Combined Disabled Mortality Table projected with Scale BB to 2013. Male mortality rates are set back four years.
The actuarial assumptions used in the June 30, 2016, valuation were based on the results of an actuarial experience study for the five year period ended June 30, 2013.
The long-term expected rate of return was determined by using a building-block method in which best-estimate ranges of expected future reaJ rate of returns are developed for each asset class. The ranges are combined by weighting the expected future rea l rate of return by the target asset allocation percentage. The target allocation and best estimates of arithmetic real rale of return for each major asset class are summarized in the table below:
Long-Term Expected Asset Class Target Allocation Real Rate of Return
US Equity US Large Cap 5.00% 4.50% US Mid Cap 6.00% 4.50% US Small Cap 6.50% 5.50%
Non US Equity International Developed 12.50% 6.50% Emerging Markets 5.00% 7.25%
Global Bonds 4.00% 3.00% Credit Fixed
Gloval IG Credit 2.00% 3.75% High Yield 7.00% 5.50% EMD 5.00% 6.00% Illiquid Private 10.00% 8.50%
Private Equity 10.00% 6.50% Real Estate 5.00% 9.00% Absolute Return 10.00% 5.00% Real Return 10.00% 7.00% Cash 2.00% 1.50% Total 100.00% 6.09%
47
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System, continued
Discount Rate - The discount rates used to measure the total pension / OPEB liabilities at the measurement dates and changes since the prior year were as follows:
Discount rate, June 30, 2017 Increase(decrease) Discount rate, June 30, 2018
Pension
6.25%
6.25%
OPEB
5.84% .01%
The discount rate of 6.25% used to measure the total pension liability was based 011 the expected rate of retLm1 n pension plan iJwestments. The discount rate of 5.85% used to measure the tot:al OPEB liability was based on the expected rate of return on OPEB plan investments of 6.25% and a municipal bond rate of 3 .62%, as reported in Fidelity Index's "20-Year Municipal GO AA Index" as of June 30, 201.8.
The projection of cash flow used to determine the discount rates is based on the assumption that each participating employer in CERS wilJ contribute the act1iarially determined contribution rate of projected compensation over the remaining 25 years (closed) amortization period of the unf1111ded actuarial accrued liability.
Sensitivity of the District's Proportionate Share of the Net Pension and PEB L iabilities to Chru1ges in the Discount Rate - The following presents the District's proportionate share of the net pension/ OPEB liabilities, as well as what the District's proportionate share of the net pension / OPEB liabilities would be if they were calculated using a discount rate that is I-percentage-point lower or I-percentage-point higher than the current rate:
District's eoreortionate share 1% Decrease Current Discount Rate 1% Increase
5.25% 6.25% 7.25%
Net Pension Liability 10,945,652 8,694,641 6,808,688
4.85% 5.85% 6.85%
Net OPES Liability 3,292,068 2,534,622 1,889,417
48
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 10. Pension and Other Postemployment Benefits- County Employees Retirement System, continued
Sensitivity of the District's Proportionate Share of the Net OPEB Liability to CJ,anges in the HealU1care Cost Trends Rates - The following presents the District's proportionate share of the net OPEB liability, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that were I-percentage-point lower or I-percentage-point higher than the current healthcare cost trend rates:
Current healthcare 1% Decrease cost trend rate 1% Increase
7.5% Pre-65 or 8.5% Pre-65 or 9.5% Pre-65 or 5.5% Post-65 5.5% Post-65 5.5% Post-65
decreasing to 4% decreasing to 5% decreasing to 6%
District's Proportionate Share of Net OPES Liability 1,887,051 2,534,622 3,297,922
Plan Fiduciary Net Position - Detailed information about the CERS fiduciary net position is available in the separately issued Kentucky Retirement Systems Comprehensive Annual Financial Report.
Payables to the Pension / OPEB Plans - The District reported the following payables for the outstanding amount of p nsjon/OPEB contributions due to CERS for the year ended June 30, 2019:
Pension OPEB $ $
Note 11. Risk Management
TJ1e District is exposed to various risks of Jos related to torts; theft of, damage to, and destruction of a. sets; errors and omissions; injuries to employees; and naturaJ disasters. The Dis1rict pays an nual premium for coverage lo Liberly MutuaJ Tnsurnnce for their general liability and propetiy instu·ance coverage. The District purchases unemployment insurance through tl1e Kentuck')' Employers MutuaJ Insw-ance. Coni.ributi ns to U1e Workers' Compensati n Fund are based on premium rates established by such fund in conjw1ction with tho excess insw·ance carri.er subject to laims experience modificatjons and a group discount amounl. Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three fiscal years.
Note 12. COBRA
Under COBRA, employers are mandated to notify terminated empl yees of available continuing insurance coverage. Failure to comply with this requirement may put the sch ol district at risl for a substantial loss (contingency).
49
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 13. Transfer of funds
There were no interfund balances as of June 30, 2019.
The following interfund transfers were made during the year:
From Fund To Fund Non major Governmental Funds: FSPK Debt Service
Total Nonmajor governmental funds
Special Revenue General General Special Revenue
Total Major governmental funds
Total Transfers
Note 14. Contingencies
Purpose
Debt Payments
Flex Focus Technology
Amount
$ 694,175
694,175
48,674 48,674
97,348
$ 791,523
Funding for the District's Grant Funds is provided by federal, state and local govermnent agencies. These funds are to be used for designated purposes only. For government agency grants, if based upon the grantor' review, the funds are considered not to have been used for the intended pmpose, the grantor may request a refund of monies advanced or refuse to reimburse the District for its disbursements. The amount of such future refunds and unreimbursed disbursements, if any, is not expected to be sign ificant. Continuation of the District' grant programs is preclicated upon the grantor's satisfaction that the funds provided are being spent as intended and the grantor's intent to continue its programs.
As shown in Note 4 above, the Kentucky School Facilities Construction Commission (KSFCC) is assisting the District with the repayment of the Bond Series 2006, 2009, 2013, 20 14, and 2016. In the unlikely event the Commonwealth f Kentucky defaults on their portio11 of the bond series, the DislTict is responsible to repay the amount in full. The KSFCC's portion as of June 30, 2019 was $1,955,353.
Note 15. Deficit Operating/Net Position
There are funds of the District that currently have a deficit 11et position because of tbe implementation of ASB 68 irnJ GASD 75 wh.ilc other funds have operntions thM resulted in a cu□-en year deficit of revenues under e penditures and oth r financing uses resulting in a correspondjng reduction of fund balance. The operating deficits were funded by ava ilable resource at the beginning of the year.
Construction Fund
District Activity Find
School Food Service
Child Care Program
Operations
$ 715,797
$ 10,431
$
50
Net Position
$ 709,670
$ 26,972
UNION COUNTY SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2019
Note 16. On-behalf Payments
The Commonwealth of Kentucky made payments on behalf of the District as follows for the year ended June 30, 2019. The amounts are included in the General Fund, Debt Service, Food Service Fund and Child Care Fund as Intergovemmental-State revenues. In the General Fund, the retirement J ayments are recorded as additionaJ inslruction expense and the · health insurance, flexible spending plan, and life insurance payments (J-1et of administrative fees) are allocated to the various expense functions based on a ratio of employees and technology payments are recorded as Di trict Administration expense. In the Debt Service Fund, the payments are recorded as principal and interest payments. In the Food Service and Day Care Funds, all of the payments are recorded as additional employee benefits.
Kentucky Teachers Retirement System Health insurance, flexible spending plan, life insurance,
net of administrative fees Technology Debt Service
Amounts Reported in: General Fund Food Service Fund Day Care Fund Debt Service Fund
Note 17. Commitments
$ 2,942,643
2,768,805 86,098
251,577 $ 6,049,123
$ 5,675,116 108,294
14,136 251 ,577
$ 6,049,123
The District had no outstanding construction projects, as evidenced by contracts, purchase orders or BG-1 forms, as applicable, as of June 30, 2019.
Note 18. Subsequent Events
Management has evaluated subsequent events through November 8, 2019 the date on which the financial statements were available to be issued.
51
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL-GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2019
VARIANCES WITH BUDGETED AMOUNTS FINAL BUDGET
FAVORABLE ORIGINAL FINAL ACTUAL (UNFAVORABLE)
Revenues: From local sources:
Taxes: Property $ 4,959,275 $ 5,085,105 $ 5,114,233 $ 29,128 Motor vehicle 730,000 730,000 758,864 28,864 Utilities 1,080,000 1,080,000 1,152,482 72,482 Unmined minerals 418,200 305,551 307,717 2,166
Earnings on investments 6,800 147,700 147,670 (30) other local revenues 42,808 61,899 81,875 19,976 Intergovernmental - Local 86,080 86,080 82,146 (3,934) Intergovernmental - State 12,651,795 12,786,945 14,071,558 1,284,613 Intergovernmental - Federal 230,000 268,334 276,748 8,414
Total Revenues 20,204,958 20,551 ,614 21 ,993,293 1,441 ,679
Expenditures: Current:
Instruction 11,639,141 11,672,587 12,188,623 (516,036) Support services:
Student 1,561,547 1,533,227 1,444,760 88,467 Instructional staff 449,905 474,143 485,760 (11,617) District administration 937,578 894,205 758,617 135,588 School administration 1,430,628 1,436,897 1,424,720 12,177 Business 830,683 829,957 821,484 8,473 Plant operations and maintenance 2,360,891 2,363,318 2,106,918 256,400 Student transportation 1,880,354 1,880,311 1,647,726 232,585
Community service activities 27,276 24,685 4,181 20,504 Total Expenditures 21,118,003 21,109,330 20,882,789 226,541
Excess(deficiency) of revenues over expenditures (913,045) (557,716) 1,110,504 1,668 ,220
other Financing Sources (Uses): Proceeds from sale of fixed assets 11,084 11,084 Operating transfers in 40,000 48,674 48,674 Operating transfers out (40,000) (48,674) (48,674) Contingency (1 ,282,022) (1,282,021) 1,282,021
Total Other Financing Sources (Uses) (1,282,022) (1,270,937) 11,084 1,282,021
- Net Change in Fund Balance (2,195,067) (1,828,653) 1,121,588 2,950,241
Fund balance June 30, 2018 2,195,067 1,828,653 6,527,475 4,698,822
Fund balance June 30, 2019 $ $ $ 7,649,063 7,649,063
52
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2019
VARIANCES WITH BUDGETED AMOUNTS FINAL BUDGET
FAVORABLE ORIGINAL FINAL ACTUAL (UNFAVORABLE)
Revenues: From local sources:
Taxes: Property Motor vehicle Utilities Unmined minerals
Earnings on investments Intergovernmental - State $ 896,146 $ 955,928 $ 1,102,346 $ 146,418 Intergovernmental - Federal 1,235,686 1,365,489 1,137,070 (228,419) Revenue in lieu of taxes Other state revenue Other local revenues 8,701 27,140 18,439
Total Revenues 2,131,832 2,330,118 2,266,556 (631562)
Expenditures: Current:
Instruction 1,698,620 1,826,893 1,784,543 42,350 Support services:
Student 17,731 17,731 18,165 (434) Instructional staff 115,834 226,904 147,122 79,782 District administration School administration Business 1,700 5,556 545 5,011 Plant operations and maintenance Student transportation 83,287 81,849 77,170 4,679 Community services 214 660 219,859 239,011 (19,152)
Total Expenditures 2,131,832 2,378,792 2,266,556 112,236 Excess(deficiency) of revenues over expenditures 0 (48,674) 0 48 ,674
Other Financing Sources (Uses): Operating transfers in 48,674 48,674 Operating transfers out (48,674} (48,674)
Total Other Financing Sources (Uses) 48,674 (48,674)
Net Change in Fund Balance
Fund balance July 1, 2018
Fund balance June 30, 2019 $ $ - $ $
53
Budgetary Process
UNION COUNTY SCHOOL DISTRICT SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FOR BUDGETARY PROCESS FOR THE YEAR ENDED JUNE 30, 2019
Budgetary Basis of Accounting: AnnuaJ budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. All arumal appropriations lapse at fiscal year-end.
As required by KRS 160.470 on or before January 3 l of eacl1 year, the District commence budget preparation for the following fi cal year. Before May 30 a tentative working budget is presented to the Kentucky Department of ducation. A final working budget must be prepared and adopted no later than September 30. The budget is periodically amended and adopted by the Board of Education during the fiscal year with a final budget adopted by the Board prior to June 30.
The appropriated budget is prepared by fund unit, function, program, level, object and project. The legal level of budgetary control is the fund level.
Reconciliation between the Budgetary Basis of Accounting and GAAP
There were no material variances between the GAAP prescribed basis of accounting for governmental funds and the budgetary basis used by the District.
54
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
Last 10 Fiscal Years*
2019
District's proportion of the plan total net pension liability 0.0000%
District's proportionate share of the net pension liability associated with the District ' State's proportionate share of the net pension liability associated with the District 371473,487
Total $37,473 487
District's covered-employee payroll $ 9,696,483
District's proportionate share of the net pension liability as a percentage of its covered-employee payroll 0.00%
Plan fiduciary net position as a percentage of the total pension liability 59.30%
*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
55
2018 2017
0.0000% 0.0000%
$ $
83,029,951 92,975 785
$83,029,951 $92,975,785
$ 9,403,467 $10,086,380
0.00% 0.00%
39.83% 35.22%
2016 2015
0.0000% 0.0000%
$ $
73,805,718 65,341,991
$73, 805,718 $65,341,991
$10,203,588 $10,040,188
0.00% 0.00%
42.49% 45 59%
I \.
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PENSION CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
Last 10 Fiscal Years•
District's contractually required contributions
District's contributions in relation to the contractually required contributions
Contribution deficiency (excess)
District's covered-employee payroll
Contributions as a percentage of covered-employee payroll
2019
$
$
$9,696,483
0,00%
*The amounts presented tor each fiscal year were determined as of June 30. Schedule is Intended to show Information for ten years. Additional years will be displayed as they become available,
56
2018
$
$ 9,403,467
0.00%
2017
$
$10,086,380
0.00%
2016 2015
$ $
s $
$10,203,588 $10,040,188
0.00% 0.00%
UNION COUNTY SCHOOL DISTRICT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
NET PENSION LIABILITY
TEACHERS RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
hanges of Benefit Terms
2019 None 2018 None 2017 None 2016 None
Changes of Assumptions
For the Year Ended June 30, 2019
2019 The municipal bond index rate increased from 3.56% to 3.89%.
The discount rate increased from 4.49% to 7.50%.
2018 The municipal bond index rate increased from 3.01 % to 3 .56%.
The single equivalent interest rate, net of pension plan investment expense, including inflation
increased from 4.20% to 4.49%.
The inflation rate decreased from 3.50% to 3.00%.
2017 The municipal bond index rate decreased from 3 .82% to 3.01 %.
The discount rate decreased from 4.88% to 4.20%.
2016 None
57
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITIES TEACHERS' RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
Last 10 Fiscal Years*
2019 2018 MEDICAL INSURANCE PLAN (MIP)
District's proportion of the plan total net MIP OPES liability 0.14644% 0.16100%
District's proportionate share of the net MIP OPES liability $ 5,081,000 $ 5,741,000 associated with the District
State's proportionate share of the net MIP OPES liability associated with the District 4,379,000 4,690,000
Total $ 9,460,000 $ 10,431,000
District's covered-employee payroll $ 9,696,483 $ 9,403,467
District's proportionate share of the net MIP OPES liability as a percentage of its covered-employee payroll 52.40% 61.05%
Plan fiduciary net position as a percentage of the total MIP OPES liability 25.50% 21 .18%
LIFE INSURANCE PLAN (LIP)
District's proportion of the plan total net LIP OPES liability 0.0000% 0.0000%
District's proportionate share of the net LIP OPES liability $ $ associated with the District
State's proportionate share of the net LIP OPES liability associated with the District 75,000 63,000
Total $ 75,000 $ 63,000
District's covered-employee payroll $ 9,696,483 $ 9,403,467
District's proportionate share of the net LIP OPES liability as a percentage of its covered-employee payroll 0.00% 0.00%
...:. Plan fiduciary net position as a percentage of the
total LIP OPES liability 75.00% 79.99%
*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
58
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF OPEB CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
Last 10 Fiscal Years*
2019 MEDICAL INSURANCE PLAN (MIP)
District's contractually required contributions $ 260,846 $
District's contributions in relation to the contractually required contributions (260,846)
Contribution deficiency (excess) $ $
2018
282,104
(282,104)
District's covered-employee payroll $ 9,696,483 $ 9,403,467
Contributions as a percentage of covered-employee payroll
LIFE INSURANCE PLAN (LIP)
District's contractually required contributions
District's contributions in relation to the contractually required contributions
Contribution deficiency (excess)
$
$
3.00% 3.00%
$
$
District's covered-employee payroll $ 9,696,483 $ 9,403,467
Contributions as a percentage of covered-employee payroll 0.00%
*The amounts presented for each fiscal year were determined as of June 30.
Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
59
0.00%
UNION COUNTY SCHOOL DISTRICT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
NET OPEB LIABILITY
TEACHERS RETIREMENT SYSTEM OF THE STATE OF KENTUCKY
MEDTCAL lNSURANC P AN CMIP)
Change ofBene:fit eTms
2019 None
For the Year Ended June 30, 2019
2018 With the passage of House Bill 471 the e.ljgibility for non-single subsidies (NSS) for the KEHPparticipating members who retired prior to July 1, 2010 is restored, but lhe tate will only finance, via its KEPH "shared responsibility" contributions, the costs of the NSS related to lhose F ".HPparticipating members who retired on or after July 1, 2010.
Changes of Assumptions
2019 The municipal bond index rate increased from 3.56% to 3.89%.
2018 None
.LIFE INSURANCE PLAN (LIP)
Changes of Benefit Terms
2019 None
2018 None
Changes of Assumptio11s
2019 The municipal bond index rate increased from 3.56% to 3.89%.
2018 None
60
:...:.
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY COUNTY EMPLOYEES RETIREMENT SYSTEM
Last 10 Fiscal Years•
2019 2018
District's proportion of the net pension liability 0.142757% 0.144050%
District's proportionate share of the net pension liability $ 8,694,641 $ 8,431,689
District's covered-employee payroll $ 3,516,082 $ 3,577,327
District's proportionate share of the net pension liability as a percentage of its covered-employee payroll 247.28% 235.70%
Plan fiduciary net position as a percentage of the total pension liability 53.54% 53.30%
*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
61
2017
0.147620%
$7,268,002
$3,521,226
206.41%
55.50%
2016 201 5
0.154510% 0.156407%
$6,643,304 $5,074,432
$3,533,955 $3,609,158
187.98% 140.59%
59.97% 66.80%
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PENSION CONTRIBUTIONS COUNTY EMPLOYEES RETIREMENT SYSTEM
Last 10 Fiscal Years•
2019
Contractually required contribuiions $ 559,520
Contributions in relation to the contractually required contributions (559,520)
Contribution deificiency (excess) =$======
District's covered-employee payroll $3,516,082
Contributions as a percentage of covered-employee payroll 16.22%
2018
$ 517,997
(61 7,997)
$
$3,577,327
14.48%
•The amounts presented for each fiscal year were determined as of June 30. Schedule is Intended to show Information for ten years. Additional years will be displayed as they become available.
62
2017
$ 491,211
(491,211)
$3,521,226
13.95%
2016
$ 439,159
(439,159)
$
$3,533,955
12.42%
2015
$ 460,208
(460,208)
$
$3,609,158
12.75%
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY COUNTY EMPLOYEES RETIREMENT SYSTEM
Last 1 O Fiscal Years•
2019 2018
District's proportion of the net OPES liability 0.142750% 0.144050%
District's proportionate share of the net OPES liability 2,534,622 2,895,898
District's covered-employee payroll $ 3,516,082 $ 3,577,327
District's proportionate share of the net OPEB liability as a percentage of its covered-employee payroll 72.09% 80.95%
Plan fiduciary net position as a percentage of the total OPEB liability 57.62% 52.40%
•The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
63
UNION COUNTY SCHOOL DISTRICT
SCHEDULE OF OPEB CONTRIBUTIONS COUNTY EMPLOYEES RETIREMENT SYSTEM
Last 10 Fiscal Years•
Contractually required contribution
Contributions In relatio~ to the contractually required contribution
Contribution deficiency (excess)
District's covered-employee payroll
Contributions as a percentage of covered-employee payroll
2019
$ 181,984
(181,984)
$
$ 3,516,082
5.26%
•The amounts presented for each fiscal year were determined as of June 30. Schedule Is Intended to show Information for ten years. Additional years will be displayed as they become available.
64
2018
$ 168,134
(168,134)
$
$ 3,577,327
4.70%
UNION COUNTY SCHOOL DISTRICT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
COUNTY EMPLOYEES RETIREMENT SYSTEM
Changes of Benefit Terms
2019 None 2018 None 2017 None 2016 None
Changes of Assumptions
Pension and OPEB:
For the Year Ended June 30, 2019
2019 The salary increases assumption was changed from 2.00% to 3.05%.
2018 The inflation rate decreased from 3.25% to 2.30%, which also resulted in a 0.95% decrease in the salary increase assumption at aJI years of service.
The investment rate ofretum, net of investment expense & inflation decreased from 7.50% to 6.25%.
The payroll growth assumption (applicable for the amortization of unfunded actuarial accrued liabiLities) decreased from 4.00% to 2.00%.
OPEB:
2019 The single discount rate changed from 5.84% to 5.85%.
2018 The single discount rate changed from 6.89% to 5.84%.
2017 None
2016 Pension:
The assumed investment rate of return wa decreased from 7.75% to 7.50%.
The assumed rate of in · ation was reduced from 3.50% to 3.25% The assumed rate of wage inflation was reduced from 1.00% to 0.75%.
Payroll growth assumption was reduced from 4.50% to 4.00%.
The assumed rates of Retirement, Withdrawal and Disab iLity were updated to more accurately reflect experience.
65
1-
f--<
UNION COUNTY SCHOOL DISTRICT COMBINING BALANCE SHEET- NONMAJOR GOVERNMENT FUNDS
JUNE 30, 2019
SEEK Capital Debt
District FSPK Outlay Service Activit~ Fund Fund Fund Fund
Assets
Cash and cash equivalents Accounts receivable:
Local Restricted cash $ 73,733 $ 186,347 $ 196,161 $
Total assets $ 73,733 $ 186,347 $ 196, 161 $
Liabilities and Fund Balances: Liabilities
Accounts payable Retainage payable Due to other funds
Total liabilities
Fund Balances Restricted for:
Capital Projects $ 186,347 $ 196,161 Debt Service $
Assigned for encumbraces 73,733 Unassigned
Total fund balances 73,733 186,347 196,161
Total liabilities and fund balances $ 73,733 $ 186,347 $ 196,161 $
66
Total Nonmajor
Governmental Funds
$ 456,241
$ 456,241
$
$ 382,508
73,733
456,241
$ 456,241
UNION COUNTY SCHOOL DISTRICT COMBINING STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES- NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2019
SEEK Total Capital Debt Nonmajor
District FSPK Outlay Service Governmental Activity Fund Fund Fund Fund Funds
Revenues: From local sources:
Taxes: Property $ 494,388 $ 494,388
Earnings on Investments 6,963 $ 1,701 8,664 Other local revenue $ 46,130 46,130 Donations
Intergovernmental - State 316,099 194,361 251,577 762,037
Total revenues 46,130 817,450 196,062 251,577 1,311 ,219
Expenditures: Instruction: 54,361 54,361 Instructional staff : 2,200 2,200 Community service: Capital outlay:
Facilities acquisition and construction Debt Service:
Principal 825,000 825,000 Interest 120,752 120,752 Bond issuance costs
Total expenditures 56,561 945,752 1,002,313
Excess (deficit) of revenues over expenditures (10,431) 817,450 196,062 (694,175) 308,906
Other Financing Sources (Uses) Bond proceeds Transfers in 694,175 694,175 Transfers out (694,175) (694,175)
Total other financing sources (uses) (694,175) 694,175
Excess (deficit) of revenues and other financing sources over expenditures and other financing uses (10,431) 123,275 196,062 308,906
Fund balance, July 1, 2018 84,164 63,072 99 147,335
Fund balance, June 30, 2019 $ 73,733 $ 186,347 $ 196,161 $ $ 456,241
67
UNION COUNTY SCHOOL DISTRICT COMBINING SCHEDULE OF RECEIPTS, DISBURSEMENTS
AND FUND BALANCES ALL AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2019
Cash Balances July 1,
2018 Receipts Activity Funds
Union County High School $ 238,104 $ 546,129 Union County Middle School 52,229 112,624 Sturgis Elementary School 36,862 63,284 Uniontown Elementary School 15,901 33,233 Morganfield Elementary School 16,629 73,931
$ 359,725 $ 829,201
The Activity Funds cash balances at June 30, 2019 consisted of the following:
Cash and cash equivalents Certificates of deposit
$
$
295,901 83,406
379,307
68
Disbursements
$ 545,154 $ 93,060 62,097 35,556 73,752
$ 809,619 $
Cash Balances June 30,
2019
239,079 71,793 38,049 13,578 16,808
379,307
Accounts Accounts Fund Receivable Payable Balances
June 30, June 30, June 30, 2019 2019 2019
$ $ 1,650 $ 237,429 744 71,049
38,049 3 13,581
16,808
$ 3 ~ 2,394 $ 376,916
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF RECEIPTS, DISBURSEMENTS AND FUND BALANCES
HIGH SCHOOL ACTIVITY FUNDS FOR THE YEAR ENDED JUNE 30, 2019
Cash Cash Accounts Accounts Fund Balances Balances Receivable Payable Balances July 1, Transfers Transfers June 30, June 30, June 30, June 30, 2018 Receipts Disbursements In Out 2019 2019 2019 2019
100 General Fund $ 282 $ 3,559 $ $ $ $ 3,841 $ 3,841 101 Drink Machine 1,392 1,138 2,204 326 326 102 Student Reward Money/PSIS 546 1,133 460 546 1,765 1,765 103 Start Up Cash 2,600 2,970 370 200 Faculty/Staff Flower 108 2,762 2,320 41 509 150 359 201 Guidance 2,229 808 2,027 1,010 1,010 202 Guidance Testing 3,348 15,107 10,900 198 7,753 7,753 203 Staff/Preschool 77 114 41 4 4 301 Beta 1,478 10,624 10,654 1,448 1,448 302 Book Club 292 292 292 303 EAC 61 209 239 31 31 304 F.8.L.A. 14 13,840 12,997 857 857 305 F.E.A. 134 60 194 194 306 F.F.A. 12,430 27,678 38,786 50 1,372 1,372 307 Foreign Language 538 226 312 312 308 Gamers Guild 140 140 140 309 HOSA 6,111 5,186 4,049 7,248 7,248 310 Leadership 92 92 92 311 National Honor Society 593 980 1,476 97 97 312 NTHS 398 398 313 Operation HOPE 5 5 314 PEP 1,783 4,170 1,689 1,600 2,664 2,664 315 Science Club 23 23 23 316 VICA(Skills USA) 177 177 177 317 Tri-M 143 143 318 SOAP 434 109 107 50 386 386
319 Health Service 4,509 7,242 6,359 5,392 5,392
320 Performing Arts 2,721 90 2,631 2,631
321 Academic Team 78 282 360 322 Art Studio 2,960 2,960 2,960
323 Gifted & Talented 12 621 633 324 Links YSC 2,329 1,700 2,080 198 1,751 1,751
325 Project Graduation 14,145 13,438 25,670 1,913 800 1,113
326 TeenpoWer 197 20 150 67 67
327 FCCLA 39 39 39
328 FCA 611 563 48 48
400 MSD 745 2,947 2,625 1,067 1,067
401 2019 GRAD 1,249 1,168 81 81
404 2020 GRAD 23,943 20,675 120 3,148 700 2,448
500 Athletics General 34,351 92,257 54,219 32,788 39,601 39,601
504 Football Boosters 28,620 38,437 38,824 1,006 27,227 27,227
505 Boys Basketball Boosters 1,053 30,741 30,203 1,591 1,591
506 Girls Basketball Boosters 11 ,231 22,741 15,269 18,703 18,703
507 Cross Country Boosters 262 550 735 77 77
508 Baseball Boosters 14,085 52,646 56,966 38 9,803 9,803
509 Softball Boosters 7,929 23,656 18,582 13,003 13,003
510 Girls Soccer Boosters 9,236 9,439 10,765 13 7,923 7,923
511 Boys Soccer Boosters 2,846 2,846 2,846
512 Golf Boosters 1,373 5,695 5,012 2,056 2,056
513 Tennis Boosters 1,777 1,565 1,078 2,264 2,264
514 Volleyball Boosters 3,143 11,237 9,167 36 5,249 5,249
515 Cheer Boosters 11,836 38,266 42,396 887 8,593 8,593
516 Dance Boosters 1,667 7,339 7,231 1,775 1,775
69
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF RECEIPTS, DISBURSEMENTS AND FUND BALANCES
HIGH SCHOOL ACTIVITY FUNDS FOR THE YEAR ENDED JUNE 30, 2019
Cash Cash Accounts Accounts Fund Balances Balances Receivable Payable Balances July 1, Transfers Transfers June 30, June 30, June 30, June 30, 2018 Receiets Disbursements In Out 2019 2019 2019 2019
518 Archery Boosters 145 2,640 1,981 804 804 522 Golf Athletic 275 775 500 523 Softball Athletic 2,000 2,000 525 Volleyball Athletics 105 429 1,956 2,000 578 578 526 Football Athletic 3,581 13,499 12,035 2,117 2,117 527 Girls Soccer Athletic 2,000 2,000 528 Wrestling Athletic 75 2,065 2,000 10 10 529 Cheer Athletic 680 1,155 475 475 530 Boys Basketball Athletic 3,910 3,910 531 Girls Basketball Athletic 4,000 4,000 532 Cross Country Athletic 582 750 168 168 533 Tennis Athletic 573 637 750 686 686 535 Baseball Athletic 1 2,001 2,000 536 Track Athletic 261 1,011 750 537 Dance Athletics 250 250 538 Archery Athletics 210 250 40 40 550 Athletic Participation/ Travel 551 Cheer Bus 423 423 552 Volleyball Bus 700 700 554 Girls Soccer Bus 475 475 555 Girls Basketball Bus 325 325
556 Golf Bus 7 25 32 557 Football Bus 25 25 558 Boys Basketball Bus 475 475 559 Baseball Bus 775 775 560 Softball Bus 550 550 562 Tennis Bus 350 350 564 Cross Country Bus 175 175 565 Dance Bus 300 300 568 Archery Bus 975 939 36 36 600 Band Boosters 686 25,201 25,058 180 649 649 601 Chorus 15 1,649 1,664 603 Tech Classes 5,135 5,115 20 20 604 Book Rental Transfer 5 11,104 11,061 48 48 606 Library District Transfer 144 144 608 Ag Science District Transfer 25 25 610 English District Transfer 125 125 612 Health Science District TransfE 15 15 705 Yearbook 1,903 9,381 10,808 476 476 800 Anderson Farms Scholarship 2,004 3,000 2,000 3,004 3,004 802 Coleman & Hazel Brinkley 250 250 250 803 Dr. Douglas Hines Scholarshi~ 10 10 10 804 Greenwell Scholarship 140 87 227 227 806 Payton Mcelroy Scholarship 5,009 2,000 3,000 4,009 4,009 807 Alumni Scholarship 362 362 362 808 Terry Goodwin Scholarship 4,067 4,067 4,067 809 Meg Gatten Scholarship 9,021 2,500 1,000 10,521 10,521 810 Alumni Scholarship CD 2,513 1 2,514 2,514 811 Douglas Hines Scholarship 2,232 2,232 2,232 812 Kyle Brantley CD (2 CDs) 4,013 4,013 4,013 813 Sam Greenwell CD 91717 9,717 9,717
Gaming 15 1,682 1,697 1,697 Totals $ 238,1 04 $ 546, 129 $ 545,154 $ 36,529 $ 36,529 $ 239,079 $ $ 1,650 $ 237,429
70
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2018
Federal Gr~ntor/ Pass Through Grantor/ Program Title
U.S. Department of Education
Passed through Commonwealth of Kentucky Department of Education:
Title I Grants to Local Education Agencies Title I Grants to Local Education Agencies
Title I Grants to Local Education Agencies Total Title I
Special Education Cluster: Special Education-Grants to States Special Education-Grants to States Special Education-Grants to States
Special Education-Preschool Grants
Total Special Education Cluster
Improving Teacher Quality State Grants Improving Teacher Quality State Grants Improving Teacher Quality State Grants
Race to the Top Race to the Top
Vocational Education Basic Grants to State Vocational Education Basic Grants to State
Total Kentucky Department of Education
Tot~! OS Department of Education
Environmental Protection Agency
Clean Diesel Grant
Total US Evvironmental Protection Agency
71
Federal CFDA
Number
84.010
84.010
84.010
84.027
84.027
84.027
84.173
84.367
84.367 '
84.367
84.424
84.424
84.048
84.048
66.047
Pass-through Number
3100002-18
3100002-16
3100002-17
3810002-17
3810002-18
3810002-16
3800002-18
3230002-18
3230002-16
3230002-17
3420002-18
3420002-17
3710002-18
3710002-17
Fund 1
Federal Expenditures
$ 366,281
17,761
13,660
397,702
9,401
563,138
481
573,020
1,109
574,129
4,583
48,031
55,629
108,243
24,382
10,292
34,674
21,499
822
22,321
1,137,069
1,137,069
40,000
40,000
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, Continued
FOR THE YEAR ENDED JUNE 30, 2018
Federal Federal Grantor/ Pass Through Grantor/ CFDA Pass-through Federal
Program Title Number Number Exp~nditures
U.S. Deeartment of Agriculture
Passed through Kentucky Department of Education: Child Nutrition Cluster:
School Breakfast Program 10.553 7760005 18 87,893 School Breakfast Program 10.553 7760005 19 314,~•13
•!02,836 National School Lunch Program
Cash Assistance 10.555 7750002 18 182,713 Gash Assistance 10.555 7750002 19 653,975
836,688 Noncash Assistance - Commodities (Note C) 10.555 Fund 51 94,445
931,133
Summer Food Service Program for Children 10.559 7690024 18 887 Summer Food Service Program for Children 10.559 769002419 2,061 Summer Food Service Program for Children 10.559 7740023 18 8,495 Summer Food Service Program for Children 10.559 7740023 19 19,752
31,1 95
Total Child Nutrition Cluster 1,365,1 64·
Total U.S. Department of Agriculture 1r% 5.1G4
Total Federal Expenditures $ 2,s42,::m
Note A: Basis of Presentation:
The accornpanylng schedule or expenditures of federal awards (Iha Schedule) Includes the federal award activity of the Union County School Dislrtcl
under programs of Iha federal governmonl fQr the year ended June 30, 2019. The tnrormallon In this Scliedule Is presented In accordanco with Iha re.qulrernerrJs of n 1lo 2 U.S. Code of Federal Regula/ions Part 200 Uniform Adminlstrallve Requirements, Cost Principles,
and Audit Roqu/remenls fqr Fed1trol Awards (Uniform Guidance).
Beca1-1se !his Sahedule prosenls only a selected portion or the opernllons of the Union County School District,
It Is not lnlendciJ to ancl does not presenl lhe financial poslllon, changes In I1al position, or cash flows of the
Union County School Disllicl.
Note B: Summary of Significant Accounting Policies:
(1) Expenditures repor1od on lhls Schedule are reported on the accrual basis of accounting. Such expenditures are recognlzod
following lhc cost principles contained In the Uniform Guidance, wherein,
certaln types of expeJ)dllures are not ellOYlable or are limited as to ri,lmb1Irsemon1.
(2) n ie U11lon Counly School District has elected lo use the 10 percent de mlnlmis hid/reel cost rate as allowed under the Unlrorm Guidance.
Note~: Commodities:
Noncash assistance Is repor1ed in the Schedule at the fair mar1<et value of the USDA food commodities received and disbursed.
Note D: Medicaid Reimbursements:
Although reported in the nnaI1clal slaleniortts as direct federal revenue, medicaid reimbursements($236,7 4B) are not considered
expenditures or roderal awards for !he purposes of the sciladule.
Note E: Subreclplents:
There were no awards passed through to subreclpienls.
72
.41ford~ anceJ ones4'0 akley, llp
J. Wesley Alford, Jr.,CPA Jacqueline L. Nance, CPA
Certified Public Accountants Theresa A. Jones, CPA
Lori A. Oakley, CPA
108 S. Main St., Ste 101 • Madisonville, Kentucky 42431 • Tel:270-825-4578 • Fax:270-821-3521 • www.anjocpa.com
INDEPENDENT AUDITOR'S 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
State Committee for School District Audits Members of the Board of Education Union County School District Morganfield, Kentucky
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the ComptroJler General of the United States, and the audit requirements prescribed by the State 01:nmittee for Scho I DistTlct Audits' F iscal Year 2018-2019 Financial Audit Contract, the financial statemenl of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Union County School District as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Disttfot's basic financial statements and have issue I our report thereon dated November 8, 2019.
Internal Control over Financial Reporting
In planning and perfo1ming our audit of the financial statements, we considered Union County School District's internal control over financlal reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the U11.ion County chool District's internal control. Accordingly, we do not express an opinion on the effectiveness of the Un i.on County School District's internal control.
A deficiency in internal control exists when the design or operati0n of a conltol does 11ot aUow management or employees, it1 the normal course of performi1lg their assigned fonctions to -prevent, or detect ru1d conect, misstatements on a timely basis. A material weakness is a deficiency, or a combination of d ficiencies, in internal control such that there js a reasonable possibility that a material misstatement of the entity's financial statements wi ll not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies in intema'I control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited ptrrpose de~cribed in the first paragraph of this section and was not designed to identify all deficiencies in internal contr l tha,t might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reas-onable assurance about whether the Union County School District's financial statements are free from material mis tatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect ort 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 e, pres such an opinion. The rnsults of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. In addition, the results of our tests disclosed no instances of material
73
noncompliance of specific state statutes or regulations identified in the State Committee for School District At1dits' Fi.seal Year 2018-2019 Financial Audit ontract.
We noted certain matters other than si.gni.ficant deficiencies and material weaknesses that we have reported to management of the lJnion County School District in a separate letter dated November 8, 2019.
Purpose of this Report
he purpose of this reporl is olely to describe the scope four testing of internal control and compliance and lhe resu lts of that testing, a11d not to provide an pinion on the effectiveness of the entity' s internal control or on compliance. This report is an integral part of an audit performed in accordance with Govemment AudUing tandards in considering the entity ' internal control and compliance. Accordingly, tbis communication is not
suitable for any other purpose.
~.~~~~ J!f Alford, Nance, Jones, & Oakley LLP
Madisonville, Kentucky November 8, 2019
74
4 1ford,-.anceJ ones4-,0 akley, llp Certified Public Accountants
J. Wesley Alford, Jr.,CPA Jacqueline L. Nance, CPA
Theresa A. Jones, CPA Lori A. Oakley, CPA
108 S. Main St., Ste 101 • Madisonville, Kentucky 42431 • Tel:270-825-4578 • Fax:270-821-3521 • www.anjocpa.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUJRED BY THE UNIFORM GUIDANCE
State Committee for School District Audits Members of the Board of Education Union County School District Morganfield, Kentucky
Report on Compliance for Each Major Federal Program
We have audited Union County School District's compliance with the types of compliance requirement described in the 0MB Compliance Supplement that could have a direct and material effect on each of Union County School District's major federal program for the year ended June 30, 2019. Union County School District's major federa l programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Union County School District's major federal programs based on our audit of the types of compliance requirement referred to above. We conducted mu- audit of compliance in accordance with auditing standards generally accepted in the United States of Amel'i,ca; the standards applicable to financial audits contained in Government Auditing Standm·ds, issued by the Comptroller General oftbe United States; ,and the audit requirements ofTiUe 2 U. . ode Of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirement. for Federal Award· (Uniform Guidance). Tbose standards and the Uniform Gu idance require that we plan and pe1form the audit to obtain reasonable assurance about whether noncompliance with the types of compl iance requirements referr d to above that could have a direct and material effect on a major federal program occurred. An audil includes examining, on a test basi , evidence about Union ounty School District s compliance with those requirements and perfonning such other procedures as we con.sidered necessary in the circum tances.
We believe that our audit provides a reasonable basis for our pinion on compliance for each major federal program. However, our audit does not provide a legal deter.aiinati n of Union County School District's compliance.
Opinion on Each Major Federal Program
In our opinion, Union County School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.
75
Report on Internal Control Over Compliance
Management of Union County School District, is responsible for establishing and maintaining effective internal contro l over compliance with the types of compliance requirements r ferrecl to above. In planning and performing our audit of compl iance, we cons.idered Union County School Disti-i.ct's iJ1ternal control over compliance with lhe types of requirements that couJd have a direct and material effect on each m~jor federa l program to determine the auditing procedw·es that are appropriate in the circumstances for the purp se of expressing an opinion on compliance for each major federal program and to tesl and rnport on internal control over compJ iance in accordance with tbe Uniform Guidance but not ·ft r the purpose of expressing an pinion on lhe effectiveness of internal control over compliance. Accordingly we do 11 t express an opinion on the offectivenes of Union County 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 tbe normal course of performing their assigned functions, to prevent, or detect a.nd correct, noncompliance with a type of compliance requirement fa federal program n a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination o:f deficiencies, in internal control over compliance, such that there is a reasonable po sibilily that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internaJ control ver com1)1iance with a type of com1Jliance requirement of a federaJ program that is less severe than a material weakuess in internal control over compliance, yet important enough to merit attention by th se charged with govemai1ce.
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 iJ1temal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in 'internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The pw-pose of this rep 11t on interna l control over compliance is soJely to describe the sc pe four testing of internaJ control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not uitable for any other purpos
Alford, Nance, Jones, & Oakley LLP Madisonville, Kentucky November 8, 2019
76
-
UNION COUNTY SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2019
A. Summary of Audit Results
B.
C.
1. The auditor's report expresses an unmodified opinion on whether the financial statements of the Union County School District were prepared in accordance with GAAP.
2. No significan1 deficiencies relating to the audit of the financial statements are reporl d in the Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Perfonned in Accordance With Government Auditing Standards. No material weaknesses are reported.
3. No instances of noncompliance material to the financial statements of Union County School District were disclosed during the audit.
4. There were no significant deficiencies in internal control disclosed during the audit of the major federnl award programs as reported in the Independent Auditors' Report on Compliance for acb Major Program and on Internal Control Over Compliance Required by the Uniform Guidance. N material weaknesses are reported .
5. The auditor's report on compliance for the major federal award programs for the Union County School District expresses an unmodified opinion on all major federal programs.
6. There were no audit findings that are required to be reported in accordance with 2 CFR Section 200.516(a). ·
7. The programs tested as major programs included:
Child Nutrition Cluster: - National School Lunch - National School Breakfast - Summer Food Service
10.555 10.553 10.559
8. The threshold for distinguishing Types A and B programs was $750,000.
9. Union County Board of Education was determined to be a low risk auditee.
Findings-Financial Statements Audit
None reported.
Findings and Questioned Costs - Major Federal Award Programs Audit
None reported
D. Schedule of Prior Audit Findings
None reported relative to Financial Statements
None reported relative to Major Federal Awards
77
A lford~ anceJ ones~O akley, llp Certified Public Accountants
J. Wesley Alford, Jr.,CPA Jacqueline L. Nance, CPA
Theresa A. Jones, CPA Lori A. Oakley, CPA
108 S. Main St., Ste 101 • Madisonville, Kentucky 42431 • Tel:270-825-4578 • Fax:270-821-3521 • www.anjocpa.com
Kentucky State Committee for School District Audits Members of the Board of Education Union county School District Morganfield, Kentucky
In planning and performing our audit of the financial statements of the Union County School District for the year ended June 30, 2019, we considered the District's internal controls to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control.
However, during our audit, we became aware of several matters that are opportunities for strengthening internal controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments and suggestions r garding those matters. A separate report dated November 8, 201 9 contains our report on significant deficiencies and material weaknesses if any, in the District's internal controls. This letter does 110t affect ur repmt dated November 8, 2019 on the financial statements of the Union County School District.
We appreciate the opportunity to bring these comments to your attention. We have already discussed many of these comments and suggestions with various District personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations.
~~~ JJP Madisonville, KY November 8, 2019
78
UNION COUNTY SCHOOL DISTRICT MANAGEMENT LETTER POINTS
FOR THE YEAR ENDED JUNE 30, 2019
CURRENT YEAR MANAGEMENT LETTER POINTS
School Activity Funds:
Required Forms/P1·occdU1·es
Finding: We noted instances where it appeared that Red Book forms were either not completed, were completed improperly, and/or required procedures were not foDowed.
Criteria: The "Red Book" and KDE guidelines. KDE "Red Book" requires the use of specific forms ( or reasonable facsimiles) for certain activities such as (1) Transform Forms.
Cause and Effect:
FORMS • Transfers: Noticed instances where transfer forms were not filled out properly (SES)
Recommendation: We recommend that the principal and secreta1y at each school review the "Red Book" and comply Vlrith its requirements regarding the use of these procedures.
Response: Tho school bookkeeper will work to ensure that all transfers are accompanied by Form F-SA-10. The school bookkeeper also plans to attend Red book training in November 20 l9.
Receipts
Finding: We noted instance where receipt that were collected from the students and remitted to the finance secretaries in excess of $100 were being held ovemigbt. (UCHS, UCMS, MES)
Criteria: The "Redhook" and KDE guidelines.
ause and Effe t: Lack of another person trained to make deposits in the event of an unplanned absence by the bookkeeper.
Recommendation: We recommend adherence to the policies of Red Book
ReJponse: Thr ugh conversation with the bookkeepers at all three schools, it was determined that the instauccs of not dcposiLing receipts in excess of $100 occurred when there was an unplanned absence f 1l1e school bookkeeper. In response t this comment, each school bas now designated and trained a second individual who will complete deposits when required in the event of the b okkeeper's absence.
79
UNION COUNTY SCHOOL DISTRICT MANAGEMENT LETTER POINTS
FOR THE YEAR ENDED JUNE 30, 2019
J>RIOR YEAR MANAGEMENT LETTER POINTS
School Activity Funds:
Required Forms/Procedures
Finding: We noted instances where it appeared that Red Book forms were either not completed, were completed improperly, and/or required procedures were not followed.
t'iteria: The "'Red Book" and KDE guidelines. KDE "Red Book" requires the use of specific forms ( or reasonable facsimiles) for certain activities such as (1) Inventory Control, (2) Ticket Sales, (3) Ftmdraising, and ( 4) Donations.
Cause and Effect:
FORMS • Inventory Control: Noticed instances where the worksheet was not used or incorrectly used.
(UCHS, UCMS, MES, SES, UES) • Ti.cket Sales: Noted instance where ticket requisition form was not completed properly. (UES) • Donation: Noted an instance where a donation acceptance form was not used. (U HS)
PROCEDURES • Noted instances of checks containing only one signature. (UCHS) • Noted one instance of a deposit ticket not initialed. (UCHS)
Recommendation: We recommend that the principal and secretary at each school review the "Red Book" and comply with its requirements regaJding the use of these procedures.
Response: The District Finance Officer will work with Lhe school bookkeeper and booster groups t educate and train appropriate individuaJs on the use of the Inventory Control Worksheet. The school B okkeeper wilJ accurately complete the Requisition and Report of Ticket Sales form as requiJed by Redbook and will work to insure that Donation Acceptance Forms are completed when required . The school B okk eper will work to ensure that all checks contain dual signatures and that all deposit slips are initialed by someone other than the person preparing the slip.
,FYE 6/30119: Improvements have been made, see current year comment.
80
APPENDIX C
Union County School District Finance CorporationSchool Building Revenue Bonds
Series of 2020
Official Terms and Conditions of Bond Sale
OFFICIALTERMS AND CONDITIONS OF BOND SALE
$305,000*Union County School District Finance Corporation
School Building Revenue Bonds, Series of 2020Dated February 6, 2020
SALE: January 16, 2020 AT 11:00 A.M., E.S.T.
The Union County School District Finance Corporation ("Corporation") will until January 16, 2020, at the hourof 11:30 A.M., E.S.T., in the office of the Executive Director of the Kentucky School Facilities ConstructionCommission, 700 Louisville Rd, Carriage House, Frankfort, KY 40601, receive competitive bids for the revenue bondsherein described. To be considered, bids must be submitted on an Official Bid Form and must be delivered to theCorporation at the address indicated on the date of sale no later than the hour indicated. Bids may be submitted manuallyor by facsimile or electronically via PARITY. Bids will be considered by the Corporation and may be accepted withoutfurther action by the Corporation's Board of Directors.
Subject to a Permitted Adjustment* increasing or decreasing the issue by up to $30,000.
UNION COUNTY SCHOOL DISTRICT FINANCE CORPORATION
The Corporation has been formed in accordance with the provisions of Sections 162.120 through 162.300 andSection 162.385 of the Kentucky Revised Statutes ("KRS"), and KRS Chapter 273 and KRS 58.180, as a non profit, nonstock corporation for the purpose of financing necessary school building facilities for and on behalf of the Board ofEducation of the Union County, Kentucky School District (the "Board"). Under the provisions of existing Kentucky law,the Corporation is permitted to act as an agency and instrumentality of the Board for financing purposes and the legalityof the financing plan to be implemented by the Bonds herein referred to has been upheld by the Kentucky Court ofAppeals (Supreme Court) in the case of White v. City of Middlesboro, Ky. 414 S.W.2d 569.
STATUTORY AUTHORITY, PURPOSE OF ISSUE AND SECURITY
These Bonds are authorized pursuant to KRS 162.120 through 162.300, 162.385, and KRS 58.180 and are issuedin accordance with a Resolution of the Corporation's Board of Directors. Said Bonds are revenue bonds and constitutea limited indebtedness of the Corporation payable from rental revenues derived by the Corporation from the Board underthe Lease identified below. Said Bonds are being issued to finance district wide safety and security upgrades to includeinstallation of a new communication and intercom system at Union County High School, Union County VocationalSchool, Union County Middle School, Uniontown Elementary School, Morganfield Elementary School and SturgisElementary School (collectively, the "Project") and are secured by a lien upon and a pledge of the revenues from therental of the school building to the Board under the Lease on a year to year basis; the first rental period ending June 30,2020; provided, however, said lien and pledge are on parity with a similar lien and pledge securing the Corporation'sSchool Building Revenue Bonds previously issued to improve or refinance certain of the building(s) in which the Projectis located (the "Parity Bonds").
Should the Board default in its obligations under the Lease or fail to renew the Lease, the Registered Owners ofBonds have the right to have a receiver appointed to administer the Project but foreclosure and sale are not available asremedies.
The rental of the Project from the Corporation to the Board is to be effected under a certain Lease Agreement byand between the Corporation and the Board (the "Lease"), whereunder the Project is leased to the Board for the initialperiod ending June 30, 2020, with an option in the Board to renew the Lease each year at rentals sufficient to providefor the principal and interest requirements on the Bonds as they become due, plus the costs of insurance, maintenance,depreciation, and bond issuance and administration expenses; the Board being legally obligated only for the initial rentalperiod and for one year at a time thereafter each time the Lease is renewed.
(C-1)
Under the terms of the Lease and any renewal thereof, so long as the Bonds remain outstanding and in conformancewith the intent and purpose of KRS 157.627(5) and KRS 160.160(5), in the event of a failure by the Board to pay therentals due under the Lease, and unless sufficient funds have been transmitted to the Paying Agent, or will be sotransmitted, for paying said rentals when due, the Board has granted under the terms of the Lease and ParticipationAgreement to the Corporation and the Commission the right to notify and request the Kentucky Department of Educationto withhold from the Board a sufficient portion of any undisbursed funds then held, set aside, or allocated to the Boardand to request said Department or Commissioner of Education to transfer the required amount thereof to the PayingAgent for the payment of such rentals.
Although the Board is obligated to pay the Corporation annual rentals in the full amount of the principal and interestrequirements for the Bonds for each year in which the Lease is renewed, the Board has entered into the Lease in relianceupon a certain Participation Agreement by and between the Board and the Kentucky School Facilities ConstructionCommission (the "Commission"). Under the terms of the Participation Agreement, the Commission has agreed to payannually directly to the Paying Agent for the Bonds a stated Agreed Participation equal to approximately 100% of theannual debt service requirements for the Bonds herein identified until their retirement, subject to the constitutionalrestrictions limiting the commitment to the biennium; said annual amount is to be applied only to the principal andinterest requirements of the Bonds so long as the Board renews the Lease. Under the Lease, the Board has pledged andassigned all of its rights under the Participation Agreement in and to the Agreed Participation to the Corporation in orderto secure the Bonds and has agreed to pay that portion of the rentals in excess of said Agreed Participation for each yearin which the Lease is renewed.
KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION
The Commission is an independent corporate agency and instrumentality of the Commonwealth of Kentuckyestablished pursuant to the provisions of Sections 157.611 through 157.640 of the Kentucky Revised Statutes, asrepealed, amended, and reenacted (the "Act") for the purpose of assisting local school districts in meeting the schoolconstruction needs of the Commonwealth in a manner which will ensure an equitable distribution of funds based uponunmet need.
Pursuant to the provisions of the Act, the Regulations of the Kentucky Board of Education and the Commission,the Commission has determined that the Board is eligible for participation from the Commission in meeting the costsof construction of the Projects and has entered into a Participation Agreement with the Board whereunder theCommission agrees to pay an annual Agreed Participation equal to approximately 100% of the annual debt servicerequirements for the Bonds herein identified each year until their retirement; provided, however, that the contractualcommitment of the Commission to pay the annual Agreed Participation is limited to the biennial budget period of theCommonwealth, with the first such biennial period terminating on June 30, 2020; the right is reserved in the Commissionto terminate its commitment to pay the Agreed Participation after the initial biennial period and every two yearsthereafter. The obligation of the Commission to make payments of the Agreed Participation shall be automaticallyrenewed each two years for a period of two years unless the Commission shall give notice of its intention not toparticipate not less than sixty days prior to the end of the biennium; however, by the execution of the ParticipationAgreement, the Commission has expressed its present intention to continue to pay the Agreed Participation in eachsuccessive biennial budget period until the retirement of all of the Bonds, but such execution does not obligate theCommission to do so.
The General Assembly of the Commonwealth adopted the State's Budget for the biennium ending June 30, 2020.Inter alia, the Budget provides $129,504,400 in FY 2018-19 and $128,672,400 in FY 2019-20 to pay debt service onexisting and future bond issues; $58,000,000 of the Commission's previous Offers of Assistance made during the lastbiennium; and authorizes $58,000,000 in additional Offers of Assistance for the current biennium to be funded in theBudget for the biennium ending June 30, 2022.
ADDITIONAL PARITY BONDS
The Corporation has reserved the right and privilege of issuing additional bonds from time to time payable fromthe income and revenues of said lands and school building Project and secured by a statutory mortgage lien and pledgeof revenues, but only if and to the extent the issuance of such additional parity bonds are in accordance with the plansand specifications which have been approved by the Board, Commissioner of Education, and filed in the office of theSecretary of the Corporation and a Lease shall be entered into whereunder the annual rental payments during the life ofsuch additional bonds shall be increased by the amount of the annual principal and interest requirements of suchadditional bonds.
(C-2)
BOND MATURITIES, PRIOR REDEMPTION PROVISIONS AND PAYING AGENT
All such Bonds shall be in denominations in multiples of $1,000 within the same maturity, bear interest fromFebruary 6, 2020, payable on August 1, 2020, and semi annually thereafter and shall mature as to principal on February1 in each of the years as follows:
Year Amount* Year Amount* 2021 $12,000 2031 $15,0002022 12,000 2032 16,0002023 12,000 2033 16,0002024 12,000 2034 16,0002025 13,000 2035 17,0002026 13,000 2036 18,0002027 13,000 2037 18,0002028 14,000 2038 19,0002029 14,000 2039 20,0002030 15,000 2040 20,000
*Subject to a Permitted Adjustment of the amount of Bonds awarded of up to $30,000 which may be applied in anyor all maturities.
The Bonds maturing on or after February 1, 2029 are subject to redemption at the option of the Corporation priorto their stated maturity on any date falling on or after February 1, 2028, in any order of maturities (less than all of a singlematurity to be selected by lot), in whole or in part, upon notice of such prior redemption being given by the Paying Agentin accordance with DTC requirements not less than thirty (30) days prior to the date of redemption, upon terms of theface amount, plus accrued interest, but without redemption premium.
Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to call the Bondsin whole or in part on any date at par for redemption upon the total destruction by fire, lightning, windstorm or otherhazard of any building constituting the Project and apply casualty insurance proceeds to such purpose.
The Bonds are to be issued in fully registered form (both principal and interest). Old National Wealth Management,Evansville, Kentucky, has been designated as the Bond Registrar and Paying Agent, shall remit interest on eachsemiannual due date to Cede & Co. Principal and interest will be payable through the Book-Entry-Only-Systemadministered by The Depository Trust Company: Please see "BOOK-ENTRY-ONLY-SYSTEM" below. Interest onthe Bonds will be paid at rates to be established upon the basis of competitive bidding as hereinafter set forth, suchinterest to be payable on August 1 and February 1 of each year, beginning August 1, 2020 (Record Date is the 15th dayof month preceding interest due date).
BIDDING CONDITIONS AND RESTRICTIONS
(A) Bids must be made on Official Bid Form, contained in Information for Bidders available from the undersignedor Ross, Sinclaire & Associates, LLC, Louisville, Kentucky, by visiting www.rsamuni.com submitted manually, byfacsimile or electronically via PARITY®.
(B) Electronic bids for the Bonds must be submitted through PARITY® and no other provider of electronic biddingservices will be accepted. Subscription to the PARITY® Competitive Bidding System is required in order to submit anelectronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of anyprospective bidders to subscribe. For the purposes of the bidding process, the time as maintained by PARITY® shallconstitute the official time with respect to all bids whether in electronic or written form. To the extent any instructionsor directions set forth in PARITY® conflict with the terms of the Official Terms and Conditions of Bond Sale, thisOfficial Terms and Conditions of Sale of Bonds shall prevail. Electronic bids made through the facilities of PARITY®shall be deemed an offer to purchase in response to the Notice of Bond Sale and shall be binding upon the bidders as ifmade by signed, sealed written bids delivered to the Corporation. The Corporation shall not be responsible for anymalfunction or mistake made by or as a result of the use of the electronic bidding facilities provided and maintained byPARITY®. The use of PARITY® facilities are at the sole risk of the prospective bidders. For further informationregarding PARITY®, potential bidders may contact PARITY®, telephone (212) 404-8102. Notwithstanding theforegoing, non-electronic bids may be submitted via facsimile or by hand delivery utilizing the Official Bid Form.
(C-3)
(C) The minimum bid shall be not less than $298,900 (98% of par) plus accrued interest. Interest rates shall bein multiples of 1/8 or 1/20 of 1% or both. Only one interest rate shall be permitted per Bond, and all Bonds of the samematurity shall bear the same rate. Interest rates must be on an ascending scale, in that the interest rate stipulated in anyyear may not be less than that stipulated for any preceding maturity. There is no limit on the number of different interestrates.
(D) The maximum permissible net interest cost for the Bonds shall not exceed "The Bond Buyer's" Index of 20Municipal Bonds as established on the Thursday immediately preceding the sale of said Bonds plus 1.50%.
(E) The determination of the best purchase bid for said Refunding Bonds shall be made on the basis of all bidssubmitted for exactly $305,000 principal amount of Refunding Bonds offered for sale under the terms and conditionsherein specified, but the Corporation may adjust the principal amount of Bonds upward or downward by $30,000 (the"Permitted Adjustment") which may be awarded to such best bidder may be a minimum of $275,000 or a maximum of$335,000. In the event of such Permitted Adjustment, no rebidding or recalculation of a submitted bid will be requiredor permitted and the Underwriter's Discount on the Bonds as submitted by the successful bidder shall be held constant.The Underwriter's Discount shall be defined as the difference between the purchase price of the Bonds submitted by thebidder and the price at which the Bonds will be issued to the public, calculated from information provided by the bidder,divided by the par amount of the Bonds bid. The price of which such adjusted principal amount of Bonds will be soldwill be the same price per $1,000 of Bonds as the price per $1,000 for the $305,000 of Bonds bid.
(F) If three (3) or more bids for the Bonds are received as a result of this competitive sale, the successful purchaserwill be required to certify on or before the issue date the reasonably expected initial offering price to the public for eachMaturity of the Bonds which prices are the prices for each Maturity of the Bonds used by the successful purchaser informulating its bid to purchase the Bonds.
If less than three (3) bids for the Bonds are received as a result of this competitive sale, the successful purchaser,by submitting a bid pursuant to a published Notice of Sale, has agreed in writing that they will certify on or before theissue date (and provide reasonable supporting documentation for such Certification, such as a copy of the Pricing wireor equivalent communication) for each Maturity of the Bonds (i) the first price at which at least 10% of each Maturityof the Bonds was sold to the Public, or (ii) that they will neither offer nor sell any of the Bonds of each Maturity to anyperson at a price that is higher than the Initial Offering Price for such maturity during the Holding Period for suchMaturity.
Bids will not be subject to cancellation or withdrawal by the bidder in the event that three bids are not received andthe Issuer determines to apply the hold-the-offering-price rule.
For purposes of the above the following terms are defined as follows:
(a) Holding Period means, with respect to a Maturity, the period starting on the Sale Date and ending on theearlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which the successfulpurchaser has sold at least 10% of such Maturity to the Public at prices that are no higher than the InitialOffering Price for such Maturity.
(b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, orBonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(c)Public means any person (including an individual, trust, estate, partnership, association, company, orcorporation) other than an Underwriter or a related party to an Underwriter. The term "related party" forpurposes of this certificate generally means any two or more persons who have greater than 50% commonownership, directly or indirectly.
(d) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturityof the Bonds. The Sale Date of the Bonds is January 16, 2020.
(e) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with thelead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to thePublic, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a persondescribed in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (includinga member of a selling group or a party to a retail distribution agreement participating in the initial sale of theBonds to the Public).
(C-4)
(G) The successful bidder may elect to notify the Municipal Advisor within twenty-four (24) hours of the awardof the Bonds that certain serial maturities as awarded may be combined with immediately succeeding serial maturitiesas one or more Term Bonds; provided, however, (a) bids must be submitted to permit only a single interest rate for eachterm bond specified, and (b) Term Bonds will be subject to mandatory redemption by lot on February 1 in accordancewith the maturity schedule setting the actual size of the issue.
(H) CUSIP identification numbers will be printed on the Bonds at the expense of the Corporation. The purchasershall pay the CUSIP Service Bureau Charge. Improper imprintation or the failure to imprint CUSIP numbers shall notconstitute cause for a failure or refusal by the purchaser to accept delivery of and pay for said Bonds in accordance withthe terms of any accepted proposal for the purchase of said Bonds.
(I) The Corporation will provide to the successful purchaser a Final Official Statement in accordance with SECRule 15c2-12. A Final Official Statement will be provided in Electronic Form to the successful bidder, in sufficient timeto meet the delivery requirements of the successful bidder under SEC and Municipal Securities Rulemaking BoardDelivery Requirements. The successful bidder will be required to pay for the printing of Final Official Statements. (J) Bids need not be accompanied by a certified or bank cashier's good faith check, BUT the successful bidder will berequired to wire transfer an amount equal to 2% of the amount of the principal amount of Bonds awarded to the orderof the Corporation by the close of business on the day following the award. Said good faith amount which will beforfeited as liquidated damages in the event of a failure of the successful bidder to take delivery of such Bonds whenready. The good faith amount (without interest) will be applied to the purchase price upon delivery of the Bonds. Thesuccessful bidder shall not be required to take up and pay for said Bonds unless delivery is made within 45 days fromthe date the bid is accepted.
(K) Delivery will be made utilizing the DTC Book-Entry-Only-System.
(L) The Corporation reserves the right to reject any and all bids or to waive any informality in any bid. The Bondsare offered for sale subject to the principal and interest not being subject to Federal or Kentucky income taxation orKentucky ad valorem taxation on the date of their delivery to the successful bidder, in accordance with the FinalApproving Legal Opinion of Steptoe & Johnson PLLC, Bond Counsel, Louisville, Kentucky, which Opinion will bequalified in accordance with the section hereof on TAX EXEMPTION.
(M) The Corporation and the Board agree to cooperate with the successful bidder in the event said purchaser desiresto purchase municipal bond insurance regarding the Refunding Bonds; provided, however, that any and all expensesincurred in obtaining said insurance shall be solely the obligation of the successful bidder should the successful bidderso elect to purchase such insurance.
STATE SUPPORT OF EDUCATION
The 1990 Regular Session of the General Assembly of the Commonwealth enacted a comprehensive legislativepackage known as the Kentucky Education Reform Act ("KERA") designed to comply with the mandate of the KentuckySupreme Court that the General Assembly provide for as efficient and equitable system of schools throughout the State.
KERA became fully effective on July 13, 1990. Elementary and Secondary Education in the Commonwealth issupervised by the Commissioner of Education as the Chief Executive Officer of the State Department of Education("DOE"), an appointee of the reconstituted State Board for Elementary and Secondary Education (the "State Board"). Some salient features of KERA are as follows:
KRS 157.330 establishes the fund to Support Education Excellence in Kentucky ("SEEK") funded from biennialappropriations from the General Assembly for distribution to school districts. The base funding guaranteed to eachschool district by SEEK for operating and capital expenditures is determined in each fiscal year by dividing the totalannual SEEK appropriation by the state-wide total of pupils in average daily attendance ("ADA") in the preceding fiscalyear; the ADA for each district is subject to adjustment to reflect the number of at risk students (approved for free lunchprograms under state and federal guidelines), number and types of exceptional children, and transportation costs.
KRS 157.420 establishes a formula which results in the allocation of funds for capital expenditures in schooldistricts at $100 per ADA pupil which is included in the SEEK allotment ($4,000) for the current biennium which isrequired to be segregated into a Capital Outlay Allotment Fund which may be used only for (1) direct payment ofconstruction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support of bond issues; (4)reduction of deficits resulting from over expenditures for emergency capital construction; and (5) a reserve for each ofthe categories enumerated in 1 through 4 above.
(C-5)
KRS 160.470(12)(a) requires that effective for fiscal years beginning July 1, 1990 each school district shall levya minimum equivalent tax rate of $.30 for general school purposes. The equivalent tax rate is defined as the rate whichresults when the income collected during the prior year from all taxes levied by the district (including utilities grossreceipts license and special voted) for school purposes is divided by the total assessed value of property, plus theassessment for motor vehicles certified by the Revenue Cabinet of the Commonwealth. Any school district board ofeducation which fails to comply with the minimum equivalent tax rate levy shall be subject to removal from office.
KRS 160.470(12)(2) provides that for fiscal years beginning July 1, 1990 each school district may levy anequivalent tax rate which will produce up to 15% of those revenues guaranteed by the SEEK program. Any increasebeyond the 4% annual limitation imposed by KRS 132.017 is not subject to the recall provisions of that Section. Revenue generated by the 15% levy is to be equalized at 150% of the state-wide average per pupil equalized assessment.
KRS 157.440(2) permits school districts to levy up to 30% of the revenue guaranteed by the SEEK program, plusthe revenue produced by the 15% levy, but said additional tax will not be equalized with state funds and will be subjectto recall by a simple majority of those voting on the question.
KRS 157.620(1) also provides that in order to be eligible for participation from the Kentucky School FacilitiesConstruction Commission for debt service on bond issues the district must levy a tax which will produce revenuesequivalent to $.05 per $100 of the total assessed value of all property in the district (including tangible and intangibleproperty and motor vehicles) in addition to the minimum $.30 levy required by KRS 160.470(12). A district having aspecial voted tax which is equal to or higher than the required $.05 tax, must commit and segregate for capital purposesat least an amount equal to the required $.05 tax. Those districts which levy the additional $.05 tax are also eligible forparticipation in the Kentucky Facilities Support ("KFS") program for which funds are appropriated separately from SEEKfunds and are distributed to districts in accordance with a formula taking into account outstanding debt and fundsavailable for payment from both local and state sources under KRS 157.440(1)(b).
KRS 160.460 provides that as of July 1, 1994 all real property located in the Commonwealth subject to localtaxation shall be assessed at 100% of fair cash value.
BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2020
The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium ending June 30,2020 which was approved and signed by the Governor. Such budget was effective beginning July 1, 2018.
POTENTIAL LEGISLATION
No assurance can be given that any future legislation, including amendments to the Code, if enacted into law, orchanges in interpretation of the Code, will not cause interest on the Bonds to be subject, directly or indirectly, to federalincome taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax exemptionof such interest. In addition, current and future legislative proposals, if enacted into law, may cause interest on state orlocal government bonds (whether issued before, on the date of, or after enactment of such legislation) to be subject,directly or indirectly, to federal income taxation by, for example, changing the current exclusion or deduction rules tolimit the amount of interest on such bonds that may currently be treated as tax exempt by certain individuals. Proposalsare currently pending in both Federal houses which, if passed, would eliminate the ability of the issuer to advance refundthe Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding any pending or proposedfederal tax legislation.
Further, no assurance can be given that the introduction or enactment of any such future legislation, or any actionof the IRS, including but not limited to regulation, ruling, or selection of the Bonds for audit examination, or the courseor result of any IRS examination of the Bonds or obligations which present similar tax issues, will not affect the marketprice for the Bonds.
CONTINUING DISCLOSURE
As a result of the principal amount of Bonds being offered not exceeding $1,000,000 Bond Counsel has advisedthe Corporation and the Board that they are exempt from application of the Rule 15c2-12c2-12(b)(5) of the Securitiesand Exchange Commission with respect to the Bonds.
Financial information regarding the Board may be obtained from Superintendent, Union County School DistrictBoard of Education, 510 S. Mart Street, Morganfield, Kentucky 42437, Telephone 270-389-1694.
(C-6)
TAX EXEMPTION; BANK QUALIFIED
Bond Counsel is of the opinion that the Bonds are "qualified tax-exempt obligations" within the meaning of theInternal Revenue Code of 1986, as amended, and therefore advises as follows:
(A) The Bonds and the interest thereon are exempt from income and ad valorem taxation by the Commonwealthof Kentucky and all of its political subdivisions.
(B) The interest income from the Bonds is excludable from the gross income of the recipient thereof for Federalincome tax purposes under existing law and interest on the Bonds will not be a specific item of tax preference forpurposes of calculating the Federal alternative minimum tax.
(C) As a result of certifications by the Board and the Corporation, indicating the issuance of less than $10,000,000of tax-exempt obligations during the calendar year ending December 31, 2020, the Bonds may be treated by financialinstitutions as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code.
BOOK-ENTRY-ONLY-SYSTEM
The Bonds shall utilize the Book-Entry-Only-System administered by The Depository Trust Company ("DTC").
DTC will act as securities depository for the Bonds. The Bonds initially will be issued as fully-registered securitiesregistered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond Certificate will be issued,in the aggregate principal amount of the Bonds, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization"within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation"within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to theprovisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, suchas transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants'accounts, thereby eliminating the need for physical movement of securities certificates. "Direct Participants" includesecurities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC isowned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange,Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others suchas securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship witha Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and itsparticipants are on file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive acredit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("BeneficialOwner") is in turn to be recorded on the Direct and Indirect Participant's records. Beneficial Owners will not receivewritten confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmationsproviding details of the transaction, as well as periodic statements of their holdings, from the Direct or IndirectParticipant through which the beneficial Owner entered into the transaction. Transfers of ownership interests in theBonds ("Beneficial Ownership Interest") are to be accomplished by entries made on the books of Participants acting onbehalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their Beneficial Ownershipinterests in Bonds, except in the event that use of the book-entry system for the Securities is discontinued. Transfers ofownership interest in the Securities are to be accomplished by entries made on the books of Participants acting on behalfof Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities,except in the event that use of the book-entry system for the Securities is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC'spartnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co.,effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC'srecords reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or maynot be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalfof their customers.
(C-7)
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to IndirectParticipants, and by Direct Participants and Indirect Participants to Beneficial Owners, will be governed by arrangementsamong them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds are being redeemed, DTC's practiceis to determine by lot the amount of the interest of each Direct Participant in the Bonds to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, DTC mailsan Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'sconsenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments of the Bonds will be made to DTC. DTC's practice is to credit Direct Participants'account on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reasonto believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will begoverned by standing instructions and customary practices, as is the case with securities held for the accounts ofcustomers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC,the Issuer, or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Trustee, disbursements of suchpayments to Direct Participants shall be the responsibility of DTC, and disbursements of such payment to the BeneficialOwners shall be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Beneficial Ownership Interests purchased or tendered,through its Participant, to the Trustee, and shall effect delivery of such Beneficial Ownership Interests by causing theDirect Participant to transfer the Participant's interest in the Beneficial Ownership Interests, on DTC's records, to thepurchaser or the Trustee, as appropriate. The requirements for physical delivery of Bonds in connection with a demandfor purchase or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferredby Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by givingreasonable notice to the Issuer or the Bond Registrar. Under such circumstances, in the event that a successor securitiesdepository is not obtained, Bond certificates are required to be printed and delivered by the Bond Registrar.
NEITHER THE ISSUER, THE BOARD NOR THE BOND REGISTRAR/PAYING AGENT WILL HAVE ANYRESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANYBENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THEBOND REGISTRAR/PAYING AGENT AS BEING AN OWNER WITH RESPECT TO: (1) THE BONDS; (2) THEACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECTPARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANTOF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PURCHASE PRICE OFTENDERED BONDS OR THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4)THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANYBENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BONDRESOLUTION TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TORECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANYCONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER.
UNION COUNTY SCHOOL DISTRICT FINANCE CORPORATION
by /s/ Valarie Blair Secretary
(C-8)
APPENDIX D
Union County School District Finance CorporationSchool Building Revenue Bonds
Series of 2020
Official Bid Form
OFFICIAL BID FORM(Bond Purchase Agreement)
The Union County School District Finance Corporation ("Corporation" or "Issuer"), will until 11:30 A.M., E.S.T., onJanuary 16, 2020, receive in the office of the Executive Director of the Kentucky School Facilities Construction Commission,700 Louisville Rd, Carriage House, Frankfort, KY 40601, (telephone 502-564-5582; fax 888-979-6152) competitive bids forits $305,000 School Building Revenue Bonds, Series of 2020, dated February 6, 2020; maturing February 1, 2021 through 2040("Bonds").
We hereby bid for said $305,000* principal amount of Bonds, the total sum of $_______________ (not less than $298,900)plus accrued interest from February 6, 2020 payable August 1, 2020 and semiannually thereafter at the following annual rates,(rates on ascending scale in multiples of 1/8 or 1/20 of 1%; number of interest rates unlimited) and maturing as to principal onFebruary 1 in the years as follows:
Year Amount* Rate Year Amount* Rate
2021 $12,000 _________% 2031 $15,000 _________%2022 12,000 _________% 2032 16,000 _________%2023 12,000 _________% 2033 16,000 _________%2024 12,000 _________% 2034 16,000 _________%2025 13,000 _________% 2035 17,000 _________%2026 13,000 _________% 2036 18,000 _________%2027 13,000 _________% 2037 18,000 _________%2028 14,000 _________% 2038 19,000 _________%2029 14,000 _________% 2039 20,000 _________%2030 15,000 _________% 2040 20,000 _________%
* Subject to Permitted Adjustment
We understand this bid may be accepted for as much as $335,000 of Bonds or as little as $275,000 of Bonds, at the sameprice per $5,000 Bond, with the variation in such amount occurring in any maturity or all maturities, which will be determinedat the time of acceptance of the best bid.
We further understand that by submitting a bid we agree as follows:
If three (3) or more bids for the Bonds are received as a result of this competitive sale, the successful purchaser will berequired to certify on or before the issue date the reasonably expected initial offering price to the public for each Maturity ofthe Bonds which prices are the prices for each Maturity of the Bonds used by the successful purchaser in formulating its bidto purchase the Bonds.
If less than three (3) bids for the Bonds are received as a result of this competitive sale, the successful purchaser, bysubmitting a bid pursuant to a published Notice of Sale, has agreed in writing that they will certify on or before the issue date(and provide reasonable supporting documentation for such Certification, such as a copy of the Pricing wire or equivalentcommunication) for each Maturity of the Bonds (i) the first price at which at least 10% of each Maturity of the Bonds was soldto the Public, or (ii) that they will neither offer nor sell any of the Bonds of each Maturity to any person at a price that is higherthan the Initial Offering Price for such maturity during the Holding Period for such Maturity.
Bids will not be subject to cancellation or withdrawal by the bidder in the event that three bids are not received and theIssuer determines to apply the hold-the-offering-price rule.
For purposes of the above the following terms are defined as follows:
(a) Holding Period means, with respect to a Maturity, the period starting on the Sale Date and ending on the earlierof (i) the close of the fifth business day after the Sale Date, or (ii) the date on which the successful purchaser has soldat least 10% of such Maturity to the Public at prices that are no higher than the Initial Offering Price for such Maturity.
(b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bondswith the same maturity date but different stated interest rates, are treated as separate maturities.
(c)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation)other than an Underwriter or a related party to an Underwriter. The term "related party" for purposes of this certificategenerally means any two or more persons who have greater than 50% common ownership, directly or indirectly.
(d) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is January 16, 2020.
(e) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the leadunderwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) anyperson that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of thisparagraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a partyto a retail distribution agreement participating in the initial sale of the Bonds to the Public).
Electronic bids for the Bonds must be submitted through PARITY® and no other provider of electronic bidding serviceswill be accepted. Subscription to the PARITY® Competitive Bidding System is required in order to submit an electronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidders to subscribe. For the purposes of the bidding process, the time as maintained by PARITY® shall constitute the official time with respect toall bids whether in electronic or written form. To the extent any instructions or directions set forth in PARITY® conflict withthe terms of the Official Terms and Conditions of Sale of Bonds, this Official Terms and Conditions of Sale of Bonds shallprevail. Electronic bids made through the facilities of PARITY® shall be deemed an offer to purchase in response to the Noticeof Bond Sale and shall be binding upon the bidders as if made by signed, sealed written bids delivered to the Corporation. TheCorporation shall not be responsible for any malfunction or mistake made by or as a result of the use of the electronic biddingfacilities provided and maintained by PARITY®. The use of PARITY® facilities are at the sole risk of the prospective bidders. For further information regarding PARITY®, potential bidders may contact PARITY®, telephone (212) 404-8102. Notwithstanding the foregoing, non-electronic bids may be submitted via facsimile or by hand delivery utilizing the OfficialBid Form.
(D-1)
The successful bidder may elect to notify the Municipal Advisor within twenty-four (24) hours of the award of the Bondsthat certain serial maturities as awarded may be combined with immediately succeeding serial maturities as one or more TermBonds; provided, however, (a) bids must be submitted to permit only a single interest rate for each Term Bond specified, and(b) Term Bonds will be subject to mandatory redemption on February 1 in accordance with the maturity schedule setting theactual size of the issue.
The DTC Book-Entry-Only-System will be utilized on delivery of this issue.
It is understood that the Corporation will furnish the final approving Legal Opinion of Steptoe & Johnson PLLC BondCounsel, Louisville, Kentucky.
No certified or bank cashier's check will be required to accompany a bid, but the successful bidder shall be required to wiretransfer an amount equal to 2% of the principal amount of Bonds awarded by the close of business on the date following theaward. Said good faith amount will be applied (without interest) to the purchase price on delivery. Wire transfer proceduresshould be arranged through Old National Wealth Management, Evansville, Indiana, Ms. Shannon Marshall-Perry(812-461-9741).
Bids must be submitted only on this form and must be fully executed.
If we are the successful bidder, we agree to accept and make payment for the Bonds in Federal Funds on or about February6, 2020 and upon acceptance by the Issuer's Municipal Advisor this Official Bid Form shall become the Bond PurchaseAgreement.
Respectfully submitted,
__________________________________Bidder
By ________________________________Authorized Officer
___________________________________Address
Total interest cost from February 6, 2020 to final maturity $_______________
Plus discount or less any premium $_______________
Net interest cost (Total interest cost plus discount) $_______________
Average interest rate or cost ________________%
The above computation of net interest cost and of average interest rate or cost is submitted for information only and is nota part of this Bid.
Accepted by Ross, Sinclaire & Associates, LLC, as Financial Advisor and Agent for the Union County School DistrictFinance Corporation for $_________________ amount of Bonds at a price of $______________ as follows:
Year Amount Rate Year Amount Rate
2021 _______,000 ________% 2031 _______,000 ________%2022 _______,000 ________ 2032 _______,000 ________2023 _______,000 ________ 2033 _______,000 ________2024 _______,000 ________ 2034 _______,000 ________2025 _______,000 ________ 2035 _______,000 ________2026 _______,000 ________ 2036 _______,000 ________2027 _______,000 ________ 2037 _______,000 ________2028 _______,000 ________ 2038 _______,000 ________2029 _______,000 ________ 2039 _______,000 ________2030 _______,000 ________ 2040 _______,000 ________
Dated: January 16, 2020 ________________________________
ROSS, SINCLAIRE & ASSOCIATES, LLC,as Agent for the Union County School District Finance Corporation
(D-2)