PRELIMINARY OFFICIAL STATEMENT DATED MARCH 11, 2020 … · The date of this Official Statement is...
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The date of this Official Statement is March __, 2020. PRELIMINARY OFFICIAL STATEMENT DATED MARCH 11, 2020 NEW ISSUE RATING Standard & Poor’s: “A-” BOOK-ENTRY ONLY See “RATING” herein. In the opinion of Gilmore & Bell, P.C., as Special Counsel to the District, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), (1) the Interest Portions of Basic Rent paid by the District and distributable to the owners of the Series 2020 Certificates (including any original issue discount properly allocable to an owner thereof) are excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax, (2) the Interest Portions of Basic Rent are exempt from income taxation by the State of Missouri and (3) the District’s obligation to pay Basic Rent under the Lease distributable to the owners of the Series 2020 Certificates is not a “qualified tax- exempt obligation” within the meaning of Section 265(b)(3) of the Code. See “TAX MATTERS” and the form of legal opinion attached hereto as Appendix E. $12,605,000 * CERTIFICATES OF PARTICIPATION (DALLAS COUNTY R-I SCHOOL DISTRICT TECHNICAL CENTER PROJECT) SERIES 2020 Evidencing a Proportionate Interest in Basic Rent Payments to be Made by DALLAS COUNTY R-I SCHOOL DISTRICT as Lessee pursuant to an Annually Renewable Lease Purchase Agreement with BOKF, N.A., as Trustee and Lessor Dated: Date of Delivery Due: As shown on the inside cover page The above-referenced Certificates of Participation (Dallas County R-I School District Technical Center Project), Series 2020 (the “Series 2020 Certificates”), will be executed and delivered in the denomination of $5,000 or any integral multiple thereof. Principal Portions (defined herein) of Basic Rent (defined herein) represented by the Series 2020 Certificates will be payable on each April 1 in the years shown on the inside cover page hereof. Interest Portions (defined herein) of Basic Rent represented by the Series 2020 Certificates will be payable semiannually on April 1 and October 1 of each year, beginning on April 1, 2021. The Series 2020 Certificates evidence the ownership of proportionate interests in, and rights to receive Basic Rent Payments (defined herein) under the Lease Purchase Agreement dated as of March 15, 2020 (the “Lease”), entered into between BOKF, N.A., as trustee and lessor (the “Trustee”), and Dallas County R-I School District (the “District”), as lessee. The Series 2020 Certificates are being executed and delivered pursuant to a Declaration of Trust dated as of March 15, 2020 (the “Declaration of Trust”), made by the Trustee. Neither the Series 2020 Certificate nor the Basic Rent Payments are obligations of the Trustee, and the Trustee does not have any obligations under or with respect to the Series 2020 Certificates or the Basic Rent Payments. The Series 2020 Certificates are subject to optional and mandatory prepayment prior to maturity as described herein. See the section “THE SERIES 2020 CERTIFICATES OF PARTICIPATION – Prepayment” herein. The District’s obligation to make Basic Rent Payments and the other obligations of the District under the Lease are subject to and dependent upon annual appropriations being made by the District for that purpose. The Series 2020 Certificates, the Basic Rent Payments and other amounts due under the Lease do not constitute an obligation of the District in any Fiscal Year subsequent to a Fiscal Year as to which the District has appropriated funds to pay Basic Rent Payments and other amounts reasonably anticipated to come due under the Lease. If the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent Payments and reasonably anticipated other amounts to come due during the immediately following Fiscal Year, the Lease will terminate at the end of the then current Fiscal Year. Upon termination of the Lease, the Series 2020 Certificates will be payable solely from moneys, if any, held by the Trustee under the Declaration of Trust, and any amounts resulting from a sale or sublease of Trustee’s leasehold interest in the Leased Property (defined herein). The obligation of the District to pay Basic Rent does not constitute a debt of the District in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the District and does not constitute a pledge of the general tax revenues, funds, properties or moneys of the District beyond any then current Fiscal Year during which the Lease is in effect. The District is not obligated to levy any taxes in order to raise revenues to make Basic Rent Payments. AN INVESTMENT IN THE SERIES 2020 CERTIFICATES INVOLVES RISK. PROSPECTIVE PURCHASERS SHOULD BE ABLE TO EVALUATE THE RISKS AND MERITS OF AN INVESTMENT IN THE SERIES 2020 CERTIFICATES BEFORE CONSIDERING A PURCHASE OF THE SERIES 2020 CERTIFICATES. SEE THE SECTION “RISK FACTORS” HEREIN. The Series 2020 Certificates are offered when, as and if executed and delivered by the Trustee, subject to the approval of their validity by Gilmore & Bell, P.C., Kansas City, Missouri, as Special Counsel to the District, as described herein. Certain legal matters related to the Official Statement will be passed upon by Gilmore & Bell, P.C., Kansas City, Missouri, as disclosure counsel to the District. It is expected that the Series 2020 Certificates in definitive form will be available for delivery through the facilities of The Depository Trust Company in New York, New York, on April __, 2020. Bids for the purchase of the Series 2020 Certificates will only be received electronically through PARITY electronic bid submission system until 10:30 A.M., Central Time, on Monday, March 23, 2020. * Preliminary, subject to change.
Transcript of PRELIMINARY OFFICIAL STATEMENT DATED MARCH 11, 2020 … · The date of this Official Statement is...
The date of this Official Statement is March __, 2020.
PRELIMINARY OFFICIAL STATEMENT DATED MARCH 11, 2020
NEW ISSUE RATING Standard & Poor’s: “A-” BOOK-ENTRY ONLY See “RATING” herein.
In the opinion of Gilmore & Bell, P.C., as Special Counsel to the District, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), (1) the Interest Portions of Basic Rent paid by the District and distributable to the owners of the Series 2020 Certificates (including any original issue discount properly allocable to an owner thereof) are excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax, (2) the Interest Portions of Basic Rent are exempt from income taxation by the State of Missouri and (3) the District’s obligation to pay Basic Rent under the Lease distributable to the owners of the Series 2020 Certificates is not a “qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of the Code. See “TAX MATTERS” and the form of legal opinion attached hereto as Appendix E.
$12,605,000* CERTIFICATES OF PARTICIPATION
(DALLAS COUNTY R-I SCHOOL DISTRICT TECHNICAL CENTER PROJECT) SERIES 2020
Evidencing a Proportionate Interest in Basic Rent Payments to be Made by DALLAS COUNTY R-I SCHOOL DISTRICT
as Lessee pursuant to an Annually Renewable Lease Purchase Agreement with BOKF, N.A., as Trustee and Lessor
Dated: Date of Delivery Due: As shown on the inside cover page The above-referenced Certificates of Participation (Dallas County R-I School District Technical Center Project), Series 2020 (the “Series 2020 Certificates”), will be executed and delivered in the denomination of $5,000 or any integral multiple thereof. Principal Portions (defined herein) of Basic Rent (defined herein) represented by the Series 2020 Certificates will be payable on each April 1 in the years shown on the inside cover page hereof. Interest Portions (defined herein) of Basic Rent represented by the Series 2020 Certificates will be payable semiannually on April 1 and October 1 of each year, beginning on April 1, 2021. The Series 2020 Certificates evidence the ownership of proportionate interests in, and rights to receive Basic Rent Payments (defined herein) under the Lease Purchase Agreement dated as of March 15, 2020 (the “Lease”), entered into between BOKF, N.A., as trustee and lessor (the “Trustee”), and Dallas County R-I School District (the “District”), as lessee. The Series 2020 Certificates are being executed and delivered pursuant to a Declaration of Trust dated as of March 15, 2020 (the “Declaration of Trust”), made by the Trustee. Neither the Series 2020 Certificate nor the Basic Rent Payments are obligations of the Trustee, and the Trustee does not have any obligations under or with respect to the Series 2020 Certificates or the Basic Rent Payments. The Series 2020 Certificates are subject to optional and mandatory prepayment prior to maturity as described herein. See the section “THE SERIES 2020 CERTIFICATES OF PARTICIPATION – Prepayment” herein. The District’s obligation to make Basic Rent Payments and the other obligations of the District under the Lease are subject to and dependent upon annual appropriations being made by the District for that purpose. The Series 2020 Certificates, the Basic Rent Payments and other amounts due under the Lease do not constitute an obligation of the District in any Fiscal Year subsequent to a Fiscal Year as to which the District has appropriated funds to pay Basic Rent Payments and other amounts reasonably anticipated to come due under the Lease. If the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent Payments and reasonably anticipated other amounts to come due during the immediately following Fiscal Year, the Lease will terminate at the end of the then current Fiscal Year. Upon termination of the Lease, the Series 2020 Certificates will be payable solely from moneys, if any, held by the Trustee under the Declaration of Trust, and any amounts resulting from a sale or sublease of Trustee’s leasehold interest in the Leased Property (defined herein). The obligation of the District to pay Basic Rent does not constitute a debt of the District in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the District and does not constitute a pledge of the general tax revenues, funds, properties or moneys of the District beyond any then current Fiscal Year during which the Lease is in effect. The District is not obligated to levy any taxes in order to raise revenues to make Basic Rent Payments. AN INVESTMENT IN THE SERIES 2020 CERTIFICATES INVOLVES RISK. PROSPECTIVE PURCHASERS SHOULD BE ABLE TO EVALUATE THE RISKS AND MERITS OF AN INVESTMENT IN THE SERIES 2020 CERTIFICATES BEFORE CONSIDERING A PURCHASE OF THE SERIES 2020 CERTIFICATES. SEE THE SECTION “RISK FACTORS” HEREIN. The Series 2020 Certificates are offered when, as and if executed and delivered by the Trustee, subject to the approval of their validity by Gilmore & Bell, P.C., Kansas City, Missouri, as Special Counsel to the District, as described herein. Certain legal matters related to the Official Statement will be passed upon by Gilmore & Bell, P.C., Kansas City, Missouri, as disclosure counsel to the District. It is expected that the Series 2020 Certificates in definitive form will be available for delivery through the facilities of The Depository Trust Company in New York, New York, on April __, 2020. Bids for the purchase of the Series 2020 Certificates will only be received electronically through PARITY electronic bid submission system until 10:30 A.M., Central Time, on Monday, March 23, 2020.
* Preliminary, subject to change.
$12,605,000*
CERTIFICATES OF PARTICIPATION (DALLAS COUNTY R-I SCHOOL DISTRICT TECHNICAL CENTER PROJECT)
SERIES 2020
Evidencing Proportionate Interests of the Owners Thereof in Basic Rent Payments to be Made by DALLAS COUNTY R-I SCHOOL DISTRICT,
as Lessee pursuant to a Lease Purchase Agreement with BOKF, N.A. as Trustee and Lessor
MATURITY SCHEDULE
Serial Certificates*
Maturity Date April 1
Principal Portion
Interest Rate
Price
CUSIP
2021 $200,000 2022 300,000 2023 340,000 2024 355,000 2025 375,000 2026 400,000 2027 420,000 2028 440,000 2029 470,000 2030 490,000 2031 525,000 2032 555,000 2033 560,000 2034 600,000 2035 650,000 2036 700,000 2037 725,000 2038 750,000 2039 750,000 2040 500,000 2041 500,000 2042 500,000 2043 500,000 2044 500,000 2045 500,000
* Preliminary, subject to change.
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DALLAS COUNTY R-I SCHOOL DISTRICT
1323 South Ash Street Buffalo, MO 65622
(417) 345-2222
BOARD OF EDUCATION
Suzanne Powers, President and Member Jennifer Long, Vice President and Member
Peggy Zanzie, Secretary and Member Kirby Vest, Treasurer and Member
Leroy Laudenbach, Member Travis Dill, Member
Wayne Rieschel, Member
ADMINISTRATION
Dr. Timothy W. Ryan, Superintendent Teresa Mabary, Assistant Superintendent – Academic/Student Services
Deborah S. Dryer, Assistant Superintendent – Support Services
SPECIAL COUNSEL AND DISCLOSURE COUNSEL
Gilmore & Bell, P.C. Kansas City, Missouri
TRUSTEE
BOKF, N.A. Kansas City, Missouri
FINANCIAL ADVISOR
Sentry Financial Services, LLC Sullivan, Missouri
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REGARDING USE OF THIS OFFICIAL STATEMENT
No dealer, broker, salesman or other person has been authorized by the District or the Underwriter to give any information or to make any representations with respect to the Series 2020 Certificates other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2020 Certificates by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the District and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation, by the Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of the transaction. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2020 CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE SERIES 2020 CERTIFICATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE DECLARATION OF TRUST BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS OR UNDER ANY STATE SECURITIES OR “BLUE SKY” LAWS. THE SERIES 2020 CERTIFICATES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CAUTIONARY STATEMENTS REGARDING FORWARD- LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT
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Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “anticipate,” “Leased Property,” “budget” or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE FUTURE RISKS AND UNCERTAINTIES INCLUDE THOSE DISCUSSED IN THE “RISK FACTORS” SECTION OF THIS OFFICIAL STATEMENT. NEITHER THE DISTRICT NOR ANY OTHER PARTY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR.
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TABLE OF CONTENTS Page Page INTRODUCTION ................................................... 1 Purpose of the Official Statement .............................. 1 The District ................................................................ 1 Plan of Financing ....................................................... 1 Funding Sources ........................................................ 2 The Financing Documents ......................................... 2 Annual Appropriation Lease ...................................... 2 Financial Statements .................................................. 3 Continuing Disclosure ............................................... 3 Definitions and Descriptions; Inspection of
Documents ............................................................. 3 PLAN OF FINANCING .......................................... 3 The Improvements ..................................................... 3 Estimated Sources and Uses of Funds ....................... 4 THE SERIES 2020 CERTIFICATES OF
PARTICIPATION .............................................. 4 General Provisions ..................................................... 4 Payment of Basic Rent and Prepayment Price ........... 4 Transfer and Exchange .............................................. 5 Prepayment ................................................................ 6 BOOK-ENTRY ONLY SYSTEM .......................... 7 SECURITY AND SOURCES OF PAYMENT
FOR THE CERTIFICATES .............................. 9 Limited Obligations ................................................... 9 Available Revenues ................................................. 10 Funding Sources ....................................................... 10 Nonappropriation ..................................................... 11 Base Lease ............................................................... 11 Permitted Partial Release of Leased Property .......... 11 ADDITIONAL CERTIFICATES ........................ 12 THE TRUSTEE ..................................................... 12 RATING ................................................................. 12 RISK FACTORS ................................................... 13 Nonappropriation ..................................................... 13 Results of a Nonappropriation ................................. 13 Limited Source of Money for Rent Payments Under the Lease ............................................... 14 Construction Delays and Cost Overruns .................. 14 Destruction of the Leased Property ......................... 15 No Environmental Survey ....................................... 15 Possible Insufficiency of Casualty Insurance
Proceeds .............................................................. 15 Condemnation of the Leased Property ..................... 15 Effects on Exemption From Securities Registration
Requirements ....................................................... 16 Effects on the Tax Exemption of the Series 2020
Certificates Upon a Termination of the Lease ..... 16 Risk of Audit ........................................................... 16
Taxability of the Series 2020 Certificates ................ 16 Amendment of the Declaration of Trust and the
Lease ................................................................... 16 Bankruptcy .............................................................. 17 Inability to Liquidate ............................................... 17 Special Use Facility; Limited Term ......................... 17 Investment Rating .................................................... 17 Secondary Markets and Prices and Liquidity .......... 17 No Reserve Fund or Credit Enhancement ............... 17 Pensions ................................................................... 18 Other Factors ........................................................... 18 SUMMARY OF THE LEGAL DOCUMENTS .. 18 CONTINUING DISCLOSURE UNDERTAKING
............................................................................. 19 UNDERWRITING ................................................ 19 FINANCIAL ADVISOR ....................................... 19 LITIGATION ........................................................ 19 TAX MATTERS .................................................... 20 Opinion of Special Counsel ..................................... 20 Other Tax Consequences ......................................... 20 LEGAL MATTERS .............................................. 22 MISCELLANEOUS .............................................. 22 Appendix A DALLAS COUNTY R-I SCHOOL
DISTRICT, GENERAL ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT
Appendix B AUDITED FINANCIAL
STATEMENTS OF THE DISTRICT FOR FISCAL YEARS ENDED JUNE 30, 2019, TOGETHER WITH AUDITOR’S REPORT THEREON
Appendix C DEFINITIONS AND
SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS
Appendix D FORM OF CONTINUING
DISCLOSURE UNDERTAKING Appendix E FORM OF OPINION OF
SPECIAL COUNSEL
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THIS PAGE INTENTIONALLY
LEFT BLANK
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OFFICIAL STATEMENT
$12,605,000* CERTIFICATES OF PARTICIPATION
(DALLAS COUNTY R-I SCHOOL DISTRICT TECHNICAL CENTER PROJECT) SERIES 2020
Evidencing Proportionate Interests of the Owners Thereof in Basic Rent Payments to be Made by DALLAS COUNTY R-I SCHOOL DISTRICT,
as Lessee pursuant to a Lease Purchase Agreement with BOKF, N.A.
as Trustee and Lessor
INTRODUCTION
This introduction is only a brief description and summary of certain information contained in this Official Statement and is qualified in its entirety by reference to more complete and detailed information contained in the entire Official Statement, including the cover page, inside cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. Purpose of the Official Statement This Official Statement, including the cover page, the inside cover page and the appendices hereto (the “Official Statement”), is provided to furnish information with respect to the sale and delivery of the Certificates of Participation (Dallas County R-I School District Technical Center Project), Series 2020 (the “Series 2020 Certificates”), to be executed and delivered by BOKF, N.A. (the “Trustee”), pursuant to a Declaration of Trust dated as of March 15, 2020 (the “Declaration of Trust”), made by the Trustee. The Series 2020 Certificates represent the proportionate interests of the owners thereof (the “Owners”) in basic rent payments (the “Basic Rent Payments”) to be made by Dallas County R-I School District (the “District”), pursuant to a Lease Purchase Agreement dated as of March 15, 2020 (the “Lease”), entered into between the Trustee, as lessor, and the District, as lessee. See the section “PLAN OF FINANCING” herein and Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS – Summary of the Lease” attached hereto. The District The District is a seven-director school district and political subdivision of the State of Missouri. For more information about the District, see Appendix A: DALLAS COUNTY R-I SCHOOL DISTRICT, GENERAL, ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT” and Appendix B: “AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2019, TOGETHER WITH AUDITOR’S REPORT THEREON” attached hereto. Plan of Financing The proceeds received from the sale of the Series 2020 Certificates, together with available funds of the District, will be used to (1) pay costs of constructing, furnishing and equipping a new technical center and agriculture facility and related site improvements (the “Improvements”) on certain real property owned by the District which include its main campus in the City of Buffalo, Missouri, upon which the District’s high school
* Preliminary, subject to change.
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and other school facilities are situated (the “Real Property”) and (2) pay the costs of executing and delivering the Lease and the Series 2020 Certificates. See also the section “PLAN OF FINANCING” herein. Funding Sources It is the current intention of the District to satisfy its obligations to make Basic Rent Payments distributable to owners of the Series 2020 Certificates from the District’s forty-six cent (.46¢) operating tax levy increase approved by the District’s voters on April 2, 2019, for the purpose of constructing, furnishing and equipping a new technical center/agricultural facility. See the section “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Funding Sources” herein. The District’s obligation to make Basic Rent Payments under the Lease during the Original Term or any Renewal Term is not, however, limited to such revenues, but is limited to moneys of the District which its Board of Education appropriates annually from its Capital Projects Fund. See the section caption “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Missouri School Finance Laws – Transfers from Incidental Fund to Capital Projects Fund” in Appendix A hereto. There is no legal authority for the District to grant a pledge of or lien on any such revenues or other moneys. The Financing Documents Pursuant to a Base Lease dated as of March 15, 2020 (the “Base Lease”), between the District, as lessor, and the Trustee, as lessee, the District will lease to the Trustee for a term of approximately 50 years (expiring April 1, 2070) the Real Property upon which the Improvements will be constructed. Pursuant to the Lease, the Trustee will (a) lease back to the District its interest in the Real Property, the Improvements to be located thereon (the Real Property and the Improvements being collectively referred to as the “Leased Property”), and (b) grant the District an option to purchase the Trustee’s interest in the Leased Property pursuant to the terms of the Lease. The Lease provides, among other things, for an initial term commencing the date of the execution and delivery of the Series 2020 Certificates, and expiring and terminating on the last day of the District’s current Fiscal Year (June 30, 2020) (the “Original Term”), subject to annual renewal, at the option of the District, for one-year renewal terms coextensive with the District’s Fiscal Year (each a “Renewal Term”), except that the final renewal term shall expire on April 2, 2045. The District is authorized to enter into the Base Lease and the Lease pursuant to a resolution expected to be approved by the District Board of Education on March 23, 2020. The Series 2020 Certificates are being executed and delivered pursuant to the Declaration of Trust, made by the Trustee. Neither the Series 2020 Certificates nor the Basic Rent Payments are obligations of the Trustee, and the Trustee has no liability or obligation under or with respect to the Series 2020 Certificates or the Basic Rent Payments. Under the Declaration of Trust, the Trustee will hold all of its estate, right, title and interest in the Lease and the Base Lease for the benefit of the Owners of the Series 2020 Certificates. The Declaration of Trust provides for the future delivery of additional certificates (“Additional Certificates” together with the Series 2020 Certificates, the “Certificates”) which, if delivered, will rank on a parity with the Series 2020 Certificates, and any other Certificates then Outstanding under the Declaration of Trust. See the section “ADDITIONAL CERTIFICATES” herein. Annual Appropriation Lease THE SERIES 2020 CERTIFICATES, THE BASIC RENT PAYMENTS AND OTHER AMOUNTS DUE UNDER THE LEASE DO NOT CONSTITUTE AN OBLIGATION OF THE DISTRICT IN ANY FISCAL YEAR SUBSEQUENT TO A FISCAL YEAR AS TO WHICH THE DISTRICT HAS APPROPRIATED FUNDS TO PAY BASIC RENT PAYMENTS AND OTHER AMOUNTS REASONABLY ANTICIPATED TO COME DUE UNDER THE LEASE. IN THE EVENT THE DISTRICT FAILS TO BUDGET, APPROPRIATE OR OTHERWISE PROVIDE FOR
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SUFFICIENT FUNDS TO PAY BASIC RENT PAYMENTS AND REASONABLY ANTICIPATED OTHER AMOUNTS TO COME DUE DURING THE IMMEDIATELY FOLLOWING FISCAL YEAR, THE LEASE WILL TERMINATE AT THE END OF THE THEN CURRENT FISCAL YEAR. UPON TERMINATION OF THE LEASE, THE CERTIFICATES WILL BE PAYABLE SOLELY FROM MONEYS, IF ANY, HELD BY THE TRUSTEE UNDER THE DECLARATION OF TRUST, AND ANY AMOUNTS RESULTING FROM A SALE OR SUBLEASE OF THE TRUSTEE’S LEASEHOLD INTEREST IN THE LEASED PROPERTY. THE OBLIGATION OF THE DISTRICT TO PAY BASIC RENT DOES NOT CONSTITUTE A DEBT OF THE DISTRICT IN CONTRAVENTION OF ANY APPLICABLE CONSTITUTIONAL OR STATUTORY LIMITATION OR REQUIREMENT CONCERNING THE CREATION OF INDEBTEDNESS BY THE DISTRICT, AND SHALL NOT CONSTITUTE A PLEDGE OF THE GENERAL TAX REVENUES, FUNDS, PROPERTIES OR MONEYS OF THE DISTRICT BEYOND ANY THEN CURRENT FISCAL YEAR DURING WHICH THE LEASE IS IN EFFECT. THE DISTRICT IS NOT OBLIGATED TO LEVY ANY TAXES IN ORDER TO RAISE REVENUES TO MAKE BASIC RENT PAYMENTS. Financial Statements The audited financial statements of the District for Fiscal Year ended June 30, 2019, are included in Appendix B hereto. The financial statements in Appendix B have been examined by Daniel Jones & Associates, Arnold, Missouri (the “Auditor”), whose report thereon is also included in Appendix B hereto. Continuing Disclosure
The District has covenanted in the Continuing Disclosure Undertaking (defined herein) to submit certain financial information and operating data and notices of material events to the Municipal Securities Rulemaking Board (the “MSRB”) through the MSRB’s Electronic Municipal Market Access system (“EMMA”), in accordance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. See the section “CONTINUING DISCLOSURE UNDERTAKING” herein and Appendix D: “FORM OF CONTINUING DISCLOSURE UNDERTAKING” attached hereto. Definitions and Descriptions; Inspection of Documents Certain capitalized terms used in this Official Statement and not otherwise defined herein will have the meanings given to such terms in Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS” attached hereto. Summaries of the Lease, the Base Lease and the Declaration of Trust are also included in Appendix C. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Lease, the Base Lease and the Declaration of Trust are qualified in their entirety by reference to such documents, copies of which may be requested from the Trustee, or will be provided by the Underwriter to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request. All references to the Series 2020 Certificates are qualified in their entirety by the definitive terms thereof and the information with respect thereto included in the Lease, the Base Lease and the Declaration of Trust. Information concerning the District has been supplied by the District, and has not been verified by the Trustee, and the Trustee makes no representation or warranty, express or implied, as to the accuracy or completeness of such information.
PLAN OF FINANCING The Improvements
The Series 2020 Certificates are being issued to (1) pay the cost of constructing the Improvements (2) and pay the costs related to the execution and delivery of the Series 2020 Certificates. The Improvements will
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consist of constructing, furnishing and equipping a new technical center and agricultural facility at the District’s existing high school campus totaling approximately 56,665 square feet.
The District has hired Dake Wells Architecture, Springfield, Missouri, as the architect for the Improvements. The District expects to receive bids from potential general contractors and enter into a contract to begin work on the Improvements in the Spring of 2020.
The total costs of constructing the Improvements is estimated to be approximately $11,500,000.
Construction of the Improvements is expected to begin in the Spring of 2020 and the District expects the Improvements to be substantially complete by Fall of 2021. Pursuant to the Lease, the District has agreed to pay all costs of the Improvements exceeding the amount deposited in the Project Fund. Estimated Sources and Uses of Funds
The sources and application of funds in connection with the execution of the Series 2020 Certificates, exclusive of accrued interest, are estimated as follows: Source of Funds: Principal Amount of the Series 2020 Certificates ....................................... $12,605,000.00* Net Original Issue Discount ........................................................................... ___________ Cash Contribution by the District .................................................................. ___________ Total Sources of Funds ................................................................................ $___________ Uses of Funds: Deposit to Project Fund (net of Costs of Issuance) ...................................... $___________ Costs of Issuance, including Underwriter’s Discount .................................... ___________ Total Uses of Funds ..................................................................................... $___________
THE SERIES 2020 CERTIFICATES OF PARTICIPATION
General Provisions The Series 2020 Certificates are dated the date of their original delivery and will mature on April 1 in the amounts and in the years stated on the inside cover page hereof, unless prepaid prior thereto (assuming no Event of Nonappropriation occurs). Payment of Basic Rent and Prepayment Price The Series 2020 Certificates will be delivered in the denomination of $5,000 each or any integral multiple thereof in book-entry form. Purchases of the Series 2020 Certificates will be made in book-entry only form in the denomination of $5,000 or any integral multiple thereof. Purchasers of the Series 2020 Certificates will not receive certificates representing their interests in the Series 2020 Certificates purchased. Each Series 2020 Certificate represents a proportionate interest in the Principal Portions and Interest Portions of the Basic Rent Payments to be paid by the District to the Trustee under the Lease for the benefit of the Owners of the Series 2020 Certificates. Principal Portions of Basic Rent will be payable on April 1 of each year beginning April 1, 2021. Interest Portions of Basic Rent will be payable semiannually on April 1 and October 1 of each year, beginning on April 1, 2021, to and including the date of maturity or prepayment, whichever is earlier.
* Preliminary, subject to change.
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Under the Declaration of Trust, the Trustee is designated as the initial paying agent for the Series 2020 Certificates. While the Series 2020 Certificates remain in book-entry form, payments to Beneficial Owners (defined herein) are governed by the rules of DTC (defined herein) as described in the section “BOOK-ENTRY ONLY SYSTEM” herein. In the event that DTC ceases to act as securities depository for the Series 2020 Certificates, payment may be made as described below. Payment of the Interest Portions of Basic Rent represented by the Series 2020 Certificates will be payable by check or draft of the Trustee mailed to the Owners of the Series 2020 Certificates at the address of each Series 2020 Certificate Owner shown on the registration books maintained by the Trustee as of the close of business on the on the fifteenth day of the month next preceding each Basic Rent Payment Date (the “Record Date”), or upon the request of and at the expense of any Owner, by electronic transfer to such Owner upon written notice given to the Trustee by such Owner not less than 15 days prior to the Record Date for such Interest Portion, containing the electronic transfer instructions including the bank (which will be in the continental United States), ABA routing number and account name and number to which such Owner wishes to have such transfer directed and an acknowledgment that an electronic transfer fee may be applicable. Payment of the Principal Portion of the Basic Rent represented by the Series 2020 Certificates will be payable (whether at maturity or upon prepayment or acceleration) by check or draft to the Owners of such Series 2020 Certificates upon presentation and surrender of such Series 2020 Certificates at the designated payment office of the Trustee. Transfer and Exchange While the Series 2020 Certificates remain in book-entry form, transfers of ownership by Beneficial Owners may be made as described under the section “BOOK-ENTRY ONLY SYSTEM” herein. In the event that DTC ceases to act as securities depository for the Series 2020 Certificates, transfers may be effected as described below. Books for the registration and transfer of the Series 2020 Certificates are to be kept by the Trustee, as registrar. Upon surrender for transfer of any Series 2020 Certificate at the designated payment office of the Trustee and satisfaction of the conditions and restrictions of such transfer, the Trustee is to execute and deliver in the name of the transferee a new Series 2020 Certificate of the same series and maturity or maturities, interest rate and tenor as the Series 2020 Certificates surrendered. Series 2020 Certificates may be exchanged at the designated payment office of the Trustee for an equal aggregate principal amount of Series 2020 Certificates of the same series and maturity or maturities, interest rate and tenor as the Series 2020 Certificate surrendered. All Series 2020 Certificates presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Trustee, duly executed by the Owner or by his attorney duly authorized in writing. The Trustee is not required to transfer or exchange any Series 2020 Certificate after such Series 2020 Certificate has been called for prepayment. The person in whose name any Series 2020 Certificate is registered is deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of either the Principal Portion or the Interest Portion of the Basic Rent Payments represented by any Series 2020 Certificate will be made only to or upon the written order of the registered owner thereof or his legal representative. The Series 2020 Certificates are payable in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debt. Series 2020 Certificates may be transferred at the designated payment office of the Trustee. Series 2020 Certificates may be exchanged for Series 2020 Certificates of the same maturity of other authorized denominations in accordance with the terms of the
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Declaration of Trust. For every such exchange or transfer of Series 2020 Certificates, the Trustee will make a charge to the Series 2020 Certificate Owner sufficient to reimburse it for any tax, fee or other governmental charges required to be paid with respect to such exchange or transfer. Prepayment Optional Prepayment. The Series 2020 Certificates maturing on April 1, 2026, and thereafter shall be subject to optional prepayment, as a whole or in part, on April 1, 2025, or any date thereafter, at a Prepayment Price equal to 100% of the Principal Portion of the Basic Rent represented thereby plus Interest Portions of Basic Rent attributable thereto accrued to the Prepayment Date, from amounts paid by the District upon the exercise of its option to purchase the Trustee’s interest in the Leased Property or partially prepay Basic Rent Payments pursuant to the terms of the Lease.
Extraordinary Optional Prepayment. The Certificates will be subject to optional prepayment prior to their respective stated maturities, as a whole, at the Principal Portion of Basic Rent represented thereby plus the Interest Portion of Basic Rent accrued to the prepayment date, without premium, in the event of substantial damage to or destruction or condemnation (other than condemnation by the District or any entity controlled by or otherwise affiliated with the District) of, or loss of title to, substantially all of the Leased Property, or if, as a result of changes in the Constitution of Missouri or legislative or administrative action by the State of Missouri or the United States, the Base Lease or the Lease becomes unenforceable, and the District purchases the Trustee’s interest in the Leased Property pursuant to the Lease, and is not repaired or replaced and the District purchases the Trustee’s interest in the Leased Property pursuant to the Lease. Notice of Prepayment. Unless otherwise provided in the Declaration of Trust, notice of prepayment will be given by the Trustee, not less than 30 days nor more than 60 days prior to the prepayment date, to the District and the Owner of each Series 2020 Certificate affected at the address shown on the registration books of the Registrar on the date such notice is mailed. Each notice of prepayment will state the prepayment date, the place of prepayment, the prepayment price and, if less than all, the numbers of the Series 2020 Certificates to be prepaid. Such notice will also state that the Interest Portion of the Basic Rent represented by the Series 2020 Certificates designated for prepayment will cease to accrue from and after such prepayment date and that on said date the prepayment price will become due and payable on each of said Series 2020 Certificates. So long as the book-entry only system is used for the Series 2020 Certificates, the Trustee will give any notice of prepayment or any other notices required to be given to owners only to DTC. Any failure of DTC to advise any DTC Participant (defined herein) or of any DTC Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity of the prepayment of the Series 2020 Certificates so called for prepayment. Beneficial Owners may desire to make arrangements with a DTC Participant so that all notices of prepayment or other communications to DTC that affect such Beneficial Owners, including notification of all interest payments, will be forwarded in writing by such DTC Participant. See the section “BOOK-ENTRY ONLY SYSTEM” herein. The Trustee is also directed to comply with any mandatory or voluntary standards then in effect for processing prepayments of municipal securities established by the Securities and Exchange Commission. Failure to comply with such standards will not affect or invalidate the prepayment of any Series 2020 Certificate to be prepaid. Effect of Prepayment. Notice of prepayment having been duly given as aforesaid, and funds sufficient for payment of the prepayment price of such Series 2020 Certificates being held by the Trustee, on the prepayment date designated in such notice, the Series 2020 Certificates so called for prepayment will become due and payable at the prepayment price specified in such notice and the Interest Portion of Basic Rent represented by the Series 2020 Certificates so called for prepayment will cease to accrue, said Series 2020 Certificates will cease to be entitled to any benefit or security under the Declaration of Trust and the Owners of
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such Series 2020 Certificates will have no rights in respect thereof except to receive payment of the prepayment price.
BOOK-ENTRY ONLY SYSTEM General. The Series 2020 Certificates are available in book-entry only form. Purchasers of the Series 2020 Certificates will not receive certificates representing their interests in the Series 2020 Certificates. Ownership interests in the Series 2020 Certificates will be available to purchasers only through a book-entry system (the “Book-Entry System”) maintained by The Depository Trust Company “DTC”), New York, New York. The following information concerning DTC and DTC’s book-entry system has been obtained from DTC. The District takes no responsibility as to the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC will act as securities depository for the Series 2020 Certificates. The Series 2020 Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Series 2020 Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC and its Participants. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a S&P rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Ownership Interests. Purchases of Series 2020 Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2020 Certificates on DTC’s records. The ownership interest of each actual purchaser of each Series 2020 Certificate (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2020 Certificates are to be accomplished by entries made on the books of Direct
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and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2020 Certificates, except in the event that use of the book-entry system for the Series 2020 Certificates is discontinued. Transfers. To facilitate subsequent transfers, all Series 2020 Certificates deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2020 Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2020 Certificates; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2020 Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2020 Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2020 Certificates, such as redemptions, tenders, defaults, and proposed amendments to the Series 2020 Certificate documents. For example, Beneficial Owners of Series 2020 Certificates may wish to ascertain that the nominee holding the Series 2020 Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices will be sent to DTC. If less than all of the Series 2020 Certificates within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2020 Certificates unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2020 Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments. Payment of the Principal Portion of the Basic Rent Payments represented by the Series 2020 Certificates or the Prepayment Price of and the Interest Portion of the Basic Rent Payments represented by the Series 2020 Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the District, subject to any statutory or regulatory requirements as may be in effect from time to time Payment of the Principal Portion of the Basic Rent Payments represented by the Series 2020 Certificates or the Prepayment Price of and the Interest Portion of the Basic Rent Payments represented by the Series 2020 Certificates to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee or the District, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry System. DTC may discontinue providing its services as depository with respect to the Series 2020 Certificates at any time by giving reasonable notice to the Trustee or the District.
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Under such circumstances, in the event that a successor depository is not obtained, Series 2020 Certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfer through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates evidencing the Series 2020 Certificates will be printed, registered in the name of DTC’s partnership nominee, Cede & Co. (or such other name as may be requested by an authorized representative of DTC), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Series 2020 Certificates from DTC (or such successor securities depository), Series 2020 Certificates may be delivered to Beneficial Owners in the manner described herein under the section “THE SERIES 2020 CERTIFICATES - Transfer and Exchange.”
The information in this section concerning DTC and DTC’s book-entry system has been obtained from DTC. The District and the Underwriter take no responsibility for the accuracy thereof.
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Limited Obligations The Series 2020 Certificates, the Basic Rent Payments and other amounts due under the Lease do not constitute an obligation of the District in any Fiscal Year subsequent to a Fiscal Year as to which the District has appropriated funds to pay Basic Rent Payments and other amounts reasonably anticipated to come due under the Lease. In the event the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent Payments and reasonably anticipated other amounts to come due during the immediately following Fiscal Year, the Lease will terminate at the end of the then current Fiscal Year. Upon termination of the Lease, the Series 2020 Certificates will be payable solely from moneys, if any, held by the Trustee under the Declaration of Trust, and any amounts resulting from a sale or subleasing of the Trustee’s leasehold interest in the Leased Property pursuant to the Lease and the Declaration of Trust. The obligation of the District to pay Basic Rent and, thus, the Series 2020 Certificates, is limited to payment from Available Revenues (see the section “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES - Available Revenues”), will constitute a current expense of the District and will not be a debt of the District in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the District, and will not constitute a pledge of the general tax revenues, funds, properties or moneys of the District beyond any then current Fiscal Year during which the Lease is in effect. The District is not obligated to levy any taxes in order to raise revenues to make Basic Rent Payments. The District agrees to deliver notice to the Trustee of such termination at least 90 days prior to the end of the then current Fiscal Year, but failure to give such notice will not extend the term beyond such Fiscal Year. The Lease also provides that Basic Rent Payments will be deposited with the Trustee at least five (5) Business Days before the scheduled due date. To secure the payment of all of the District’s obligations under the Lease, the District has granted, to the extent permitted by law, to the Trustee a security interest in the portion of the Leased Property consisting of personal property or fixtures and on all additions, attachments, accessions thereto, substitutions therefor and on any proceeds therefor and on any proceeds therefrom. Neither the Series 2020 Certificates nor the Basic Rent Payments are obligations of the Trustee, and the Trustee has no obligation to make any payment with respect to the Series 2020 Certificates or the Lease.
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Available Revenues The District is obligated only to pay periodic payments under the Lease as may be lawfully made from all Available Revenues. “Available Revenues” means amounts budgeted and appropriated by the District from the District’s Capital Projects Fund for such Fiscal Year plus any other funds of District that are legally available to pay Rent during such Fiscal Year, plus all moneys and investments, including earnings thereon, held by the Trustee pursuant to the Declaration of Trust. See the section “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Limited Obligations” above and the section “– Funding Sources” below, and the section caption “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Missouri School Finance Laws – Transfers from Incidental Fund to Capital Projects Fund” in Appendix A hereto. Funding Sources Pursuant to an election held in the District on April 2, 2019, the District increased its operating tax levy by forty-six cents (.46¢) (the “Operating Levy Increase”) to be used for the purpose of constructing, furnishing and equipping a new technical center/agricultural facility (i.e., the Improvements). The Operating Levy Increase was first levied in 2019, with taxes due by December 31, 2019. For information regarding Operating Levy Increase collection in the current fiscal year, see Appendix A: “DALLAS COUNTY R-I SCHOOL DISTRICT, MISSOURI, GENERAL, ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT – PROPERTY TAX INFORMATION CONCERNING THE DISTRICT - Tax Collection Record” attached hereto. It is the current intention of the District to satisfy its obligations to make Basic Rent Payments distributable to the Owners of the Series 2020 Certificates from (1) the Operating Levy Increase and (2) other available funds of the District. The District’s obligation to make Basic Rent Payments under the Lease during the Original Term or any Renewal Term is not, however, limited to such revenues, but is limited to moneys of the District which its Board of Education appropriates annually from its Capital Projects Fund. There is no legal authority for the District to grant a pledge of or lien on any such revenues or other moneys. For more detailed information on the potential funding sources, see Appendix A: “DALLAS COUNTY R-I SCHOOL DISTRICT, GENERAL, ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT – FINANCIAL INFORMATION CONCERNING THE DISTRICT” attached hereto. See the section caption “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Missouri School Finance Laws – Transfers from Incidental Fund to Capital Projects Fund” in Appendix A hereto. For the estimated annual requirements for Basic Rent Payments payable by the District under the Lease and distributable to the Owners of the Series 2020 Certificates, see Appendix A: “DALLAS COUNTY R-I SCHOOL DISTRICT, GENERAL, ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT – DEBT STRUCTURE OF THE DISTRICT – The Series 2020 Certificates” attached hereto. The Lease provides that the District’s obligation to make the Basic Rent Payments is absolute and unconditional, subject to and dependent upon annual appropriations being made by the District for such purpose, and that after such appropriation each Basic Rent Payment is payable without any right of set-off or counterclaim. The District has covenanted that its responsible financial officer will do all things lawfully within his power to obtain and maintain funds from which Basic Rent may be paid, including making provision for such payments to the extent necessary in each proposed budget or appropriation request submitted for adoption in accordance with applicable provisions of law and to exhaust all available reviews and appeals in the event such portion of the budget or appropriation request is not approved. Notwithstanding the foregoing, the decision to budget and appropriate funds will be made in accordance with the District’s normal procedures for such decisions by the then current governing body of the District. See the section “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Nonappropriation” below.
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Nonappropriation The Lease Term will continue into each succeeding next Fiscal Year, at the option of the District, only if there is an appropriation made by the District from which to pay Basic Rent Payments and all other amounts payable by the District under the Lease. Upon the occurrence of an Event of Nonappropriation, the District’s obligation to make Basic Rent Payments and other payments under the Lease will terminate as of the end of the last Fiscal Year for which the District has appropriated Basic Rent Payments. If an Event of Nonappropriation occurs, or upon the occurrence of an Event of Default under the Declaration of Trust, the Trustee may take possession of the Leased Property, in which event the District will take all actions necessary to authorize, execute and deliver to the Trustee all documents necessary to vest in the Trustee for the remainder of the Trustee’s leasehold term under the Base Lease, all of the District’s interest in and to the Leased Property. The Trustee may then terminate the Lease and sublease the Leased Property or sell its leasehold interest therein. Upon the occurrence of an Event of Default or upon the occurrence of an Event of Nonappropriation, the Trustee may declare all Rent payable by the District under the Lease to the end of the Original Term or then current Renewal Term to be due. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Lease - Events of Default,” and “- Remedies on Default” attached hereto and the section “RISK FACTORS” herein. Base Lease The District has, pursuant to the Base Lease, leased all its interest in the Real Property to the Trustee, as lessee. The Real Property includes the main building of the District’s high school, in addition to the Improvements being constructed as an addition to the high school. The Base Lease terminates on April 1, 2070, unless sooner terminated if the District makes or provides for all payments required by the Lease. If an Event of Default or Event of Nonappropriation occurs under the Declaration of Trust or the Lease, the Trustee has the right to possess and use the Real Property and the Improvements to be located thereon for the remainder of the term of the Base Lease, and has the right to sublease or assign its leasehold interests under the Base Lease upon such terms as it deems prudent. The proceeds from any assignment of the Base Lease and the Trustee’s rights thereunder or any sublease of the Leased Property are required to be paid to the Trustee and applied in accordance with the Declaration of Trust. Owners of the Series 2020 Certificates are cautioned, however, that the nature of the Leased Property may impair the Trustee’s ability to assign its interest in the Base Lease or to sublease the Leased Property upon the occurrence of an Event of Default or Event of Nonappropriation or to obtain an amount therefor that would be sufficient to pay the Principal Portions and the Interest Portions of Basic Rent distributable to the Owners of the Series 2020 Certificates. To further secure the payment of the District’s obligations under the Lease, the District has granted, to the extent permitted by law, to the Trustee a security interest in the portion of the Leased Property consisting of personal property or fixtures and on all additions, attachments, accessions thereto, substitutions therefor and on any proceeds therefor and on any proceeds therefrom. Permitted Partial Release of Leased Property So long as no Event of Default or Nonappropriation has occurred under the Lease or the Declaration of Trust, the Trustee will release, without the consent of any of the Owners of the Certificates or any Additional Certificates, a portion of the Real Property, other than the portion Real Property that includes or will include any of the buildings, facilities, public access or parking infrastructure that includes the Improvements and the main classroom building of the District’s high school (collectively, the “Essential Leased Property”), upon receipt by the Trustee of the following:
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(a) A written request of the District for such release, describing the portion of the Real Property to be released (the “Released Property”), and certifying that the Released Property is not needed for the operation and use of the buildings, facilities, public access or parking infrastructure constituting the Essential Leased Property; (b) An ALTA/ASCM survey showing the boundaries of that portion of the Real Property remaining after the Released Property is removed, and showing the location of all buildings, facilities, public access or parking infrastructure that comprise or will comprise, upon completion of the Improvements, the technical center and agricultural facility on the remaining portion of the Real Property, which shall show that the Essential Leased Property is not part of the Released Property; and (c) An endorsement to the title insurance policy required under the Lease, recognizing the amendment to release the Released Property from the Base Lease and the Lease, reaffirming the existing coverage and reflecting no exceptions other than those included in the title insurance policy originally delivered.
ADDITIONAL CERTIFICATES
The Trustee may deliver Additional Certificates for any purpose specified in the Declaration of Trust, upon compliance with certain terms and conditions set forth in the Declaration of Trust. Any Additional Certificates will be equally and ratably secured by the Declaration of Trust on a parity with the Series 2020 Certificates, except that each series of Certificates, if secured by a reserve fund, is entitled to the benefits and security of a separate account in such reserve fund. Concurrently with the delivery of any such Additional Certificates, the Trustee and the District shall deliver an amendment to the Lease obligating the District to make payments of principal thereof and interest thereon in amounts and at times sufficient to provide for the timely payment of principal of and interest on such Additional Certificates. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS – Summary of the Declaration of Trust - Additional Certificates” attached hereto.
THE TRUSTEE The Trustee is not liable for the payment of Basic Rent Payments, and the Owners of the Series 2020 Certificates have no right to look to the Trustee for any payments of the Series 2020 Certificates or for any other payments other than from funds held under the Declaration of Trust.
RATING S&P Global Ratings, a division of S&P Global, Inc. (“S&P”), has assigned the Series 2020 Certificates the rating set forth on the cover page of this Official Statement based on an evaluation of the creditworthiness of the District. Such rating reflects only the views of S&P, and an explanation of the significance of the rating may be obtained only from S&P. The District has furnished S&P with certain information and materials relating to the Series 2020 Certificates and the District that has not been included in this Official Statement. Generally, S&P base their ratings on the information and materials so furnished and on investigations, studies and assumptions by S&P. There is no assurance that the rating will remain in effect if, in the judgment of S&P, circumstances warrant. Any downward revision or withdrawal of the rating may have an adverse effect on the market price and marketability of the Series 2020 Certificates.
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RISK FACTORS An investment in the Series 2020 Certificates involves a degree of risk, including the risk factors described below. Each prospective investor in the Series 2020 Certificates is encouraged to read this Official Statement in its entirety, and to give particular attention to the factors described below which, among others, could affect the payment of the Series 2020 Certificates, and which could also affect the market price of the Series 2020 Certificates to an extent that cannot be determined. This discussion of risk factors is not, and is not intended to be, exhaustive. Nonappropriation The Series 2020 Certificates, the Basic Rent Payments and other amounts due under the Lease do not constitute an obligation of the District in any Fiscal Year subsequent to a Fiscal Year as to which the District has appropriated funds to pay Basic Rent Payments and other amounts reasonably anticipated to come due under the Lease. In the event the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent Payments and reasonably anticipated other amounts to come due during the immediately following Fiscal Year, the Lease will terminate at the end of the then current Fiscal Year. Upon termination of the Lease, the Series 2020 Certificates will be payable solely from moneys, if any, held by the Trustee under the Declaration of Trust, and any amounts resulting from a sale or sublease of the Trustee’s leasehold interest in the Leased Property pursuant to the Lease and the Declaration of Trust. The obligation of the District to pay Basic Rent and, thus, the Series 2020 Certificates, is limited to payment from Available Revenues, will constitute a current expense of the District and will not be a debt of the District in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the District, and will not constitute a pledge of the general tax revenues, funds, properties or moneys of the District beyond any then current Fiscal Year during which the Lease is in effect. The District is not obligated to levy any taxes in order to raise revenues to make Basic Rent Payments. The District’s obligations under the Lease to make Basic Rent Payments may be terminated on an annual basis by the District without any penalty, and there is no assurance that the District will budget funds for that purpose. Accordingly, the likelihood that there will be sufficient funds to pay the Series 2020 Certificates is dependent upon certain factors that are beyond the control of the Owners of the Series 2020 Certificates, including (a) the continuing need of the District for the Leased Property, (b) the ability of the District to generate sufficient funds to pay obligations associated with the Lease and other obligations of the District and (c) the ability of the Trustee to sublease the Leased Property or sell its leasehold interest therein, in the event of a termination of the Lease by reason of an Event of Nonappropriation or an Event of Default. Results of a Nonappropriation An “Event of Nonappropriation” occurs if the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent and other amounts reasonably anticipated to come due during the immediately following Fiscal Year. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Lease - Events of Default” and “-Remedies on Default” attached hereto for a discussion of the results of an Event of Nonappropriation. Upon termination of the Lease, the Trustee may take possession of or sell its leasehold interest in the Leased Property. The net proceeds received from such sale, together with other moneys then held by the Trustee under the Declaration of Trust (with certain exceptions as provided in the Lease and the Declaration of Trust), are required to be used to pay the Certificates, to the extent of such moneys. The Leased Property consists of the Improvements, which includes the construction, equipping and furnishing of the District’s new technical center and agricultural facility and the Real Property upon which these Improvements will be located. See the section “PLAN OF FINANCING – The Improvements” herein. The
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ability of the Trustee to lease or resell all or a portion of its interest in the Leased Property to third parties may be limited. There can be no assurance that the proceeds of any such lease or sale would be applied to the payment of the Series 2020 Certificates, as the same may be subject to the competing claims of other creditors of the District in the event of bankruptcy or liquidations. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Lease - Remedies on Default” attached hereto. Due to the nature of the Leased Property, a potential purchaser of the Series 2020 Certificates should not assume that it will be possible for the Trustee to sell its interest in the Leased Property after a termination of the Lease at all or, if sold, for an amount equal to the aggregate principal amount represented by the Certificates then outstanding plus accrued interest represented thereby. Limited Source of Money for Rent Payments Under the Lease It is the current intention of the District to satisfy its obligations to make Basic Rent Payments distributable to the Owners of the Series 2020 Certificates from (1) the Operating Levy Increase and (2) other available funds of the District. There is, however, no legal authority for the District to grant a pledge of or lien on any such revenues or other moneys. The District’s obligation to make Basic Rent Payments under the Lease during the Original Term or any Renewal Term is not, however, limited to such revenues, but is limited to an annual appropriation of moneys of the District from its Capital Projects Fund. Moneys in the Capital Projects Fund available to make payments under the Lease are derived from (i) the Operating Levy Increase and any other tax levy imposed within such Capital Projects Fund or transfers of money from the District’s Incidental Fund (sometimes referred to as the District’s General Fund) to the Capital Projects Fund for certain purposes, including: (1) the amount to be expended for transportation equipment that is considered an allowable cost under the state board of education rules for transportation reimbursements during the current year; (2) the amount necessary to satisfy obligations of the Capital Projects Fund for state-approved area vocational-technical schools; (3) current year obligations for lease-purchase obligations entered into prior to January 1, 1997; (4) the amount necessary to repay costs of one or more guaranteed energy savings performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and (5) to satisfy current year capital project expenditures, an amount not to exceed the greater of (a) $162,326 or (b) seven percent (7%) of the State Adequacy Target. For more information, see the section herein captioned “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Funding Sources” and the section captioned “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Missouri School Finance Laws – Transfers from Incidental Fund to Capital Projects Fund” in Appendix A hereto. Construction Delays and Cost Overruns Construction delays could result from factors beyond the control of the District or the general contractor, including inclement weather, strikes or work stoppages, which would result in a delay of the completion of the Improvements. In addition to construction delays, the District may experience construction cost overruns beyond the normal construction contingencies built into the estimated construction costs of the Improvements. The costs of constructing and equipping the Improvements are estimated to be approximately $11,500,000, however, there are circumstances in which the costs of the Improvements could exceed such estimated cost and that excess could be at the expense of the District. No assurance can be given that the Improvements will be completed on schedule, within budget or without material errors and defects. Any such failure could affect the District’s decision to continue appropriations and the Trustee’s ability to relet the Leased Property. While the District’s ability to make the Basic Rent Payments is not contingent on timely completion of the Improvements on budget, construction delays and cost overruns may require the District to spend more than originally budgeted to complete the Improvements, which may have an adverse impact on the District’s finances and future budgets.
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Destruction of the Leased Property The Lease requires the Leased Property to be insured as described in Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Lease - Insurance” attached hereto. If all or any portion of the Leased Property is damaged or destroyed, the District is nevertheless required to continue to make Basic Rent Payments under the Lease, subject to the exercise of its option to extend the term of the Lease for each next succeeding Fiscal Year and to apply the net proceeds from insurance and certain other sources to repair, restore, modify, improve or replace the affected portion of the Leased Property. If the net proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement, the District will complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the net proceeds.
There can be no assurance that the District will elect to extend the term of the Lease for the next Renewal Term succeeding such damage or destruction. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Lease – Damage, Destruction and Condemnation” attached hereto.
The Trustee also has a title insurance policy covering its leasehold interest in the Leased Property in the
amount of the original aggregate principal amount of the Series 2020 Certificates, subject to the conditions and limitations contained in the policy. In the event of a title loss, the proceeds of the title insurance policy may be insufficient to allow the District to purchase the Trustee’s interest in the Leased Property pursuant to the Lease and could increase the likelihood of an Event of Nonappropriation by the District. No Environmental Survey Neither the Lease nor the Base Lease require the District to obtain for the Trustee’s benefit an environmental survey in connection with the execution and delivery of the Lease and the Trustee’s delivery of the Series 2020 Certificates. The District has made representations, warranties and covenants concerning environmental matters under the Base Lease. Environmental hazards could result in unexpected expenses to the District with respect to the Leased Property, and could adversely impact the District’s ability to make Basic Rent Payments and could increase the risk of nonappropriation. In addition, environmental hazards may delay or inhibit the Trustee’s ability to exercise its remedies under the Lease or the Declaration of Trust, upon the occurrence of an Event of Nonappropriation or an Event of Default. Possible Insufficiency of Casualty Insurance Proceeds The Leased Property is to be insured by policies of casualty and property damage or self-insurance as described in the section “SUMMARY OF THE LEASE – Insurance” in Appendix C attached hereto. In the event of damage to or destruction of the Leased Property, the net proceeds from such insurance policies or certain other sources may not be sufficient to repair or replace the Leased Property. Condemnation of the Leased Property Under applicable Missouri law, the District has the power to condemn property for any purpose for which it is authorized to acquire property. The District has agreed in the Base Lease and the Lease that, to the extent it may lawfully do so, if for any reason it exercises the power of eminent domain with respect to the Leased Property, the appraisement value of the Leased Property will not be less than the Basic Rent Payments then due plus the then applicable Purchase Price as defined and set forth in the Lease and the Base Lease. It is unknown whether the covenant described in the preceding sentence is enforceable against the District. Accordingly, there is no assurance that, if the District were to condemn the Trustee’s interest under the Lease, the condemnation award would be sufficient to pay the outstanding principal of the Certificates and interest
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thereon. The District has agreed in the Lease that, in the event that the whole or any part of the Leased Property is taken by eminent domain proceedings, the interest of the Trustee shall be recognized. Effects on Exemption From Securities Registration Requirements Special Counsel expresses no opinion with respect to the applicability of the registration requirements of the Securities Act of 1933, to any Series 2020 Certificates in the event of a termination of the Lease by reason of an Event of Nonappropriation or an Event of Default. If the Lease is terminated by reason of either such event, there is no assurance that the Series 2020 Certificates may be transferred by an Owner thereof without compliance with the registration provisions of the Securities Act of 1933, as amended, or the availability of an exemption therefrom. Effects on the Tax Exemption of the Series 2020 Certificates Upon a Termination of the Lease Special Counsel expresses no opinion as to the treatment for federal income tax purposes of any moneys received by a Series 2020 Certificate Owner other than payments by the District made pursuant to the Lease, upon an Event of Nonappropriation or an Event of Default. There is no assurance that such moneys received by a Series 2020 Certificate Owner in such event will be excludable from gross income for federal income tax purposes. Risk of Audit The Internal Revenue Service has established an ongoing program to audit tax-exempt obligations to determine the legitimacy of the tax status of such obligations. No assurance can be given that the Internal Revenue Service will not commence an audit of the Series 2020 Certificates. The Owners of the Series 2020 Certificates are advised that, if an audit of the Series 2020 Certificates were commenced, in accordance with its current published procedures, the Internal Revenue Service is likely to treat the District as the taxpayer, and the Owners of the Series 2020 Certificates may not have a right to participate in such audit. Public awareness of any audit could adversely affect the market value and liquidity of the Series 2020 Certificates during the pendency of the audit, regardless of the ultimate outcome of the audit. Taxability of the Series 2020 Certificates The failure of the District to comply with certain covenants set forth in the Resolution could cause the interest on the Series 2020 Certificates to become included in federal gross income for federal and Missouri income tax purposes retroactive to the date of delivery of the Series 2020 Certificates. The Series 2020 Certificates are not subject to prepayment nor are the interest rates on the Series 2020 Certificates subject to adjustment in the event of a determination by the Internal Revenue Service or a court of competent jurisdiction that the Interest Portion of Basic Rent Payments paid or to be paid on any Series 2020 Certificate is or was includible in the gross income of the Series 2020 Certificate Owner for federal income tax purposes. Likewise, the Declaration of Trust does not require the prepayment of the Series 2020 Certificates or the adjustment of interest rates on the Series 2020 Certificates if the interest thereon loses its exemption from income taxes imposed by the State of Missouri. Under such circumstances, the Owners of the Series 2020 Certificates would continue to hold their Series 2020 Certificates, receiving the Principal Portion and Interest Portion of Basic Rent Payments as and when due, but would be required to include the Interest Portion of Basic Rent Payments in gross income for federal and Missouri income tax purposes. Amendment of the Declaration of Trust and the Lease
Certain amendments to the Declaration of Trust and the Lease may be made without the consent of the Owners of the Certificates then outstanding, including supplements providing for the delivery of Additional Certificates, which would be payable and secured on a parity with outstanding Series 2020 Certificates under the Declaration of Trust. Such amendments may adversely affect the security of the Owners of the Series 2020
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Certificates. See Appendix C: “DEFINITIONS AND SUMMARIES OF CERTAIN PRINCIPAL DOCUMENTS - Summary of the Declaration of Trust – Amendments to the Declaration of Trust, the Lease or the Base Lease” attached hereto. Bankruptcy In addition to the limitations on remedies contained in the Declaration of Trust and the Lease, the rights and remedies provided in the Declaration of Trust and the Lease may be limited by and are subject to (i) bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws affecting creditors’ rights, (ii) the application of equitable principles, and (iii) the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of Missouri. Inability to Liquidate The enforceability of the Series 2020 Certificates and the Lease is subject to applicable bankruptcy laws, equitable principles affecting the enforcement of creditors’ rights generally and liens securing such rights, and the police powers of the State and its political subdivisions. Because of the delays inherent in obtaining the remedies involving the Leased Property, a potential purchaser of the Series 2020 Certificates should not anticipate that remedies could be accomplished rapidly, if at all. Special Use Facility; Limited Term Although the Trustee has the right under the Declaration of Trust and the Lease to take possession and relet the Leased Property for the remaining term of the Base Lease upon the occurrence of an Event of Default or Event of Nonappropriation, no assurance can be made that the Leased Property as a whole could generate sufficient revenues to pay the Principal Portion and Interest Portion of Basic Rent represented by the Series 2020 Certificates upon the exercise of such remedy by the Trustee. There can be no assurance, upon the occurrence of an Event of Default or an Event of Nonappropriation, that the then remaining term of the Base Lease would permit the Trustee to relet the Leased Property for sufficient revenues to pay the Principal Portion and Interest Portion of Basic Rent represented by the Series 2020 Certificates upon the exercise of such remedy by the Trustee. Investment Rating The lowering or withdrawal of the investment rating initially assigned to the Series 2020 Certificates by S&P as set forth on the cover page of this Official Statement could adversely affect the market price for and the marketability of the Series 2020 Certificates. Secondary Markets and Prices and Liquidity The Series 2020 Certificates are not readily liquid, and no person should invest in the Series 2020 Certificates with funds such person may need to convert readily into cash. Owners of the Series 2020 Certificates should be prepared to hold their Series 2020 Certificates to the stated maturity date. The Underwriter will not be obligated to repurchase any of the Series 2020 Certificates, and no representation is made concerning the existence of any secondary market for the Series 2020 Certificates. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2020 Certificates as no assurance can be given that the initial offering price for the Series 2020 Certificates will continue for any period of time. No Reserve Fund or Credit Enhancement No debt service reserve fund will be funded and no financial guaranty insurance policy, letter of credit or other credit enhancement will be issued to ensure payment of the Principal Portion or Interest Portion of Basic Rent
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due with respect to the Series 2020 Certificates. Accordingly, any potential purchaser of the Series 2020 Certificates should consider the financial ability of the District to pay Basic Rent Payments under the Lease. Pensions
The District contributes to two cost-sharing multiple-employer defined benefit pension plans on behalf of its employees: (i) The Public School Retirement System of Missouri and (ii) The Public Education Employee Retirement System of Missouri. See “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Pension and Employee Retirement Plans” in Appendix A of this Official Statement. The District also provides other postemployment benefits as part of the total compensation offered to attract and retain the services of qualified employees. See “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Other Postemployment Benefits” in Appendix A of this Official Statement. Future required contribution increases beyond the current fiscal year may require the District to increase its revenues, reduce its expenditures, or some combination thereof, which may impact the District’s operations or limit the District’s ability to generate additional revenues in the future. Other Factors
Other factors, including but not limited to one or more of the following factors or events, could adversely affect the District’s operations and financial performance to an extent that cannot be determined at this time:
1. Changes in Management. Changes in key management personnel could affect the capability of the management of the District.
2. Future Economic Conditions. Adverse economic conditions or changes in demographics in the
District, including increased unemployment and inability to control expenses in periods of inflation, could adversely impact the District’s financial performance, including its tax revenues and other revenues.
3. Insurance Claims. Increases in the cost of general liability insurance coverage and the amounts
paid in settlement of liability claims not covered by insurance could adversely impact the District’s financial performance.
4. Natural Disasters. The occurrence of natural disasters, such as floods, droughts, tornadoes or
earthquakes, could damage the District’s facilities, interrupt services or otherwise impair operations of the District.
5. Cybersecurity Risks. It is possible that the District’s security measures may not prevent
improper or unauthorized access or disclosure of information resulting from cyber-attacks. Cyber-attacks can create disruptions of the District and its services or unauthorized disclosure of confidential information. The District may incur significant costs to remediate possible injury to persons affected by any cyber-attack.
SUMMARY OF THE LEGAL DOCUMENTS Attached hereto as Appendix C are summaries of certain provisions of the Base Lease, the Lease and the Declaration of Trust, as well as certain defined terms used therein. The summaries do not purport to be complete, and reference is made to the full text of the Base Lease, the Lease and the Declaration of Trust, respectively, for a complete recital of their terms, as well as a complete recital of the defined terms used therein. Copies of all documents relating to the Series 2020 Certificates may be obtained electronically upon request of the Financial Advisor, Sentry Financial Services, LLC, Attn: Matthew DeLeo, Principal, e-mail: [email protected], phone: (314) 566-9353, and will be provided by the Underwriter to any prospective
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purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request.
CONTINUING DISCLOSURE UNDERTAKING
Pursuant to a Continuing Disclosure Undertaking, the District has agreed to provide to the Municipal Securities Rulemaking Board (the “MSRB”), via the MSRB’s EMMA website, not later than December 31st after the end of each Fiscal Year, commencing with the Fiscal Year ended June 30, 2020, (1) the audited financial statements of the District for that fiscal year and (2) certain operating data of the District (the “Annual Report”). The financial statements of the District are audited by the District’s independent certified public accountants. The District has also agreed to provide prompt notice to the MSRB of the occurrence of certain material events with respect to the Series 2020 Certificates. See Appendix D: “FORM OF CONTINUING DISCLOSURE UNDERTAKING” attached hereto.
In the past five years, the District has not had any obligations outstanding that were subject to prior
undertakings under Rule 15c2-12 promulgated by the Securities and Exchange Commission.
UNDERWRITING
Based on the bids received by the District on March 23, 2020, the Series 2020 Certificates were awarded
to [Underwriter] (the “Underwriter”). The Underwriter has agreed, subject to certain conditions, to purchase the Series 2020 Certificates from the District at a purchase price of $_____________ (equal to the principal amount of the Series 2020 Certificates [plus/minus] a [net] original issue [premium]/[discount] of $___________, less an underwriter’s discount of $____________). The Underwriter is purchasing the Series 2020 Certificates for resale in the normal course of the Underwriter’s business activities. The Underwriter reserves the right to offer any of the Series 2020 Certificates to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, determines. The Underwriter reserves the right to join with dealers and other purchasers in offering the Series 2020 Certificates to the public. The Underwriter may offer and sell Series 2020 Certificates to certain dealers (including dealers depositing Series 2020 Certificates into investment trusts) at prices lower than the public offering prices.
FINANCIAL ADVISOR Sentry Financial Services, LLC, Sullivan, Missouri, is employed as financial advisor to the District to render certain professional services, including advising the District on a plan of financing in connection with the planning, structuring and issuance of the Series 2020 Certificates and various other debt related matters (the “Financial Advisor”). The Financial Advisor will not be a manager or a member of any purchasing group submitting a proposal for the purchase of the Series 2020 Certificates.
LITIGATION
There is not now pending or, to the District’s knowledge, threatened, any litigation seeking to restrain or enjoin or in any way limit the approval or the issuance and delivery of this Official Statement or the Series 2020 Certificates or the proceedings or authority under which they are to be issued. There is no litigation pending or, to the District’s knowledge, threatened which in any manner challenges or threatens the District’s powers to enter into or carry out the transactions contemplated by the Declaration of Trust, the Lease, the Base Lease and this Official Statement.
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TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of
holding and disposing of the Series 2020 Certificates. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Series 2020 Certificates as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Missouri, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Series 2020 Certificates in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Series 2020 Certificates.
Opinion of Special Counsel
In the opinion of Gilmore & Bell, P.C., as Special Counsel to the District (“Special Counsel”), under the law existing as of the issue date of the Series 2020 Certificates:
Federal and Missouri Tax Exemption. The Interest Portion of Basic Rent Payments received with respect to the Series 2020 Certificates (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri. Alternative Minimum Tax. The Interest Portion of Basic Rent Payments received with respect to the Series 2020 Certificates is not an item of tax preference for purposes of computing the federal alternative minimum tax. Bank Qualification. The District’s obligation to pay Basic Rent Payments distributable to owners of the Series 2020 Certificates is not a “qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).
Special Counsel’s opinions are provided as of the date of the original issue of the Series 2020 Certificates, subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2020 Certificates in order that Interest Portion of Basic Rent Payments received with respect to the Series 2020 Certificates be, or continue to be, excludable from gross income for federal income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the Interest Portion of Basic Rent Payments received with respect to the Series 2020 Certificates to be included in gross income for federal and Missouri income tax purposes retroactive to the date of issuance of the Series 2020 Certificates. Special Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Series 2020 Certificates, but has reviewed the discussion under the heading “TAX MATTERS.” See Appendix E for a form of Special Counsel’s legal opinion. Other Tax Consequences Original Issue Premium. For federal income tax purposes, premium is the excess of the issue price of a Series 2020 Certificate over its stated redemption price at maturity. The issue price of a Series 2020 Certificate is generally the first price at which a substantial amount of the Series 2020 Certificates of that maturity have been sold to the public. Under Section 171 of the Code, premium on tax-exempt obligations amortizes over the term of the Series 2020 Certificate using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the owner’s basis in the Series 2020 Certificate and the amount of tax-exempt interest
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received will be reduced by the amount of amortizable premium properly allocable to the owner, which will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Series 2020 Certificate prior to its maturity. Even though the owner’s basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of certificate premium.
Original Issue Discount. For federal income tax purposes, original issue discount is the excess of the stated redemption price at maturity of a Series 2020 Certificate over its issue price. The issue price of a Series 2020 Certificate is generally the first price at which a substantial amount of the Series 2020 Certificates of that maturity have been sold to the public. Under Section 1288 of the Code, original issue discount on tax-exempt obligations accrues on a compound basis. The amount of original issue discount that accrues to an owner of a Series 2020 Certificate during any accrual period generally equals (1) the issue price of that Series 2020 Certificate, plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (2) the yield to maturity on that Series 2020 Certificate (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), minus (3) any interest payable on that Series 2020 Certificate during that accrual period. The amount of original issue discount accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner’s tax basis in that Series 2020 Certificate. Prospective investors should consult their own tax advisors concerning the calculation and accrual of original issue discount.
Sale, Exchange or Retirement of Series 2020 Certificates. Upon the sale, exchange or retirement (including redemption) of a Series 2020 Certificate, an owner of the Series 2020 Certificate generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Series 2020 Certificate (other than in respect of accrued and unpaid interest) and such owner’s adjusted tax basis in the Series 2020 Certificate. To the extent a Series 2020 Certificate is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Series 2020 Certificate has been held for more than 12 months at the time of sale, exchange or retirement.
Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on the Series 2020 Certificates, and to the proceeds paid on the sale of the Series 2020 Certificates, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner’s federal income tax liability.
Collateral Federal Income Tax Consequences. Prospective purchasers of the Series 2020 Certificates
should be aware that ownership of the Series 2020 Certificates may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Series 2020 Certificates. Special Counsel expresses no opinion regarding these tax consequences. Purchasers of Series 2020 Certificates should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Series 2020 Certificates, including the possible application of state, local, foreign and other tax laws.
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LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the Series 2020 Certificates are subject to the approving legal opinion of Gilmore & Bell, P.C., as Special Counsel to the District, which opinion will be rendered in substantially the form as set forth in Appendix E attached hereto. Certain matters relating to this Official Statement will also be passed upon by Gilmore & Bell, P.C., as disclosure counsel to the District. The legal opinions to be delivered concurrently with the delivery of the Series 2020 Certificates express the professional judgement of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become and insurer or guarantor of that expression of professional judgement, of the transactions opined upon or the future performance of parties to such transactions, and the rendering of an opinion does not guarantee the outcome of any legal dispute that may arise out of the transaction.
MISCELLANEOUS Information set forth in this Official Statement has been furnished or reviewed by certain officials of the District, certified public accountants, and other sources, as referred to herein, which are believed to be reliable. Any statements made in this Official Statement involving matters of opinion, estimates or Leased Property, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or Leased Property will be realized. The descriptions contained in this Official Statement of the Series 2020 Certificates, the Declaration of Trust, the Base Lease and the Lease do not purport to be complete and are qualified in their entirety by reference thereto. Simultaneously with the delivery of the Series 2020 Certificates, the District’s Board President, acting on behalf of the District, will furnish to the Underwriter a certificate which shall state, among other things, that to the best knowledge and belief of such officer, this Official Statement (and any amendment or supplement hereto) as of the date of sale and as of the date of delivery of the Series 2020 Certificates does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading in any material respect.
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The form of this Official Statement, and its distribution and use by the Underwriter, has been approved by the District. Neither the District nor any of its officers, directors or employees, in either their official or personal capacities, has made any warranties, representations or guarantees regarding the financial condition of the District or the District’s ability to make payments required of it; and further, neither the District nor its officers, directors or employees assumes any duties, responsibilities or obligations in relation to the issuance of the Series 2020 Certificates other than those either expressly or by fair implication imposed on the District by the Lease and the Declaration of Trust.
DALLAS COUNTY R-I SCHOOL DISTRICT By: President of the Board of Education
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APPENDIX A
DALLAS COUNTY R-I SCHOOL DISTRICT
GENERAL, ECONOMIC AND FINANCIAL INFORMATION FOR THE DISTRICT
APPENDIX A
DALLAS COUNTY R-V SCHOOL DISTRICT FOR THE DISTRICT
GENERAL, ECONOMIC AND FINANCIAL INFORMATION
TABLE OF CONTENTS Page A- GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT ................................ 1
General Description .......................................................................................................................................... 1 Organization and Board of Education ............................................................................................................... 1 Administration .................................................................................................................................................. 1 Professional Staff .............................................................................................................................................. 2 Educational Facilities ........................................................................................................................................ 2 History of Enrollment ....................................................................................................................................... 2 Education Programs .......................................................................................................................................... 2 Other District Statistics ..................................................................................................................................... 2 School Rating and Accreditation ...................................................................................................................... 3
ECONOMIC INFORMATION CONCERNING THE DISTRICT ............................................................... 3 Population ......................................................................................................................................................... 3 Commerce, Industry and Employment ............................................................................................................. 4 Medical and Health Facilities ........................................................................................................................... 5 Higher Education .............................................................................................................................................. 5 Recreational Facilities ....................................................................................................................................... 5 Municipal Services and Utilities and Public Safety .......................................................................................... 5 Transportation, Communications and Media .................................................................................................... 5 Income and Home Values ................................................................................................................................. 6
DEBT STRUCTURE OF THE DISTRICT ...................................................................................................... 7 Overview ........................................................................................................................................................... 7 General Obligation Indebtedness ...................................................................................................................... 7 Overlapping or Underlying General Obligation ............................................................................................... 7 Legal Debt Capacity ......................................................................................................................................... 7 The Series 2020 Certificates ............................................................................................................................. 8 Other Lease Obligations of the District ............................................................................................................ 9 No Prior Defaults ............................................................................................................................................ 10
FINANCIAL INFORMATION CONCERNING THE DISTRICT ............................................................. 10 Accounting, Budgeting and Auditing Procedures ........................................................................................... 10 Sources of Revenue ........................................................................................................................................ 11 Local Revenue ................................................................................................................................................ 12 County Revenue .............................................................................................................................................. 12 State Revenue ................................................................................................................................................. 12 Federal Revenue ............................................................................................................................................. 12 Missouri School Finance Laws ....................................................................................................................... 13 Fund Balances Summary ................................................................................................................................ 17 Risk Management ........................................................................................................................................... 17 Pension and Employee Retirement Plans ........................................................................................................ 18 Other Postemployment Benefits ..................................................................................................................... 19
PROPERTY TAX INFORMATION CONCERNING THE DISTRICT .................................................... 20 Property Valuations ........................................................................................................................................ 20 Property Tax Levies and Collections .............................................................................................................. 21 Tax Rates ........................................................................................................................................................ 22 History of Tax Levies ..................................................................................................................................... 23 Tax Collection Record .................................................................................................................................... 23 Major Property Taxpayers .............................................................................................................................. 24
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GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT General Description The District is located in southwestern Missouri, approximately 30 miles north of Springfield, Missouri. The District encompasses approximately 378 square miles in Dallas County, Laclede County and Polk County (Dallas County is highlighted in the map at right). The District’s elementary, middle and high schools are located in the City of Buffalo, Missouri.
Organization and Board of Education The District is a reorganized school district formed pursuant to Chapter 162 of the Revised Statutes of Missouri, as amended (“RSMo”). The District is governed by a seven-member Board of Education (the “Board”). The members of the Board are elected by the voters of the District for three-year staggered terms, with two directors being elected each year, except every third year, in which three directors are elected. All Board members are elected at-large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and has no regular administrative duties. The Secretary and Treasurer are appointed by the Board and may or may not be members of the Board. The current members and officers of the Board are:
Name
Office
Current Term Began
Current Term Expires
Suzanne Powers President & Member April 2014 April 2020 Jennifer Long Vice President & Member April 2013 April 2022 Peggy Zanzie Secretary & Member April 2015 April 2021 Kirby Vest Treasurer & Member April 2011 April 2023 Travis Dill Member April 2016 April 2022 Leroy Laudenbach Member April 2015 April 2021 Wayne Rieschel Member April 2017 April 2023
Administration The Board appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. Dr. Tim Ryan was appointed Superintendent of the District in July 2015. Dr. Ryan has a total of 23 years of experience in education. Prior to his appointment as Superintendent, he served as the assistant superintendent of Human Resources and Operations in the Harrisonville Cass R-9 School District from July 2010 through January 2015 and as interim superintendent from February through June 2015. Previous to his district office experiences he was the high school principal in the Pleasant Hill R-III from July 2005 through June of 2010 and he was a high school assistant principal in the Lee’s Summit R-VII School District from July 2001 to June of 2005. Dr. Ryan received a Bachelor of Science degree in biology from Rockhurst University in 1993, a master’s in secondary school administration from the University of Central Missouri in 2001, and a doctorate in educational leadership from Saint Louis University in 2005. The District has a total of 274 employees, including 12 administrative personnel, 141 teachers and 121 non-certificated employees.
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Professional Staff The average teacher employed by the District has 11.2 years of teaching experience, compared to a
statewide average of 12.5 years, and 38.8% of the District’s teachers hold advanced degrees. For the 2018-2019 school year, the average salary for all teaching staff was $42,163 compared to a statewide average salary for teaching staff of $51,218. Educational Facilities
The District operates three schools, as shown below. The aggregate replacement cost of the current physical facilities of the District as most recently determined for insurance purposes is $57,022,824.
Grades Name of School Served
D.A. Mallory Elementary School K-04 Buffalo Prairie Middle School 05-08 Buffalo High School 09-12
History of Enrollment Listed below are the District’s fall enrollment figures for the current and previous four school years.
2015-16 2016-17 2017-18 2018-19 2019-20
D.A. Mallory Elementary School (K-04) 652 630 633 605 600 Buffalo Prairie Middle School (05-08) 529 504 519 574 572 Buffalo High School (09-12) 455 484 483 502 507 Total 1,636 1,618 1,635 1,681 1,679 Source: Missouri Department of Elementary and Secondary Education. Education Programs
The District operates under the oversight of the Missouri Department of Elementary and Secondary Education (“DESE”). Programs offered by the District are comprehensive with an academic curriculum encompassing foreign language, math, science, literature, composition and social studies as well as special education and early childhood education. Other District Statistics The following table shows additional information about the District compiled by DESE for the last five completed fiscal years.
2013-14 2014-15 2015-16 2016-17 2017-18
Avg. Daily Attendance (ADA) 1,657.93 1,627.62 1,604.74 1,584.70 1,572.58 Proportional Rate of Attendance(1) 90.3% 89.6% 88.5% 87.9% 85.6% Current Expenditures per ADA $9,251.78 $8,523.81 $8,135.30 $8,774.26 $9,217.62 Students per Teacher 11 12 13 13 13 Students per Classroom Teacher 17 18 18 19 19
Source: Missouri Department of Elementary and Secondary Education. (1) Reflects the overall percentage of District students who had an individual attendance rate of 90% or higher.
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School Rating and Accreditation DESE administers the Missouri School Improvement Program (“MSIP”), the state’s school accountability system for reviewing and accrediting public school districts in Missouri. Since MSIP was established in 1990, four review cycles have been completed, each cycle lasting from five to six years. The fifth cycle, referred to as MSIP 5, began in the 2012-13 school year.
DESE computes an Annual Performance Report (“APR”) for every public school district and charter local education agency and for each school. This overall score is comprised of scores for each of the MSIP 5 performance standards: (1) Academic Achievement (percent proficient or advanced in English language arts, mathematics, science and social studies), (2) Subgroup Achievement (percent proficient or advanced in English language arts, mathematics, science and social studies for students in certain super subgroups (Hispanic, Black, FRL (free/reduced price lunch eligible), IEP (Individualized Education Program for child with disability), ELL (English Language Learners)), (3) High School Readiness (K-8 districts) or College and Career Readiness (K-12 districts) based on certain test scores, (4) Attendance Rate, and (5) Graduation Rate (K-12 districts). Status, progress and growth (where applicable) are used to calculate a comprehensive score used to determine the accreditation level of a school district. Under MSIP 5, there are four levels of school accreditation: (1) Accredited With Distinction, for districts with equal to or greater than 90% of the points possible on the APR and meeting other criteria yet to be determined by the State Board of Education (a resolution to adopt criteria was considered but withdrawn in September 2014 and no further attempt to adopt criteria has been made making the achievement of the status Accredited with Distinction impossible until criteria have been adopted), (2) Accredited, for districts with scoring equal to or greater than 70% of the points possible on the APR, (3) Provisional, for districts with equal to or greater than 50% but less than 70% of the points possible on the APR, and (4) Unaccredited, for districts scoring less than 50% of the points possible on the APR.
In the District’s 2018 APR, the District earned 90.1% of the points possible, placing the District in the “Accredited” category (as stated above, no placement in the Accredited with Distinction Category is currently possible).
The MSIP classification is not a bond or debt rating, but is solely an evaluation made by DESE.
ECONOMIC INFORMATION CONCERNING THE DISTRICT
Population The following table shows population figures for the District, the City, the County and the State of Missouri (the “State”) from the last three decennial censuses and the latest available estimate.
1990 2000 2010 2018
District 10,154 12,341 12,874 12,870 City 2,414 2,781 3,084 3,074 County 12,646 15,661 16,777 16,762 State 5,117,073 5,595,211 5,988,927 6,126,452
_______________ Source: U.S. Census Bureau * U.S. Census Bureau – American FactFinder – 2018 Population Estimates (estimated as of July 1, 2018); U.S. Census
Bureau – Small Area Income and Poverty Estimate – School District Estimates for 2018
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The following table shows population distribution by age for the District, the City, the County and the State from the latest available estimate.
Estimated Population Distribution by Age
Age District City County State
Under 5 years 744 205 971 372,932 5-19 years 2,479 656 3,468 1,171,037 20-24 years 531 194 701 421,255 25-44 years 2,549 588 3,463 1,542,544 45-64 years 3,635 647 4,616 1,600,602 65 years and over 2,454 742 3,280 981,692
TOTAL 12,392 3,032 16,499 6,090,062 Median age 44.0 39.0 43.5 38.5
Source: Missouri Census Data Center, American Community Survey, 5-year estimates (2014-2018). Commerce, Industry and Employment Major Employers. The proximity of the District to the City of Springfield, Missouri offers residents a wide range of employment opportunities. The following tables indicates major employers located in Dallas County and the Springfield, Missouri metropolitan area: Listed below are several major employers located in Dallas County:
Employer
Type of Business
Approximate Number of Employees
Dallas County R-I School District Education 274 Colonial Springs Independent Health Center Health care 110 Wal-Mart Store Retail 82 Dallas County Farmers Exchange Retail 60 Productions Products Manufacturing and sales 57
Listed below are several major employers located in the Springfield, Missouri metropolitan area:
Employer
Type of Business
Approximate Number of Employees
Cox Health Systems Health care 11,669 St. Johns Health System (Mercy Health Systems) Health care 10,950 Wal-Mart Stores & Sams Club Retail 5,372 Springfield Public Schools Education 4,100 State of Missouri Government 4,018 Bass Pro Shops/Tracker Marine Retail 3,341 United States Government Government 3,005 Missouri State University Education 2,874
Source: Location One Information System/Missouri Department of Economic Development for Dallas County; City of
Springfield, Missouri CAFR for the fiscal year ended June 30, 2019.
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Employment Figures. The following table sets forth employment figures for the County and the State:
2015 2016 2017 2018 2019 County Total Labor Force 7,025 7,059 6,949 6,966 7,082 Unemployed 437 385 327 273 314 Unemployment Rate 6.2% 5.5% 4.7% 3.9% 4.4% State Total Labor Force 3,075,107 3,081,133 3,061,142 3,051,364 3,076,376 Unemployed 153,808 140,803 114,808 97,021 99,425 Unemployment Rate 5.0% 4.6% 3.8% 3.2% 3.2%
Source: MERIC (Missouri Economic Research and Information Center). Medical and Health Facilities
In addition to family health clinics located in the City, District residents also have access to numerous health and medical facilities located throughout the Springfield metropolitan area approximately 40 minutes south of the District. The City airport is equipped with a lighted life-flight landing pad for emergency medical transport to two major hospitals in Springfield, Missouri just minutes away by air. Short-term and long-term nursing care facilities are available in the City. Higher Education
There are 34 colleges within 100 miles of the City. The nearest college is Southwest Baptist University located approximately 17 miles away in Bolivar, Missouri. Several public and private 2-year and 4-year colleges and universities are located in the Springfield, Missouri area. Recreational Facilities In addition to picnic areas, soccer and baseball fields and walking trails in the Buffalo City Park and the Dallas County Community Park, District residents also have relatively quick access to numerous indoor and outdoor recreational facilities located throughout the Springfield metropolitan area. The Branson, Missouri, area and Table Rock Lake are also located approximately 70 miles south of the District and offer District residents a wide-variety of tourist attractions and outdoor recreational opportunities. Municipal Services and Utilities and Public Safety Utility service in the District is provided by both public and private facilities. Empire Electric and Southwest Electric provide electrical service to area residents of the District. Residential and commercial properties in the City receive water and sewer service from the City. The City provides police protection and fire protection. Transportation, Communications and Media The District is served by a weekly newspaper, the Buffalo Reflex. A number of cable service providers and a substantial number of radio stations are available to District residents. Residents of the District have easy access to U.S. Highway 65 and State Highways 32 and 73. Because of its location, District residents have a short commute into the Springfield metropolitan area. Springfield-Branson National Airport, approximately 40 minutes away, provides both commercial and charter flights. The City airport has one 3,200 foot lighted asphalt runway.
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Income and Home Values The following table presents per capita personal income(1) for the County and the State for the years 2014 through 2018, the latest date for which such information is available:
County State
Year Per Capita
Personal Income Per Capita
Personal Income
2018 $33,184 $47,746 2017 31,995 45,744 2016 31,632 44,336 2015 30,504 43,096 2014 29,793 41,775
Source: U.S. Department of Commerce - Bureau of Economic Analysis. (1) Per Capita Personal Income is the annual total personal income of residents divided by resident population as of July 1.
“Personal Income” is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. “Net Earnings” is earnings by place of work — the sum of wage and salary disbursements (payrolls), other labor income, and proprietors’ income — less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal Income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).
The following table presents the estimated median household income for the District, the City, the County and the State:
Median Household Income
District $39,421 City 24,264 County 41,551 State 53,560
Source: Missouri Census Data Center, American Community Survey, 5-year estimates (2014-2018).
The following table presents the median value of owner-occupied housing units in the District, the City, the County and the State:
Number of Owner-
Occupied Units
Median Home
Value
District 3,559 $106,700 City 551 93,100 County 4,656 111,900 State 1,601,845 151,600
Source: Missouri Census Data Center, American Community Survey Profile Report: (5-year estimates) 2014-2018.
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DEBT STRUCTURE OF THE DISTRICT Overview The following table summarizes certain financial information concerning the District. This information should be reviewed in conjunction with the information contained in this section and the financial statements of the District in A hereto.
2019 Assessed Valuation (1) $132,389,600 2019 Estimated Actual Valuation (2) $612,575,989 Outstanding General Obligation Bonds (“Direct Debt”) $0 Lease Debt (3) $12,605,000* Total Direct Debt and Lease Debt $12,605,000* Estimated Population (2018) 12,870 Per Capita Direct Debt and Lease Debt $979.41* Ratio of Direct Debt and Lease Debt to Assessed Valuation 9.52%* Ratio of Direct Debt and Lease Debt to Estimated Actual Valuation 2.06%* Overlapping and Underlying General Obligation Debt (“Indirect Debt”) (4) $0
(1) Includes 2020 real and personal property as provided by the County Clerks of Dallas County, Laclede County and Polk
County, excluding state assessed railroad and utility property. For further details see “PROPERTY TAX INFORMATION CONCERNING THE DISTRICT.”
(2) Estimated actual valuation is calculated by dividing different classes of property by the corresponding assessment ratio. For a detail of these different classes and ratios see “PROPERTY TAX INFORMATION CONCERNING THE DISTRICT.”
(3) Principal amount of the Series 2020 Certificates. (4) For further details see “DEBT STRUCTURE OF THE DISTRICT–Overlapping or Underlying Indebtedness.” General Obligation Indebtedness The District currently has no general obligation debt. Overlapping or Underlying General Obligation Indebtedness To the knowledge of the District, the are no political subdivisions with boundaries overlapping the District or lying within the District with general obligation bonds outstanding. Political subdivisions may have ongoing programs requiring the issuance of bonds, the amounts of which cannot be determined at this time. Legal Debt Capacity Under Article VI, Section 26(b) of the Constitution of Missouri, the District may incur indebtedness for authorized school district purposes not to exceed 15% of the valuation of taxable tangible property in the District according to the last completed assessment upon the approval of four-sevenths of the qualified voters in the District voting on the proposition at any municipal, primary or general election or four-sevenths voter approval on any other election date. The legal debt limitation and debt margin of the District, based on the 2019 assessed valuation, is approximately $19,858,440. The District’s debt margin would actually be greater if the above calculation included (1) the amount available in the District’s Debt Service Fund which may be used to reduce the principal amount of the District’s bonds outstanding for purposes of calculating the District’s debt limitation, and (2) the value attributable to state
* Preliminary, subject to change.
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assessed railroad and utility property. Because of the manner in which tax collections are distributed to school districts from assessments of state assessed railroad and utility property (see “PROPERTY TAX INFORMATION CONCERNING THE DISTRICT–Property Valuations–Current Assessed Valuation), the cumbersome task of determining the valuation of such property physically located within a school district is not normally undertaken unless, without the value of such property included in the calculation, a district would exceed its legal debt limit. It is not necessary to determine the value of state assessed railroad and utility property within the District because, even excluding such value, the net principal amount of all of the District’s general obligation bonds outstanding does not exceed the constitutional limitation of 15% of the valuation of the taxable tangible property within the District included in the calculation.
The Series 2020 Certificates The following schedule shows the yearly Rental Payments that are payable by the District under the Lease, subject to annual appropriation, and that are distributable to owners of the Series 2020 Certificates.
Fiscal Year Ended
June 30
Principal Portion*
Interest Portion
Total
2020 - 2021 $200,000.00 2022 300,000.00 2023 340,000.00 2024 355,000.00 2025 375,000.00 2026 400,000.00 2027 420,000.00 2028 440,000.00 2029 470,000.00 2030 490,000.00 2031 525,000.00 2032 555,000.00 2033 560,000.00 2034 600,000.00 2035 650,000.00 2036 700,000.00 2037 725,000.00 2038 750,000.00 2039 750,000.00 2040 500,000.00 2041 500,000.00 2042 500,000.00 2043 500,000.00 2044 500,000.00 2045 500,000.00
TOTAL $12,605,000.00
* Preliminary, subject to change.
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Other Lease Obligations of the District
Capital Leases. On July 27, 2017, the District entered into a copier lease with De Lage Landen Public Finance, LLC in the amount of $127,496.13 to finance copiers. Pursuant to the equipment lease purchase agreement, the District is required to make monthly lease payments in the amount of $2,337.64 at the rate of 3.819% interest, with the final lease payment scheduled for July 2022. These payments are made out of the Capital Projects Fund.
Operating Leases.
On August 7, 2017, Dallas County School District entered into a bus lease with Midwest Bus Sales for four 2018 buses. The term of the lease is for 5 years beginning on September 1, 2017, through June 30, 2022. The first lease payment of $11,515 per unit, for a total of $46,060 was due on delivery.
On March 1, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for three 2019 buses. The term of the lease is for 5 years and 4 months beginning on March 1, 2018, through June 30, 2023. The first lease payment of $1,000 per month per bus for March, April and May for a total of $9,000 was due in March, after that each year a payment of $11,515 per unit, for a total of $34,545 is due annually.
On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for five 2019 buses. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $11,515 per unit, for a total of $57,575 was due on delivery.
On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for one 2017 bus. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $9,250 was due on delivery.
On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for one 2019 bus. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $13,250 was due on delivery.
On July 9, 2018, Dallas County School District entered into a computer lease with Trinity3 Financial Services for student chrome books. The term is for 49 months with 4 annual payments that are 30 days deferred. The first payment was made on August 21, 2018 of $202,709.07.
The payments for the above operating leases are made out of the Capital Projects Fund.
The annual requirements to amortize all operating leases outstanding as of June 30, 2020, are as follows (assuming non-cancellation):
Buses
Fiscal Year Ending June 30,
Payments
2020 $160,680.00 2021 160,680.00 2022 160,680.00 2023 80,075.00
TOTALS $562,115.00
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Computers
Fiscal Year Ending June 30,
Payments
2020 $202,709.07 2021 202,709.07 2022 202,709.07
TOTALS $608,127.21 No Prior Defaults The District has never defaulted on the payment of any of its debt obligations.
FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures
The District presents its governmental activities in fund financial statements on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, in conformity with the requirements of Missouri law and DESE. This basis recognizes assets, liabilities, net assets/fund equity, revenues and expenditures when they result from modified cash transactions.
The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. District resources are allocated to, and accounted for, individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Transactions have been recorded in the following funds for the accounting of all District funds:
General (Incidental) Fund: The General Fund is the primary operating fund of the District. It is used to account for general activities of the District, including expenditures for noncertified employees, pupil transportation costs, plant operation, fringe benefits, student body activities, community services, food service and any expenditures not required or permitted to be accounted for in other funds.
Special Revenue (Teachers’) Fund: Accounts for expenditures for certificated employees
involved in administration and instruction. It includes revenues restricted by the State and the local tax levy for the payment of teacher salaries and certain employee benefits.
Debt Service Fund: Accounts for the accumulation of resources for, and the payment of, principal,
interest and paying agent charges on, long-term debt. Capital Projects Fund: Accounts for resources restricted for the acquisition or construction of
specific capital projects or items. It accounts for the proceeds of long-term debt, taxes and other receipts designated for construction of major capital assets and all other capital outlay.
The Treasurer of the District is responsible for handling all moneys of the District and administering the above funds. All moneys received by the District from whatever source are credited to the appropriate fund. Moneys may be disbursed from such funds by the Treasurer only for the purpose for which they are levied, collected or received and only upon checks drawn by the Treasurer pursuant to orders of the Board or upon orders for payment issued by the Treasurer pursuant to orders of the Board.
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An annual budget of estimated receipts and disbursements for the coming fiscal year is prepared by the Superintendent and is presented to the Board prior to July 1 for approval. The District’s fiscal year is July 1 through June 30. The budget lists estimated receipts by funds and sources and estimated disbursements by funds and purposes and includes a statement of the rate of levy per hundred dollars of assessed valuation required to raise each amount shown on the budget as coming from District property taxes. The financial records of the District are audited annually by an independent public accountant according to the modified cash basis of accounting. The most recent annual audit has been performed by Daniel Jones & Associates, Certified Public Accountants. The audited financial statements of the District for the fiscal year ended June 30, 2019, together with the independent auditor’s report thereon, are included in this Official Statement at Appendix B. A summary of significant accounting policies of the District is contained in the notes accompanying the financial statements in Appendix B. The audited financial statements for earlier years with reports by the certified public accountants are available for examination in the District’s office.
Sources of Revenue The District finances its operations through the local property tax levy, state sales tax, State Aid (as defined below), federal grant programs and miscellaneous sources, including without limitation State Aid for transportation, a state sales tax on cigarettes and a pro rata share of interest income from the counties in which each school district operates. Debt service on general obligation bonds is paid from amounts in the District’s Debt Service Fund. The primary source of money in the Debt Service Fund is local property taxes derived from a debt service levy. As discussed below, the Debt Service Fund may, however, also contain money derived from transfers from the Incidental Fund, from State Aid in the Classroom Trust Fund, and from certain other taxes or payments-in-lieu-of-taxes that may be placed in the Debt Service Fund at the discretion of the Board. See “Missouri School Finance Laws – Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund.” State and federal revenue, as well as “Proposition C” sales tax revenue (included in the “Local Revenue” category below), are received on a continuous monthly basis throughout the fiscal year. Local taxes, however, are received primarily in January, over six months into a district’s fiscal year. Districts that receive a smaller percentage of revenue from state and federal aid and depend more on local revenues will typically carry a larger fund balance than other districts that may be receiving a larger percent of its revenue from state and federal aid amounts rather than local taxes. Current. For the 2018-2019 fiscal year, the District’s sources of revenue were as follows:
Source Amount %
Local Revenue: Property Taxes $4,302,882 24.16% Proposition C Sales Tax 1,704,772 9.57 Other 647,224 3.63 County Revenue: Railroad & Utility Property Taxes 357,603 2.01 Fines, Forfeitures & Other 99,375 0.56 State Revenue 8,156,119 45.80 Federal Revenue 2,252,872 12.65 Other Revenue 289,126 1.62 Total Revenue $17,809,973 100.00%
Source: District’s Annual Secretary of the Board Report for fiscal year ended June 30, 2019.
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Historical. The table below shows the allocation of revenues received by the District for the past five fiscal years:
Source 2015 2016 2017 2018 2019
Local Revenue $ 5,982,675 $ 6,162,994 $ 6,319,933 $ 6,444,033 $ 6,654,878 County Revenue 427,364 428,841 411,879 350,275 460,332 State Revenue 7,561,244 7,829,126 7,702,721 7,620,688 8,156,119 Federal Revenue 2,483,972 2,248,575 2,368,028 2,327,294 2,252,872 Other Revenue 228,777 265,260 337,977 220,068 289,126 Total $16,684,032 $16,934,796 $17,140,538 $16,962,358 $17,809,973
Source: District’s Annual Secretary of the Board Reports for fiscal years ended June 30, 2015 through 2019. Local Revenue The primary sources of “local revenue” are (1) taxes upon real and personal property within a district, excluding railroad and utility property taxes, which are more fully described below, and (2) receipts from a 1% state sales tax (commonly referred to as “Proposition C revenues”) approved by the voters in 1982. Proposition C revenues are deemed to be “local” revenues for school district accounting purposes. Proposition C revenues are distributed to each school district based on the district’s weighted average daily attendance (see “Weighted ADA” under “Missouri School Finance Laws” below). For the 2020-2018 fiscal year, each school district received approximately $988 per pupil from Proposition C revenues based upon each district’s 2016-2020 Weighted ADA. For the 2018-2019 fiscal year, each school district is expected to receive approximately $1,006 per pupil from Proposition C revenues based upon each district’s 2020-2018 Weighted ADA according to the final payment calculation information provided by DESE in their June 2019 School Finance Memo. For the 2019-2020 fiscal year, each school district is expected to receive approximately $1,036 per pupil from Proposition C revenues based upon each district’s 2018-2019 Weighted ADA; however, this is a preliminary estimate and subject to change.
County Revenue For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of the railroad and utility property that is physically located within the boundaries of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district and in part on the taxes levied by each district. County revenue also includes certain fines and forfeitures collected with respect to violations within the boundaries of the school district. State Revenue The primary source of state revenue or “State Aid” is provided under a formula enacted under Chapter 163, RSMo. In its 2005 regular session, the Missouri General Assembly approved significant changes to the formula by adoption of Senate Bill 287 (“SB 287”), which became effective July 1, 2006. The changes to State Aid distribution laws are more fully described below under “Missouri School Finance Laws.” Federal Revenue
School districts receive certain grants and other revenue from the federal government that are required to be used for the specified purposes of the grant or funding program.
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The federal “No Child Left Behind” law required that every public school student must score at a “proficient” level or higher in math and reading by 2014. Each state establishes its own proficiency levels. Federal sanctions for school districts that fail to meet established proficiency standards include providing parents and students from underperforming schools within a district the right to request a transfer to a school within the district that meets proficiency standards. In addition, schools that continue to fail to meet proficiency standards must, in addition to transfers and tutoring, make additional changes in staffing, curriculum and management. Federal sanctions apply only to public schools that receive Title I federal money.
In July of 2012, the State earned a waiver from the No Child Left Behind law when the United States Department of Education (the “DOE”) approved the State’s proposed accountability system aimed at replacing the existing accountability measures of the No Child Left Behind law. This waiver expired August 1, 2016. The State’s proposed system, Top 10 by 20, outlines a plan for the State to be in the top 10 states by 2020, with a focus on students becoming college and career ready by graduation.
The federal “Every Student Succeeds Act” (“ESSA”) was signed into law on December 10, 2015. ESSA replaces the “No Child Left Behind Act.” Each state education agency must develop a state accountability plan (“ESSA Plan”) that incorporates testing based on challenging academic standards. The ESSA Plans were required to be submitted to the DOE by either April 3 or September 18, 2020. Under ESSA, states can decide how much weight to give standardized tests in their accountability systems and determine what consequences, if any, should attach to poor performance. However, at least 95 percent of eligible students are required to take the state-chosen standardized test and federal funding can be withheld if states fall below the 95 percent threshold.
The State submitted its plan to the DOE on September 13, 2020 in order to meet the September 18, 2020 deadline. The DOE approved the State’s plan on January 16, 2018. Under ESSA, the State will continue to test students through the Missouri Assessment Program.
Missouri School Finance Laws
State Aid. The amount of State Aid for school districts in Missouri has typically been calculated using a complex formula. The impact of SB 287 was to transition the state away from a local-tax-rate-based formula to a formula that is primarily student-needs-based. The formula was phased in over a seven-year period, which began in the 2006-2007 fiscal year and ended with the 2012-2013 school year. Since the 2013-2014 school year, State Aid has been calculated solely using the student-needs-based formula. Property Tax Levy Requirements. The sum of a district’s local property tax levies in its Incidental and Teachers’ Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the 2005-2006 fiscal year. Levy reductions required as a result of a “Hancock rollback” (see “PROPERTY TAX INFORMATION CONCERNING THE DISTRICT – Tax Rates – Operating Levy” below) will not affect a district’s eligibility for State Aid increases. The Formula. A district’s State Aid is determined by first multiplying the district’s weighted average daily attendance (“Weighted ADA”) by the state adequacy target (“State Adequacy Target”). This figure may be adjusted upward by a dollar value modifier (“DVM”). The product of the Weighted ADA multiplied by the State Adequacy Target multiplied by the DVM is then reduced by a district’s local effort (“Local Effort”) to calculate a district’s final State Aid amount. The State Aid amount is distributed to the districts on a monthly basis. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced price lunch (“FRL”), receive special education services (“IEP”), or possess limited English language proficiency (“LEP”). These FRL, IEP and LEP students are weighted to the extent they exceed certain thresholds (based on the percentage of students in each of the categories in certain high performing districts (“Performance Districts”), which thresholds can change every two years. For fiscal years 2020 and 2018, DESE revised the thresholds
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downward as required under SB 586, which modified the definition of State Adequacy Target to require that a future recalculation of the State Adequacy Target never result in a decrease from the State Adequacy Target as calculated for fiscal years 2020 and 2018. For fiscal years 2019 and 2020, DESE revised the thresholds downward for FRL and IEP and upward for LEP. Beginning with the 2018-2019 fiscal year, certain school districts who operate early childhood education programs, such as the District, will also be able to claim a portion of their pre-kindergarten FRL students in their calculation of ADA; however, the portion of pre-kindergarten FRL students included in the calculation of ADA cannot exceed 4% of the total number FRL students between the ages of 5 to 18 who are included in the school district’s calculation of ADA. The District’s State Aid revenues would be adversely affected by decreases in its Weighted ADA resulting from decreased enrollment generally and, specifically, decreased enrollment of FRL, IEP and LEP students.
State Adequacy Target. The State Aid formula requires DESE to calculate a “State Adequacy Target,” which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE’s calculation of the State Adequacy Target is based upon amounts spent, excluding federal and state transportation revenues, by Performance Districts. Every two years, using the most current list of Performance Districts, DESE will recalculate the State Adequacy Target. The recalculation can never result in a decrease from the State Adequacy Target as calculated for fiscal years 2020 and 2018 and any State Adequacy Target figure calculated subsequent to fiscal year 2018. For the fiscal year ended June 30, 2019, the State Adequacy Target was $6,308 per pupil. For the fiscal year ending June 30, 2020, the State Adequacy Target is expected to be $6,375 per pupil; but the Governor still has the ability to withhold money throughout the year.
Dollar Value Modifier. The DVM is an index of the relative purchasing power of a dollar in different areas of the state. The DVM is calculated as one plus 15% of the difference of the regional wage ratio (the ratio of the regional wage per job divided by the state median wage per job) minus one. The law provides that the DVM can never be less than 1.000. DESE revises the DVM for each district on an annual basis. The DVM for the District for 2018-2019 was 1.030. The DVM for the District for 2019-2020 was 1.030. The DVM for the District for 2020-2021 fiscal year is 1.029. Local Effort. For the 2006-2007 fiscal year, the Local Effort figure utilized in a district’s State Aid calculation was the amount of locally generated revenue that the district would have received in the 2004-2005 fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the “performance levy.” For all years subsequent to the 2006-2007 fiscal year, a district’s Local Effort amount has been frozen at the 2006-2007 amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement and (4) educational and screening program entitlements. Classroom Trust Fund (Gambling Revenue) Distribution. A portion of the State Aid received under the formula will be in the form of a distribution from the “Classroom Trust Fund,” a fund in the state treasury containing a portion of the state’s gambling revenues. This money is distributed to school districts on the basis of ADA (versus Weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and may be spent at the discretion of the local school district except that, beginning with the 2010-11 fiscal year, all proceeds of the Classroom Trust Fund in excess of amounts received in the 2009-10 fiscal year must be placed in the Teachers’ or Incidental Funds. For the 2020-2018 fiscal year, each school district received approximately $415 per pupil based on their 2016-2020 ADA. For the 2018-2019 fiscal year, each school district is expected to receive approximately $413 per pupil based on their 2020-2018 ADA according to the final payment calculation information provided by DESE in their June 2019 School Finance Memo. For the current 2019-2020 fiscal year, each school district is expected to receive approximately $412 per pupil based on their 2018-2019 ADA; however, this is a preliminary estimate and subject to change. Classroom Trust Fund dollars do not increase the amount of State Aid.
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Mandatory Deposit and Expenditures of Certain Amounts in the Teachers’ Fund. The following state and local revenues must be deposited in the Teachers’ Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district’s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district’s boundaries. In addition to these mandatory deposits, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. Since the 2007-2008 fiscal year, school districts are further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year’s Weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers’ Fund, plus the amount of any transfers from the Incidental Fund to the Teachers’ Fund that are calculated to be local and county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. Commencing with the 2006-2007 fiscal year, the formula provides that certificated staff compensation now includes the costs of public school retirement and Medicare for those staff members. These items were previously paid from the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers’ Fund will result in a deduction of the amount of the expenditure shortfall from a district’s basic formula State Aid for the following year, unless the district receives an exemption from the State Board of Education.
A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers’ Fund. Any district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers’ Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers’ Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds such as the Bonds (which are repaid from a Debt Service Fund levy) and lease financings; (ii) revenue from the school district’s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Incidental Fund; and (iv) a portion of the funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers’ and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers’ and Incidental Funds to an amount below $2.75. For the current fiscal year ending June 30, 2020, the District’s Capital Projects Fund levy is $0.46 per $100 of assessed valuation.
Transfers from the Incidental Fund to the Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund for certain purposes, including: (1) the amount to be expended for transportation equipment that is considered an allowable cost under the state board of education rules for transportation reimbursements during the current year; (2) the amount necessary to satisfy obligations of the Capital Projects Fund for state-approved area vocational-technical schools; (3) current year obligations for lease-purchase obligations entered into prior to January 1, 1997; (4) the amount necessary to repay costs of one or more guaranteed energy savings performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and (5) to satisfy current year capital project expenditures, an amount not to exceed the greater of (a) $162,326 or (b) seven percent (7%) of the State Adequacy Target (see “State Adequacy
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Target” above) times a school district’s Weighted ADA. The District made no transfer from the Incidental Fund to the Capital Projects Fund during the 2018-2019 fiscal year.
Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school
district is not using the seven percent (7%) or the $162,326 transfer discussed in parts (5)(a) and (5)(b) of the prior paragraph and is not making payments on lease purchases pursuant to Section 177.088, RSMo, then the school district may transfer from the Incidental Fund to the Debt Service and/or the Capital Projects Fund the greater of (1) the State Aid received in the 2005-2006 school year as a result of no more than eighteen (18) cents of the sum of the Debt Service Fund levy and Capital Projects Fund levy used in the foundation formula and placed in the Capital Projects Fund or Debt Service Fund, or (2) five percent (5%) of the State Adequacy Target (see “State Adequacy Target” above) times the district’s Weighted ADA. The District made no transfer from the Incidental Fund to the Capital Projects Fund under this provision during the 2018-2019 fiscal year.
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Fund Balances Summary The following Summary Statement of Revenues, Expenditures and Changes in Fund Balances was prepared from the audited financial statements of the District. The statement set forth below should be read in conjunction with the financial statements and notes appertaining hereto set forth in Appendix A of this Official Statement and the financial statements on file at the District’s office.
Summary Statement of Revenues, Expenditures and Changes in Fund Balances
2015 2016 2017 2018 2019 General (Incidental) Fund Balance--Beginning of Year $3,142,706 $3,368,153 $4,525,509 $4,864,950 $4,232,071 Revenues 7,523,713 8,185,069 8,053,149 8,013,987 7,822,377 Expenditures 6,391,549 6,154,791 6,396,351 6,727,464 7,698,987 Transfers In (Out) (906,717) (872,922) (1,317,357) (1,919,402) (691,044) Balance--End of Year $3,368,153 $4,525,509 $4,864,950 $4,232,071 $3,664,416 Special Revenue (Teachers’) Fund Balance--Beginning of Year $ 0 $ 0 $ 0 $ 12 $ 0 Revenues 8,845,651 8,453,329 8,455,356(1) 8,190,720(1) 8,995,158(1) Expenditures 8,990,881 8,453,329 9,065,448 9,238,603 9,686,202 Transfers In (Out) 145,230 0 610,104 1,047,872 691,044 Balance--End of Year $ 0 $ 0 $ 12 $ 0 $ 0 Debt Service Fund Balance--Beginning of Year $ 0 $ 0 $ 0 $ 0 $ 0 Revenues 0 0 0 0 0 Expenditures 0 0 0 0 0 Balance--End of Year $ 0 $ 0 $ 0 $ 0 $ 0 Capital Projects Fund Balance--Beginning of Year $1,150,757 $1,275,523 $1,664,571 $1,508,726 $1,170,374 Revenues 314,668 296,398 632,031(2) 757,650(2) 992,438(2) Expenditures 951,389 780,272 1,495,130 1,967,532 1,557,017 Transfers In (Out) 761,487 872,922 707,253 871,530 0 Balance--End of Year $1,275,523 $1,664,571 $1,508,726 $1,170,374 $ 605,795 Total Funds Balance--Beginning of Year $ 4,293,463 $ 4,643,676 $ 6,190,079 $ 6,373,687 $ 5,402,445 Revenues 16,684,032 16,934,796 17,140,536(1)(2) 16,962,357(1)(2) 17,809,973(1)(2) Expenditures 16,333,819 15,388,392 16,956,929 17,933,600 18,942,206 Balance--End of Year $ 4,643,676 $ 6,190,080 $ 6,373,687 $ 5,402,445 $ 4,270,211
Source: Missouri Department of Elementary & Secondary Education 2016-2020 Annual Secretary of the Board Report. (1) Includes funds from net insurance recovery, sale of school buses and other property. (2) Includes tuition and vocational fees from other districts. Risk Management
The District is covered through Midwest Public Risk of Missouri (“MPR”), a nonprofit association which provides property and casualty insurance coverages for member school districts in the state of Missouri by means of a pooling arrangement. Member districts pay an annual assessment based on exposures to potential losses which assessment moneys are used to pay for losses, to fund a modest administrative budget, to buy risk management services and to purchase necessary excess insurance. Excess insurance allows the program to cap any large losses
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at an affordable level. Coverages include property, liability, automobile, crime, errors and omissions, boiler and machinery, worker’s compensation and treasurer’s bond. Pension and Employee Retirement Plans The District contributes to two cost-sharing multiple-employer defined benefit pension plans on behalf of its employees: (i) The Public School Retirement System of Missouri (“PSRS”), which provides retirement, disability and death benefits to full-time (and certain part-time) certificated employees of school districts and certain other educational entities in Missouri and employees of certain related employers; and (ii) The Public Education Employee Retirement System of Missouri (“PEERS”), which provides retirement and disability benefits to employees of school districts and certain other educational entities in Missouri and of certain related employers who work 20 or more hours per week and do not contribute to PSRS. Benefit provisions relating to both PSRS and PEERS are set forth in Chapter 169 of the Revised Statutes of Missouri, as amended. The statutes assign responsibility for the administration of both plans to a seven member Board of Trustees of PSRS (the “PSRS Board”). PSRS and PEERS had 533 and 530 contributing employers, respectively, during the fiscal year ended June 30, 2019.
PSRS and PEERS issue a publicly available financial report that includes financial statements and required supplementary information. The PSRS/PEERS Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019 (the “2019 PSRS/PEERS CAFR”), the comprehensive financial report for the plans, is available at www.psrs-peers.org/Investments/Annual-Report. The link to the 2019 PSRS/PEERS CAFR is provided for general background information only, and the information in the 2019 PSRS/PEERS CAFR is not incorporated by reference herein. The 2019 PSRS/PEERS CAFR provides detailed information about PSRS and PEERS, including their respective financial positions, investment policy and performance information, actuarial information and assumptions affecting plan design and policies, and certain statistical information about the plans. PSRS and PEERS Contributions Employees who contribute to PSRS are not eligible to make Social Security contributions, except in limited circumstances. For the fiscal year ended June 30, 2019, PSRS contributing employees were required to contribute 14.5% of their annual covered salary and their employers, including the District, were required to contribute a matching amount of 14.5% of each contributing employee’s covered salary. The contribution requirements of members and the District are established (and may be amended) by the PSRS Board based on the recommendation of an independent actuary. State statute prohibits the PSRS Board from approving an increase greater than 1.0% in aggregate of PSRS contributing member covered pay of the previous year.
Employees who contribute to PEERS are eligible to make Social Security contributions. For the fiscal year ended June 30, 2019, PEERS contributing employees were required to contribute 6.86% of their annual covered salary and their employers, including the District, were required to contribute a matching amount of 6.86% of each contributing employee’s covered salary. The contribution requirements of members and the District are established (and may be amended) by the PSRS Board based on the recommendation of an independent actuary. State statute prohibits the PSRS Board from approving an increase greater than 0.5% in aggregate of PEERS contributing member covered pay of the previous year.
PSRS and PEERS Funded Status PSRS and PEERS reported funded ratios of 84.0% and 86.1%, respectively, as of June 30, 2019, according to the 2019 PSRS/PEERS CAFR. Funded ratios are intended to estimate the ability of current plan assets to satisfy projected future liabilities. The PSRS and PEERS funded ratios are determined by dividing the smoothed actuarial value of plan assets by the plan’s actuarial accrued liability determined under the entry age normal cost method with normal costs calculated as a level percentage of payrolls, along with certain actuarial assumptions based on an experience study conducted in 2016. PSRS and PEERS amortize unfunded actuarial liabilities using a closed 30-year method. Additional assumptions and methods used to determine the actuarial
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funded status of PSRS and PEERS are set forth in the Actuarial Section of the 2019 PSRS/PEERS CAFR. The funding objective of each plan, as stated in each plan’s Actuarial Funding Policy, is to achieve a funded ratio of 100% over a closed 30-year period.
The following provides a historical comparison of actual employer contributions to actuarially determined contributions and the historical funded status for the plans for the years shown:
Schedule of Employer Contributions PSRS PEERS
Year
Ended June 30,
Actuarially Determined
Contribution
Actual Employer
Contributions
Contribution Excess/
(Deficiency)*
Actuarially Determined
Contribution
Actual Employer
Contributions
Contribution Excess/
(Deficiency)*
2019 $628,513,916 $712,545,096 $84,031,180 $113,567,475 $120,042,046 $6,474,571 2018 533,062,186 696,970,397 163,908,211 97,653,104 115,103,143 17,450,039 2017 642,821,624 684,857,718 42,036,094 108,807,233 111,239,585 2,432,352 2016 643,155,536 669,953,683 26,798,147 104,011,593 106,654,638 2,643,045 2015 666,438,984 656,924,899 (9,514,085) 105,739,092 103,624,310 (2,114,782)
______________ Source: “Schedules of Employer Contributions” in the Financial Section of the 2019 PSRS/PEERS CAFR. * The annual statutory increase in the total contribution rate may not exceed 1% of pay for PSRS and 0.5% of pay for PEERS. The limitation on contribution increases resulted in a deficiency for some of the years presented. Contributions were funded to the maximum statutory limit each year.
Schedule of Funding Progress (Dollar amounts in thousands)
PSRS PEERS
Year
Ended June 30,
Actuarial Value of Assets
Actuarial Accrued Liability
Funded Ratio
Actuarial Value of Assets
Actuarial Accrued Liability
Funded Ratio
2019 $40,498,479 $47,973,829 84.4% $5,019,868 $5,809,485 86.4% 2018 $39,211,452 $46,702,002 84.0 4,774,781 5,542,478 86.1 2017 37,373,740 44,501,771 84.0 4,470,270 5,209,369 85.8 2016 35,419,278 41,744,619 84.8 4,157,427 4,809,666 86.4 2015 34,073,415 40,610,540 83.9 3,915,199 4,512,317 86.8 2014 31,846,599 38,483,184 82.8 3,584,719 4,211,489 85.1
______________ Source: “Schedule of Funding Progress” in the Actuarial Section of the 2019 PSRS/PEERS CAFR.
For information specific to the District’s participation in PSRS and PEERS, including the District’s past
contributions and proportionate share of the net pension liability of PSRS and PEERS, see Note V to the District’s financial statements included in Appendix B to this Official Statement. For additional information regarding PSRS and PEERS, see the 2019 PSRS/PEERS CAFR. Other Postemployment Benefits
In addition to pensions, many state and local governments, including the District, provide other postemployment benefits (“OPEB”) as part of the total compensation offered to attract and retain the services of qualified employees. For information specific to the District’s OPEB obligations, including the District’s past contributions relative to its required contributions, its assumptions as to future healthcare and other costs and its
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unfunded actuarial accrued liability, see “Post-Employment Benefits” on page 33 of the District’s financial statements included in Appendix B to this Official Statement.
PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Property Valuations Assessment Procedure. All taxable real and personal property within the District is assessed annually by the County Assessor. Missouri law requires that personal property be assessed at 33-1/3% of true value and that real property be assessed at the following percentages of true value:
Residential real property ........................................................................................ 19% Agricultural and horticultural real property ............................................................ 12% Utility, industrial, commercial, railroad and all other real property ....................... 32%
The assessment ratio for personal property is generally 33-1/3% of true value. However, subclasses of tangible personal property are assessed at the following assessment percentages: grain and other agricultural crops in an unmanufactured condition, 0.5%, livestock, 12%; farm machinery, 12%; historic motor vehicles, 5%; poultry, 12%; and certain tools and equipment used for pollution control, used in retooling for the purpose of introducing new product lines or used for making improvements to existing products by certain types of companies specified by state law, 25%. A general reassessment of real property occurred statewide in 1985. In order to maintain equalized assessed valuations following this reassessment, the state legislature adopted a maintenance law in 1986. On January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission. The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll to the Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the values of individual properties appearing on the tax rolls.
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Current Assessed Valuation. The following table shows the preliminary assessed valuation and the estimated actual valuation, by category, of all taxable tangible property situated in the District, excluding state assessed railroad and utility property, according to the assessment for calendar year 2019 for property owned as of January 1, 2019, after Board of Equalization adjustments.
Total Estimated % of
Assessed Assessment Actual Actual Type of Property Valuation Rate Valuation(2) Valuation Real: Residential $ 68,591,254 19.00% $361,006,600 58.93% Agricultural 10,773,000 12.00% 89,775,000 14.66 Commercial(1) 21,671,550 32.00% 67,723,594 11.06 Total Real 101,035,804 518,505,194 84.64 Personal 31,353,796 33.33%(2) 94,070,795 15.36 Total Real & Personal $132,389,600 $612,575,989 100.00%
Source: County Clerks of Dallas, Laclede and Polk Counties. (1) Includes locally assessed railroad and utility property. (2) Assumes all personal property is assessed at 33 1/3%; because certain subclasses of tangible personal property are
assessed at less than 33 1/3%, the estimated actual valuation for personal property would likely be greater than that shown above. See “Assessment Procedure” discussed above.
For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district and in part on the taxes levied by each district. Under this method of distributing tax collections from state assessed railroad and utility property, it is unnecessary to determine the assessed value of such property that is physically located within the bounds of each school district. The District received $357,602.70 in fiscal year ended June 30, 2019, from state assessed railroad and utility property taxes. History of Property Valuations. The total assessed valuation of all taxable tangible property situated in the District (excluding state assessed railroad and utility property) according to the assessments of January 1, as adjusted through December 31 in each of the following years, has been as follows:
Assessed % Year Valuation Change
2019 $132,389,600 3.55% 2018 127,849,299 3.49 2017 123,540,770 6.17 2016 116,361,633 1.18 2015 115,000,491 NA
Source: For calendar years 2015 through 2018, Annual Report of the County Clerks of Dallas, Laclede and Polk Counties provided
to DESE; for the calendar year 2019, Notice of Assessed Valuation provided by County Clerks of Dallas, Laclede and Polk Counties, after Board of Equalization adjustments.
Property Tax Levies and Collections Property taxes are levied and collected for the District by the counties, for which each county receives a collection fee of approximately 1.5% and an assessment fee of 1.0% of the gross tax collections made. The District is required by law to prepare an annual budget, which includes an estimate of the amount of revenues to be received from all sources for the budget year, including an estimate of the amount of money required to be raised from property taxes and the tax levy rates required to produce such amounts. The budget
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must also include proposed expenditures and must state the amount required for the payment of interest, amortization and redemption charges on the District’s debt for the ensuing budget year. Such estimates are based on the assessed valuation figures provided by the County Clerk. The District must fix its ad valorem property tax rates and certify them to the County Clerk not later than September first for entry in the tax books. The County Clerk receives the county tax books from the County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified by the local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown in such books. The County Clerk forwards the tax books by October 31 to the County Collector, who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and city lots on which delinquent taxes are due are charged with a penalty of eighteen percent of each year’s delinquency. All lands and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. The County Collector is required to make disbursements of collected taxes to the District each month. Because of the tax collection procedure described above, the District receives the bulk of its moneys from local property taxes in the months of December, January and February. Tax Rates Debt Service Levy. The District has no general obligation bonds outstanding thus it has no debt service levy. If general obligation bonds have been approved by requisite number of the voters voting therefor and are issued, the District is required under Article VI, Section 26(f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board of Education may set the tax rate for debt service, without limitation as to rate or amount, at the level required to make such payments. Operating Levy. The total operating levy (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the newly-received assessed valuation of the District for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower; however, the District cannot be required to reduce its operating levy for school purposes below the minimum rate required to qualify for the highest level of State Aid (currently $2.75). Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1984 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment, more fully explained under the following caption “Tax Limitation Provisions”). The tax levy for debt service on the District’s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Under Article X, Section 11(c) of the Missouri Constitution, any increase in the District’s total operating levy ceiling up to $6.00 per $100 of assessed valuation must be approved by a majority of the voters voting on the proposition and any increase above $6.00 must be approved by two-thirds of the voters voting on the proposition. For fiscal year 2019-20, the District’s operating levy is $3.7759 per $100 of assessed valuation which is the District’s tax rate ceiling for the current fiscal year. The tax levy for debt service on the District’s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Tax Limitation Provisions. An amendment to the Missouri Constitution commonly known as the Hancock Amendment approved in 1980 places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of “total state revenues” to exclude voter-approved tax increases such as the 1% state sales tax for education under
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Proposition C. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than 5% or the increase in the general price level from the previous year (whichever is lower), the maximum authorized current levy applied thereto in each political subdivision must be reduced to yield the same gross revenue from existing property, adjusted for such changes, as could have been collected at the existing authorized levy on the prior assessed value. School districts that are required to reduce their operating levies below $2.75 per $100 assessed valuation because of the Hancock Amendment will not suffer a reduction in State aid for failure to maintain a $2.75 operating levy. The limitation on local governmental units does not apply to taxes imposed for the payment of principal and interest on general obligation bonds. History of Tax Levies The following table shows the District’s tax levies per $100 of assessed valuation for each of the following years:
Fiscal Year General Special
Revenue Debt Capital Ended Incidental Teachers’ Service Projects Total
June 30 Fund Fund Fund Fund(1) Levy
2020 $3.3159 $0.0000 $0.0000 $0.4600 $3.7759 2019 2.9229 0.0000 0.0000 0.3850 3.3079 2018 3.2897 0.0000 0.0000 0.0000 3.2897 2017 3.3311 0.0000 0.0000 0.0000 3.3311 2016 3.3500 0.0000 0.0000 0.0000 3.3500 2015 3.3338 0.0000 0.0000 0.0000 3.3338
Source: District’s Annual Secretary of the Board Reports for fiscal years ended June 30, 2015 through 2019. (1) On April 2, 2019, voters of the District voted to increase the operating tax levy by forty-six cents per one hundred dollars
of assessed valuation to fund the lease purchase of constructing, furnishing and equipping of a new technology center/agricultural facility, such increase to expire in 2044. The District began collecting revenues from the levy increase in December 2019, and it is estimated to generate approximately $600,000 in fiscal year ending June 30, 2020.
Tax Collection Record
The following table sets forth tax collection information for the District for the last five years.
Fiscal Year Total Current Current & Delinquent Calendar Ended Total Assessed Taxes Taxes Collected(4) Taxes Collected(3)(4)
Year June 30 Levy Valuation(1) Levied(2)(4) Amount % Amount %
2018 2019 $3.3079 $127,849,299 $4,229,127 $3,860,521 91.28% $4,302,882 101.74% 2017 2018 3.2897 123,540,770 4,064,121 3,763,627 92.61 4,138,766 101.84 2016 2017 3.3311 116,361,633 3,876,122 3,509,688 90.55 3,881,017 100.13 2015 2016 3.3500 115,000,491 3,852,516 3,458,224 89.77 3,898,712 101.20 2014 2015 3.3338 112,020,964 3,734,555 3,359,487 89.96 3,782,031 101.27
Source: District’s Annual Secretary of the Board Reports for fiscal years ended June 30, 2015 through 2019. (1) The assessed valuation used is the assessed valuation of the District as adjusted through December 31 of the calendar
year prior to the fiscal year shown. The assessed valuation excludes state assessed railroad and utility property. (2) Total Taxes Levied is calculated by dividing Assessed Valuation by 100 and multiplying by the Total Levy. Excludes
taxes against state-assessed railroads and utilities. (3) Delinquent taxes are shown in the year payment is actually received, which may cause the percentage of Current and
Delinquent Taxes Collected to exceed 100%. (4) It should be noted that on April 2, 2019, voters of the District voted to increase the operating tax levy by forty-six cents
per one hundred dollars of assessed valuation to fund the lease purchase of constructing, furnishing and equipping of a new technology center/agricultural facility, such increase to expire in 2044. The District began collecting revenues from the levy increase in December 2019, and it is estimated to generate approximately $600,000 in fiscal year ending June 30, 2020.
A-24
Major Property Taxpayers The following table shows the taxpayers believed to own real and personal property with the greatest amount of assessed valuation within the District based on the valuation of real and personal property owned as of January 1, 2019. The District has not independently verified the accuracy or completeness of such information.
Real Property
Percentage of Assessed Total Assessed
Owner Valuation Valuation
Southwest Electric Cooperative $1,869,860 1.41% Hostetler Sales & Construction, LLC (2 properties) 1,021,380 0.77 Laclede Electric Cooperative 878,080 0.66 Woods Super Market, Inc. 794,430 0.60 O’Bannon Banking Company 751,420 0.57 Associated Electric Cooperative 586,820 0.44 R&R Organics Property, LLC 503,470 0.38 Wal-Mart Realty Company 334,530 0.25 Superior Gearbox Company 326,980 0.25 Total $7,066,970 5.34%
Personal Property
Percentage of Assessed Total Assessed
Owner Valuation Valuation
Thompson Gas, LLC $ 819,610 0.62% Deere Credit, Inc. 522,200 0.39 Wells Fargo Financial Leasing 221,150 0.17 Casey’s General Store 216,750 0.16 Fidelity Cablevision, Inc. 207,720 0.16 Hostetler Sales & Construction 174,420 0.13 Hostetler Quarry 129,460 0.10 Hale Enterprise LLC 122,036 0.09 Wal-Mart Stores East, LP 106,770 0.08 Ozark Organics LLC 87,327 0.07 Total $2,607,443 1.97%
Source: Dallas County Assessor’s Office.
* * *
APPENDIX B
FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2019, TOGETHER WITH AUDITORS’ REPORT THEREON
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DALLAS COUNTY R-I SCHOOL DISTRICT
DALLAS COUNTY, MISSOURI
AUDITED FINANCIAL STATEMENTS
JUNE 30, 2019
DALLAS COUNTY R-I SCHOOL DISTRICT TABLE OF CONTENTS
FINANCIAL SECTION PAGE
Independent Auditor’s Report 1-2 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position – Modified Cash Basis 3 Statement of Activities – Modified Cash Basis 4 Fund Financial Statements Balance Sheet – Modified Cash Basis –All Governmental Funds 5 Statement of Revenues, Expenditures And Changes in Fund Balances – Modified Cash Basis – All Governmental Funds 6 Notes to the Financial Statements 7-26 SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – Modified Cash Basis – General Fund 27 Budgetary Comparison Schedule – Modified Cash Basis – Special Revenue Fund 28 Budgetary Comparison Schedule – Modified Cash Basis – Debt Service Fund 29 Budgetary Comparison Schedule – Modified Cash Basis – Capital Projects Fund 30
Budgetary Comparison Schedule – Modified Cash Basis – All Governmental Funds 31 Notes to the Budgetary Comparison Schedules 32 Other Post-Employment Benefits 33
DALLAS COUNTY R-I SCHOOL DISTRICT TABLE OF CONTENTS
(CONCLUDED)
PAGE STATE COMPLIANCE SECTION Independent Accountant’s Report on Management’s Assertions about Compliance with Specified Requirements of Missouri State Laws and Regulations 34
Schedule of Selected Statistics 35-38 Schedule of State Findings 39 FEDERAL COMPLIANCE SECTION 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 40-41 Report on Compliance for Each Major Federal Program and Report
On Internal Control over Compliance Required by the Uniform Guidance 42-43 Schedule of Expenditures of Federal Awards 44 Notes to the Schedule of Expenditures of Federal Awards 45 Schedule of Findings and Questioned Costs 46-48 Summary Schedule of Prior Year Audit Findings 49
FINANCIAL SECTION
1
INDEPENDENT AUDITOR’S REPORT
To the Members of the Board of Education Dallas County R-I School District
Report on the Financial Statements
We have audited the accompanying modified cash-basis financial statements of the governmental activities and each major fund of Dallas County R-I School District (District), Missouri, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note I; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective modified cash-basis financial position of the governmental activities and each major fund of the District as of June 30, 2019, and the respective changes in modified cash-basis financial position thereof for the year then ended in accordance with the modified cash basis of accounting described in Note I.
2
Basis of Accounting
We draw attention to Note I of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter.
Other Matters
Report on Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The budgetary comparison schedules and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The budgetary comparison schedules presented on pages 27 through 31 and the schedule of expenditures of federal awards presented on page 44 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison schedules and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2019, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
DANIEL JONES & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS ARNOLD, MISSOURI December 9, 2019
BASIC FINANCIAL STATEMENTS
DALLAS COUNTY R-I SCHOOL DISTRICTSTATEMENT OF NET POSITION - MODIFIED CASH BASIS
AS OF JUNE 30, 2019
Governmental ActivitiesAssets
Current assets: Cash and cash equivalents (Note II) 1,983,598.74$ Investments 1,815,582.38 Total current assets 3,799,181.12
Restricted assets:Professional Development Cash 12,887.01 Student Scholarships Cash 103,756.05 Investments 369,999.07 Health Savings Account Cash 578.38
Total restricted assets 487,220.51
Total assets 4,286,401.63
LiabilitiesCurrent liabilities: Payroll Liabilities HSA/FLEX 16,190.26
Total Current Liabilities 16,190.26
Net PositionRestricted for: Professional Development 12,887.01 Student Scholarships 473,755.12 Health Savings Account 578.38
Unrestricted 3,782,990.86
Total Net Position 4,270,211.37
Total net position and liabilities 4,286,401.63$
The notes to the financial statements are an integral part of this statement.
3
DALLAS COUNTY R-I SCHOOL DISTRICTSTATEMENT OF ACTIVITIES - MODIFIED CASH BASIS
FOR THE YEAR ENDED JUNE 30, 2019
Net (Expenses) Revenueand Changes in
Program Revenues Net Position
Functions/Programs ExpensesCharges for
ServicesOperating Grants and Contributions
Capital Grants and Contributions Governmental Activities
Governmental activities:Instruction 9,890,647.75$ 566,629.06$ 9,422,215.26$ -$ 98,196.57$ Attendance 47,902.60 - - - (47,902.60) Guidance 409,348.57 - - - (409,348.57) Health, Psych Speech and Audio 176,961.61 - - - (176,961.61) Improvement of Instruction 359,460.70 - 62,188.56 - (297,272.14) Professional Development 57,063.27 - - - (57,063.27) Media Services (Library) 217,786.58 - - - (217,786.58) Board of Education Services 439,810.32 - - - (439,810.32) Executive Administration 827,644.58 - - - (827,644.58) Building Level Administration 833,485.15 - - - (833,485.15) Administrative Technology Services 766,669.14 - - - (766,669.14) Operation of Plant 1,165,469.86 - - - (1,165,469.86) Security Services 15,250.00 - - - (15,250.00) Pupil Transportation 1,457,470.82 - 272,479.00 - (1,184,991.82) Food Services 852,355.82 99,562.93 652,108.66 - (100,684.23) Community Services 225,253.09 - - - (225,253.09) Capital Outlay 1,173,912.23 - - - (1,173,912.23) Debt Service: Principal Retirement 22,360.07 - - - (22,360.07) Interest and Fiscal Charges 3,353.97 - - - (3,353.97) Total Governmental activities 18,942,206.13$ 666,191.99$ 10,408,991.48$ -$ (7,867,022.66)
General revenues: Taxes: Property taxes, levied for general purposes 4,331,543.62 Other taxes 110,943.79 Prop C - Sales tax 1,704,771.88 Federal, State and County aid not restricted to specific purposes 456,977.28 Interest and investment earnings 64,952.68 Miscellaneous 65,600.00 Subtotal, general revenues 6,734,789.25
Change in net position (1,132,233.41)
Net position July 1, 2018 5,402,444.78
Net position June 30, 2019 4,270,211.37$
The notes to the financial statements are an integral part of this statement.
4
DALLAS COUNTY R-I SCHOOL DISTRICTBALANCE SHEET - MODIFIED CASH BASIS
ALL GOVERNMENTAL FUNDSAS OF JUNE 30, 2019
General Fund
Special Revenue
FundDebt Service
FundCapital Projects
Fund
Total Governmental
FundsASSETSCash and cash equivalents (Note II) 1,377,803.49$ -$ -$ 605,795.25$ 1,983,598.74$ Investments 1,815,582.38 - - - 1,815,582.38 Restricted AssetsProfessional Development Cash 12,887.01 - - - 12,887.01 Student Scholarships Cash 103,756.05 - - - 103,756.05 Investments 369,999.07 - - - 369,999.07 Health Savings Account Cash 578.38 - - - 578.38 Total Assets 3,680,606.38$ -$ -$ 605,795.25$ 4,286,401.63$
LIABILITIES AND FUND BALANCES
Payroll Liabilities 16,190.26 - - - 16,190.26 Total Liabilities 16,190.26 - - - 16,190.26
Fund Balances (Note I):Restricted For
Professional Development 12,887.01 - - - 12,887.01 Student Scholarships 473,755.12 - - - 473,755.12
Health Savings Account 578.38 - - - 578.38 Committed for
Stabilization Reserve - - - - - Assigned to: Capital Projects - - - 605,795.25 605,795.25 Unassigned 3,177,195.61 - - - 3,177,195.61
Total Fund Balance 3,664,416.12 - - 605,795.25 4,270,211.37
Total net position and liabilities 3,680,606.38$ -$ -$ 605,795.25$ 4,286,401.63$
The notes to the financial statements are an integral part of this statement.
5
DALLAS COUNTY R-I SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS
ALL GOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2019
General FundSpecial Revenue
FundDebt Service
FundCapital Projects
FundTotal Governmental
FundsRevenues
5,498,042.86$ 671,323.02$ -$ 485,512.21$ 6,654,878.09$ County Sources 339,763.71 99,374.58 - 17,838.99 456,977.28
650,044.07 7,082,588.81 - 423,486.55 8,156,119.43 Federal Sources 1,334,526.45 918,345.60 - - 2,252,872.05
7,822,377.09 8,771,632.01 - 926,837.75 17,520,846.85
ExpendituresCurrent
Regular Instruction 2,082,223.14 7,674,851.72 - 133,572.89 9,890,647.75 Attendance 47,902.60 - - - 47,902.60 Guidance 33,554.97 375,793.60 - - 409,348.57 Health, Psych Speech & Audio 176,961.61 - - - 176,961.61 Improvement of Instruction 186,850.70 172,610.00 - - 359,460.70 Professional Development 38,985.77 18,077.50 - - 57,063.27 Media Services 33,703.82 184,082.76 - - 217,786.58 Board of Education Services 438,940.66 869.66 - - 439,810.32 Executive Administration 324,663.20 502,981.38 - - 827,644.58 Building Level Administration 307,077.61 526,407.54 - - 833,485.15 Administrative Technology services 758,514.14 - - 8,155.00 766,669.14 Business Central Services - - - - - Operation of Plant 973,969.83 - - 191,500.03 1,165,469.86 Security Services - - - 15,250.00 15,250.00 Pupil Transportation 1,397,547.16 59,923.66 - - 1,457,470.82 Food Service 843,443.32 - - 8,912.50 852,355.82 Central Office Support Services - - - - - Other Supporting Services - - - - - Adult Continuing Education - - - - - Community Services 54,648.69 170,604.40 - - 225,253.09 Capital Outlay - - - 1,173,912.23 1,173,912.23 Debt Service: Principal - - - 22,360.07 22,360.07 Interest and Charges - - - 3,353.97 3,353.97 Total Expenditures 7,698,987.22 9,686,202.22 - 1,557,016.69 18,942,206.13
Excess (deficiency) of revenues over expenditures 123,389.87 (914,570.21) - (630,178.94) (1,421,359.28)
Other Financing Sources (Uses): Transfers (691,044.34) 691,044.34 - - - Sale of Other Property - - - 65,600.00 65,600.00 Tuition from other Districts - 31,025.87 - - 31,025.87 Area Voc Fees from Other LEAS - 192,500.00 - - 192,500.00
Total Other Financing Sources (Uses) (691,044.34) 914,570.21 - 65,600.00 289,125.87
NET CHANGE IN FUND BALANCES (567,654.47) - - (564,578.94) (1,132,233.41)
Fund Balances July 1, 2018 4,232,070.59 - - 1,170,374.19 5,402,444.78
Fund Balances June 30, 2019 3,664,416.12$ -$ -$ 605,795.25$ 4,270,211.37$
Local Sources
State Sources
TOTAL REVENUES
The notes to the financial statements are an integral part of this statement.
6
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
7
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Dallas County R-I School District (District) operates under the regulations pursuant to Section 162.092 RSMo of the Public School Laws of Missouri, which designates a Board of Education to act as the governing authority. The District provides educational services. As discussed further in Note I, these financial statements are presented on the modified cash basis of accounting. This modified cash basis of accounting differs from accounting principles generally accepted in the United States of America (GAAP). Generally accepted accounting principles include all relevant Governmental Accounting Standards Board (GASB) pronouncements. A. Principles Used to Determine Scope of Entity
The District’s reporting entity includes the District’s governing board and all related organizations that exercise oversight responsibility.
The District has developed criteria to determine whether outside agencies with activities that benefit the citizens of the District, including joint agreements that serve pupils from numerous districts, should be included within its financial reporting entity. The criterion includes, but is not limited to, whether the District exercises oversight responsibility (which includes financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matter), scope of public service, and special financing relationships.
Excluded from the reporting entity:
Public School Retirement System of Missouri and the Public Education Employee Retirement System. The participating School District’s governing bodies have appointed these potential component units jointly. These are independent units that select management staff, set user charges, establish budgets and control all aspects of its daily activity. The District has determined that no other outside agency meets the above criteria and, therefore, no other agency has been included as a component unit in the District’s financial statements. In addition, the District is not aware of any entity that would exercise such oversight which would result in the District being considered a component unit of the entity.
B. Basis of Presentation – Fund Accounting The accounts of the School District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts, which comprise its assets, liabilities, fund balance, revenues, and expenditures. District resources are allocated to and accounted for in individual funds based upon their spending purposes and the means by which spending activities are controlled. The following fund types are used by the District on the modified cash basis of accounting:
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
8
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Basis of Presentation – Fund Accounting (concluded)
Governmental Funds:
General (incidental) Fund: Accounts for general activities of the District, including student activities, food service, and textbooks, which are not required to be accounted for in another fund. Special Revenue (Teachers’) Fund: Accounts for expenditures for certified employees involved in administration and instruction. It includes revenues restricted by the State and local tax levy for paying teacher salaries and certain employee benefits. Capital Projects Fund: Accounts for the proceeds of long-term debt, taxes and other revenues restricted for acquisition or construction of major capital assets. Debt Service Fund: Accounts for the accumulation of resources for, and the payment of, principal, interest and finance charges on general long-term debt. The School District’s basic financial statements consist of government-wide statements, including a statement of net position and a statement of activities, and fund financial statements, which provide a more detailed level of financial information. Government-wide Financial Statements: The Statement of Net Position: Presents the financial condition of the government at year-end. The Statement of Activities: Presents a comparison between direct expenses and program revenues for each program or function of the School District’s governmental activities. Direct expenses are those that are specifically associated with a service, program or department and therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to support a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the School District with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or drawing from the general revenues of the School District.
Fund Financial Statements: During the year, the School District segregates transactions related to certain School District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present the District’s financial information at this more detailed level. Governmental financial statements focus on major funds, and each major fund is presented in a separate column. Non-major funds, if applicable, are aggregated and presented in a single column.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
9
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus and Basis of Accounting
The financial statements are presented on a modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America (GAAP) as established by the Governmental Accounting Standards Board. This basis of accounting involves modifications to the cash basis of accounting to report in the Statement of Net Position or Balance Sheet cash transactions or events that provide a benefit or result in an obligation that covers a period greater than the period in which the cash transaction or event occurred. Such reported balances include investments, inventories, receivables, capital assets, deferred outflows, short-term liabilities, long-term liabilities, and deferred inflows arising from cash transactions or events. This modified cash basis of accounting differs from GAAP primarily because certain assets and their related revenues (such as accounts receivable and revenue for billed or provided services not yet collected, and other accrued revenue and receivables) and certain liabilities and their related expenses or expenditures (such as accounts payable and expenses for goods or services but not yet paid, and other accrued expenses and liabilities) are not recorded in these financial statements. In addition, other economic assets, deferred outflows, liabilities, and deferred inflows that do not arise from a cash transaction or event (such as donated assets and post-employment benefit obligations) are not reported, and the measurement of reported assets and liabilities does not involve adjustment to fair value. If the School District utilized the basis of accounting recognized as generally accepted in the United States, the fund financial statements for governmental funds would use the modified accrual basis of accounting, and the fund financial statements for proprietary fund types would use the accrual basis of accounting. All government-wide financial statements would be presented on the accrual basis of accounting.
D. Pooled Cash and Temporary Investments Cash resources of the individual funds are combined to form a pool of cash and temporary investments that is managed by the District Treasurer. Investments of the pooled accounts consist of certificates of deposit investments, carried at cost, which approximates market. Interest income earned is allocated to contributing funds based on cash and temporary investment balances.
E. Property and Equipment Capital assets are recorded as expenditures in the General (Incidental) Fund and the Capital Projects (Building) Fund at the time the expenditures are paid. No depreciation is provided for property and equipment.
F. Compensated Absences
Vacation time, personal business days and sick leave are considered as expenditures in the year paid. Amounts that are unpaid and vested in the employee are payable upon termination.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
10
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. Teachers’ Salaries
The District’s salary payment schedule for the 2018-2019 school year requires paying salaries over a twelve-month period. Consequently, the July and August 2019 payroll checks are included in the financial statements as an expenditure paid in the month of June. This practice has been consistently followed in previous years.
H. Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy, which is based primarily on the District’s obligation to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:
Nonspendable Fund Balance consists of funds that cannot be spent due to their form (e.g., inventories and prepaids) or funds that legally or contractually must remain intact. The District did not have any nonspendable resources as of June 30, 2019.
Restricted Fund Balance consists of funds that are mandated for a specific purpose by external parties, constitutional provisions or enabling legislation. Debt service resources are to be used for future District servicing - held bonds and are restricted through debt covenants.
Committed Fund Balance consists of funds set aside for a specific purpose by the District’s highest level of decision - making authority, the Board of Education. Formal action, such as a vote of the Board of Education, must be taken prior to the end of the fiscal year. The same formal action must be taken to remove or change the limitations placed on the funds.
Assigned Fund Balance consists of funds that are set aside for a specific purpose by the District’s highest level of decision - making authority, the Board of Education or a body or official, such as the superintendent, who has been given the authority to assign funds. Assigned funds cannot cause a deficit in unassigned fund balance. This classification includes the remaining positive fund balance of all governmental funds except for the General Fund.
Unassigned Fund Balance consists of excess funds that have not been classified in the previous four categories. All funds in this category are considered spendable resources. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfalls.
The District would typically use Restricted Fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but it reserves the right to selectively spend Unassigned resources first to defer using these other classified funds.
As of June 30, 2019, fund balance components other than unassigned fund balances consist of the following:
Non spendable Restricted Committed Assigned
General Fund $ - $ 487,220.51 $ - $ -Special Revenue (Teachers) Fund - - - -Debt Service Fund - - - -Capital Projects Fund - - - 605,795.25
Total $ - $ 487,220.51 $ - $ 605,795.25
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
11
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
I. Interfund Activity
Interfund transfers are reported as other financing sources/uses in governmental funds. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on the financial statements.
J. Extraordinary and Special Items
Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Board of Education and are either unusual in nature or infrequent in occurrence.
K. Inventories
The District does not maintain inventory cost records. Inventory is deemed to be immaterial and accounted for using the purchase method in which supplies are charged to expenditures when purchased.
II. CASH AND CASH EQUIVALENTS
The District maintains a cash and temporary investment pool that is available for all funds except the Debt Service Fund (State law requires that all deposits of the Debt Service Funds be kept separate and apart from all other District funds). Deposits with maturities greater than three months are considered investments. Each fund type's portion of this pool is displayed on the balance sheet arising from cash transactions as "Cash and Cash Equivalents" under each fund's caption.
Deposits Missouri statutes require that all deposits with financial institutions be collateralized in an amount at least equal to uninsured deposits. At June 30, 2019, the carrying amount of the District's pooled deposits and investments was $4,286,401.63 and the bank balance was $5,515,775.39 As of June 30, 2019, the U.S. Government guaranteed 100% of the District’s investments through pledged securities and FDIC insurance.
SUMMARY OF CARRYING VALUES
The carrying values of deposits shown above are included in the financial statements at June 30, 2019, as follows:
Included in the following fund financial statement captions:
Balance Sheet – Governmental Funds
Unrestricted Deposits $ 1,983,598.74Unrestricted Investments 1,815,582.38Deposits Restricted for Professional Development 12,887.01Deposits Restricted for Student Scholarships 103,756.05Investments Restricted for Student Scholarships 369,999.07Deposits Restricted for Health Savings Accounts 578.38Total $ 4,286,401.63
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
12
II. CASH AND CASH EQUIVALENTS (CONCLUDED)
TYPE
FUND
MATURITIES
COST
Investments are broken down as follows:
Certificate of Deposit General 02/03/20 $ 500,000.00
Certificate of Deposit General 02/24/20 1,000,000.00
Certificate of Deposit General 10/06/19 250,000.00
Certificate of Deposit General 06/20/20 65,582.38
Certificate of Deposit General 12/12/19 358,317.16
Certificate of Deposit General 01/05/20 5,000.00
Certificate of Deposit General 08/01/20 6,681.91
TOTAL INVESTMENTS $ 2,185,581.45
Custodial Credit Risk – Deposits For a deposit, custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The District’s investment policy does not include custodial credit risk requirements. The District’s deposits were not exposed to custodial credit risk at year end.
Custodial Credit Risk – Investments Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the District, and are held by the party who sold the security to the District or its agent but not in the government’s name. The District does not have a policy for custodial credit risk relating to investments. All investments, evidenced by individual securities, are registered in the name of the District or of a type not exposed to custodial credit risk. Investment Interest Rate Risk
Investment interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.
Concentration of Investment Credit Risk
The District discloses concentration of investment credit risk for any single investment that represents 5% or more of total investments (excluding investments issued by or explicitly guaranteed by the U.S. Government, investments in mutual funds, investments in external investment pools and investments in other pooled investments). The District has no policy in place to minimize the risk of loss resulting from over concentration of assets in specific maturity, specific issuer or specific class of securities. The District’s deposits were not exposed to concentration of investment credit risk for the year ended June 30, 2019.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
13
III. TAXES Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on November 1 and are payable by December 31. The County collects the property tax and remits it to the District.
The District also receives sales tax collected by the State, and it is remitted based on a prior year weighted average attendance. The assessed valuation of the tangible taxable property for the calendar year 2018, for purposes of local taxation, was:
2018 Assessed Valuation $ 127,849,299
The tax levy per $100 of the assessed valuation of tangible taxable property for the calendar year 2018, for purposes of local taxation, was:
2018 Unadjusted Adjusted General (Incidental) Fund $ 2.9229 $ 2.9229 Special Revenue Fund 0.0000 0.0000 Debt Service Fund 0.0000 0.0000 Capital Projects Fund 0.3850 0.3850 Total $ 3.3079 $ 3.3079
The receipts of current and delinquent property taxes during the fiscal year ended June 30, 2019, aggregated approximately 91.28% of the current assessment computed on the basis of the levy as shown above.
IV. CHANGES IN LONG-TERM DEBT Leasehold Purchases
On July 27, 2017, Dallas County School District entered into a copier lease with De Lage Landen Public Finance, LLC for copiers. The amount borrowed was $127,496.13 with a rate of interest of 3.819% and monthly payments of $2,337.64. The leasehold purchases mature in July of 2022. These payments are made out of the Capital Projects Fund.
The following is a summary of Leasehold Purchase transactions for the year ended June 30, 2019:
Leasehold Purchases Payable, July 1, 2018 $ 105,904.09 Leasehold Purchases Issued - Leasehold Purchases Retired (22,360.07) Leasehold Purchases Payable, June 30, 2019 $ 83,544.02
A total of $3,353.97 in interest payments were made on the capital leases for the year ended June 30, 2019. The annual requirements to amortize all lease purchases outstanding as of June 30, 2019, including interest payments are as follows (assuming non-cancellation):
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
14
IV. CHANGES IN LONG-TERM DEBT (CONTINUED)
Leasehold Purchases (Concluded)
Operating Leases On August 7, 2017, Dallas County School District entered into a bus lease with Midwest Bus Sales for four 2018 buses. The term of the lease is for 5 years beginning on September 1, 2017, through June 30, 2022. The first lease payment of $11,515 per unit, for a total of $46,060 was due on delivery. These payments are made out of the Capital Projects Fund. On March 1, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for three 2019 buses. The term of the lease is for 5 years and 4 months beginning on March 1, 2018, through June 30, 2023. The first lease payment of $1,000 per month per bus for March, April and May for a total of $9,000 was due in March, after that each year a payment of $11,515 per unit, for a total of $34,545 is due annually. These payments are made out of the Capital Projects Fund. On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for five 2019 buses. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $11,515 per unit, for a total of $57,575 was due on delivery. These payments are made out of the Capital Projects Fund. On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for one 2017 bus. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $9,250 was due on delivery. These payments are made out of the Capital Projects Fund. On May 16, 2018, Dallas County School District entered into a bus lease with Midwest Bus Sales for one 2019 bus. The term of the lease is for 5 years beginning on July 1, 2018, through June 30, 2023. The first lease payment of $13,250 was due on delivery. These payments are made out of the Capital Projects Fund. On July 9, 2018, Dallas County School District entered into a computer lease with Trinity3 Financial Services for student chrome books. The term is for 49 months with 4 annual payments that are 30 days deferred. The first payment was made on August 21, 2018 of $202,709.07. These payments are made out of the Capital Projects Fund.
Fiscal Year Ending June 30,
Principal
Interest
Total
2020 $ 25,300.89 $ 2,750.79 $ 28,051.682021 26,284.26 1,767.42 28,051.682022 29,628.64 658.97 30,287.612023 2,330.23 7.41 2,337.64
Totals $ 83,544.02 $ 5,184.59 $ 88,728.61
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
15
IV. CHANGES IN LONG-TERM DEBT (CONCLUDED)
Operating Leases (Concluded) The following is a summary of operating lease transactions for the year ended June 30, 2019:
Operating leases Payable, July 1, 2018 $ 722,795.00 Operating leases Issued 810,836.28 Operating leases Retired (363,389.07) Operating leases Payable, June 30, 2019 $ 1,170,242.21
The annual requirements to amortize all operating leases outstanding as of June 30, 2019, are as follows (assuming non-cancellation): Buses
Fiscal Year Ending June 30,
Payments
2020 $ 160,680.00 2021 160,680.00 2022 160,680.00 2023 80,075.00
Totals $ 562,115.00
Computer
Fiscal Year Ending June 30,
Payments
2020 $ 202,709.07 2021 202,709.07 2022 202,709.07 2023 -
Totals $ 608,127.21
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
16
V. RETIREMENT PLAN
Summary of Significant Accounting Policies
Financial reporting information pertaining to the District’s participation in the Public School Retirement System of Missouri and the Public Education Employee Retirement System of Missouri (PSRS and PEERS, also referred to as the Systems) is prepared in accordance with Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, as amended.
The fiduciary net position, as well as additions to and deductions from the fiduciary net position, of PSRS and PEERS have been determined on the same basis as they are reported by the Systems. The financial statements were prepared using the accrual basis of accounting. Member and employer contributions are recognized when due, pursuant to formal commitments and statutory requirements. Benefits and refunds of employee contributions are recognized when due and payable in accordance with the statutes governing the Systems. Expenses are recognized when the liability is incurred, regardless of when payment is made. Investments are reported at fair value. The fiduciary net position is reflected in the measurement of the District’s net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense. A Comprehensive Annual Financial Report (“CAFR”) can be obtained at www.psrs-peers.org.
General Information about the Pension Plan - PSRS Plan Description. PSRS is a mandatory cost-sharing multiple employer retirement system for all full-time certificated employees and certain part-time certificated employees of all public school districts in Missouri (except the school districts of St. Louis and Kansas City) and all public community colleges. PSRS also includes certificated employees of the Systems, Missouri State Teachers' Association, Missouri State High School Activities Association, and certain employees of the State of Missouri who elected to remain covered by PSRS under legislation enacted in 1986, 1987 and 1989. The majority of PSRS members are exempt from Social Security contributions. In some instances, positions may be determined not to be exempt from Social Security contributions. Any PSRS member who is required to contribute to Social Security comes under the requirements of Section 169.070 (9) RSMo, known as the “two-thirds statute.” PSRS members required to contribute to Social Security are required to contribute two-thirds of the approved PSRS contribution rate and their employer is required to match the contribution. The members’ benefits are further calculated at two-thirds the normal benefit amount.
Benefits Provided. PSRS is a defined benefit plan providing retirement, disability, and death/survivor benefits. Members are vested for service retirement benefits after accruing five years of service. Individuals who (a) are at least age 60 and have a minimum of 5 years of service, (b) have 30 years of service, or (c) qualify for benefits under the “Rule of 80” (service and age total at least 80) are entitled to a monthly benefit for life, which is calculated using a 2.5% benefit factor. Beginning July 1, 2001, and ending July 1, 2014, a 2.55% benefit factor was used to calculate benefits for members who have 31 or more years of service at retirement. Actuarially age-reduced benefits are available for members with five to 24.9 years of service at age 55. Members who are younger than age 55 and who do not qualify under the “Rule of 80” but have between 25 and 29.9 years of service may retire with a lesser benefit factor. Members that are three years beyond normal retirement can elect to have their lifetime monthly benefits actuarially reduced in exchange for the right to also receive a one-time partial lump sum (PLSO) payment at retirement equal to 12, 24, or 36 times the Single Life benefit amount.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
17
V. RETIREMENT PLAN (CONTINUED)
General Information about the Pension Plan – PSRS (Concluded) Summary Plan Descriptions detailing the provisions of the plan can be found on the Systems’ website at www.psrs-peers.org.
Contributions. PSRS members were required to contribute 14.5% of their annual covered salary during fiscal years 2017, 2018 and 2019. Employers were required to match the contributions made by employees. The contribution rate is set each year by the PSRS Board of Trustees upon the recommendation of the independent actuary within the contribution restrictions set in Section 169.030 RSMo. The annual statutory increase in the total contribution rate may not exceed 1% of pay. The District's contributions to PSRS were $1,125,440.00 for the year ended June 30, 2019.
General Information about the Pension Plan - PEERS
Plan Description. PEERS is a mandatory cost-sharing multiple employer retirement system for all non-certificated public school district employees (except the school districts of St. Louis and Kansas City), employees of the Missouri Association of School Administrators, and community college employees (except the Community College of St. Louis). Employees of covered districts who work 20 or more hours per week on a regular basis and who are not contributing members of PSRS must contribute to PEERS. Employees of the Systems who do not hold Missouri educator certificates also contribute to PEERS. PEERS was established as a trust fund by an Act of the Missouri General Assembly effective October 13, 1965. Statutes governing the System are found in Sections 169.600 - 169.715 and Sections 169.560-169.595 RSMo. The statutes place responsibility for the operation of PEERS on the Board of Trustees of PSRS. Benefits Provided. PEERS is a defined benefit plan providing retirement, disability and death benefits to its members. Members are vested for service retirement benefits after accruing five years of service. Individuals who (a) are at least age 60 and have a minimum of five years of service, (b) have 30 years of service, or (c) qualify for benefits under the “Rule of 80” (service and age total at least 80) are entitled to a monthly benefit for life, which is calculated using a 1.61% benefit factor. Members qualifying for "Rule of 80" or "30-and-out" are entitled to an additional temporary benefit until reaching minimum Social Security age (currently age 62), which is calculated using a 0.8% benefit factor. Actuarially age-reduced retirement benefits are available with five to 24.9 years of service at age 55. Members who are younger than age 55 and who do not qualify under the “Rule of 80” but have between 25 and 29.9 years of service may retire with a lesser benefit factor. Members that are three years beyond normal retirement can elect to have their lifetime monthly benefits actuarially reduced in exchange for the right to also receive a one-time partial lump sum (PLSO) payment at retirement equal to 12, 24, or 36 times the Single Life benefit amount. Summary Plan Descriptions detailing the provisions of the plans can be found on the Systems’ website at www.psrs-peers.org.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
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V. RETIREMENT PLAN (CONTINUED)
General Information about the Pension Plan – PEERS (Concluded) Contributions. PEERS members were required to contribute 6.86% of their annual covered salary during fiscal years 2017, 2018 and 2019. Employers were required to match the contributions made by employees. The contribution rate is set each year by the PSRS Board of Trustees upon the recommendation of the independent actuary within the contribution restrictions set in Section 169.030 RSMo. The annual statutory increase in the total contribution rate may not exceed 0.5% of pay.
The District's contributions to PEERS were $215,130.92 for the year ended June 30, 2019. Cost-of-Living Adjustments ("COLA"). The Board of Trustees has established a policy of providing COLAs to both PSRS and PEERS members as follows: - If the June to June change in the Consumer Price Index for All Urban Consumers (CPI-U) is less than 2% for consecutive one-year periods, a cost-of-living increase of 2% will be granted when the cumulative increase is equal to or greater than 2%, at which point the cumulative increase in the CPI-U will be reset to zero. For the following year, the starting CPI-U will be based on the June value immediately preceding the January 1 at which the 2% cost-of-living increase is granted. - If the June to June change in the CPI-U is greater than or equal to 2%, but less than 5%, a cost-of-living increase of 2% will be granted. - If the June to June change in the CPI-U is greater than or equal to 5%, a cost-of-living increase of 5% will be granted. - If the CPI decreases, no COLA is provided. For any PSRS member retiring on or after July 1, 2001, such adjustments commence on the second January after commencement of benefits and occur annually thereafter. For PEERS members, such adjustments commence on the fourth January after commencement of benefits and occur annually thereafter. The total of such increases may not exceed 80% of the original benefit for any member. Pension Liabilities and Pension Expense - PSRS At June 30, 2019, the District has a liability of $11,297,649 for its proportionate share of the net pension liability. The net pension liability for the plan in total was measured as of June 30, 2018, and determined by an actuarial valuation as of that date. The District's proportionate share of the total net pension liability was based on the ratio of its actual contributions of $1,058,224 paid to PSRS for the year ended June 30, 2018, relative to the total contributions of $697,214,371 from all participating employers. At June 30, 2018, the District's proportionate share was 0.1518%.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
19
V. RETIREMENT PLAN (CONTINUED)
Pension Liabilities and Pension Expense - PEERS At June 30, 2019, the District has a liability of $1,329,065 for its proportionate share of the net pension liability. The net pension liability for the plan in total was measured as of June 30, 2018, and determined by an actuarial valuation as of that date. The District's proportionate share of the total net pension liability was based on the ratio of its actual contributions of $196,354 paid to PEERS for the year ended June 30, 2018, relative to the total contributions of $114,141,743 from all participating employers. At June 30, 2018, the District's proportionate share was 0.1720%. Actuarial Assumptions
Actuarial valuations of the Systems involve assumptions about the probability of occurrence of events far into the future in order to estimate the reported amounts. Examples include assumptions about future employment, salary increases, and mortality. Amounts determined regarding the net pension liability are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Board of Trustees adopts actuarial assumptions, each of which individually represents a reasonable long-term estimate of anticipated experience for the Systems, derived from experience studies conducted every fifth year and from Board policies concerning investment and COLAs. The most recent comprehensive experience studies were completed in June 2016. All economic and demographic assumptions were reviewed and updated, where appropriate, based on the results of the studies and effective with the June 30, 2016, valuation. For the June 30, 2017, valuations, the investment rate of return was reduced from 7.75% to 7.6% and the assumption for the annual cost-of-living adjustments was updated in accordance with the funding policies amended by the Board of Trustees at their November 2017 meeting. For the June 30, 2018, valuation, the investment rate of return assumption was further reduced from 7.60% to 7.50%. Significant actuarial assumption and methods, including changes from the prior year, are detailed below. For additional information please refer to the Systems’ Comprehensive Annual Financial Report (CAFR). The next experience studies are scheduled for 2021.
Significant actuarial assumptions and other inputs used to measure the total pension liability:
- Measurement Date June 30, 2018
- Valuation Date June 30, 2018
- Expected Return on Investments 7.50%, net of investment expenses and including 2.25% inflation
- Inflation 2.25%
- Total Payroll Growth - PSRS 2.75% per annum, consisting of 2.25% inflation, 0.25% real wage growth due to the inclusion of active health care costs in pensionable earnings, and 0.25% of real wage growth due to productivity.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
20
V. RETIREMENT PLAN (CONTINUED) Actuarial Assumptions (Continued)
- Total Payroll Growth - PEERS 3.25% per annum, consisting of 2.25% inflation, 0.50% real wage growth due to the inclusion of active health care costs in pensionable earnings, and 0.50% of real wage growth due to productivity.
- Future Salary Increases - PSRS 3.00% - 9.50%, depending on service and including 2.25% inflation, 0.25% real wage growth due to the inclusion of active health care costs in pensionable earnings, and 0.25% of real wage growth due to productivity.
- Future Salary Increases - PEERS 4.00% - 11.00%, depending on service and including 2.25% inflation, 0.50% real wage growth due to the inclusion of active health care costs in pensionable earnings, and 0.50% of real wage growth due to productivity.
- Cost-of-Living Increases – PSRS & PEERS The annual COLA assumed in the valuation increases from 1.25% to
1.65% over eight years, beginning January 1, 2020. The COLA reflected for January 1, 2019, is 2.00%, in accordance with the actual COLA approved by the Board. This COLA assumption reflects an assumption that general inflation will increase from 1.85% to a normative inflation assumption of 2.25% over eight years. It is also based on the current policy of the Board to grant a COLA on each January 1 as follows:
- If the June to June change in the CPI-U is less than 2% for
consecutive one year periods, a cost-of-living increase of 2% will be granted when the cumulative increase is equal to or greater than 2%, at which point the cumulative increase in the CPI-U will be reset to zero. For the following year, the starting CPI-U will be based on the June value immediately preceding the January 1 at which the 2% cost-of-living increase is granted.
- If the June to June change in the CPI-U is greater than or equal to 2%,
but less than 5%, a cost-of-living increase of 2% will be granted. - If the June to June change in the CPI-U is greater than or equal to 5%,
a cost-of-living increase of 5% will be granted. - If the CPI decreases, no COLA is provided.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
21
V. RETIREMENT PLAN (CONTINUED) Actuarial Assumptions (Concluded)
- Cost-of-Living Increases – PSRS & PEERS (Concluded)
The COLA applies to service retirements and beneficiary annuities. The COLA does not apply to the benefits for in-service death payable to spouses (where the spouse is over age 60), and does not apply to the spouse with children pre-retirement death benefit, the dependent children pre-retirement death benefit, or the dependent parent death benefit. The total lifetime COLA cannot exceed 80% of the original benefit. PSRS members receive a COLA on the second January after retirement, while PEERS members receive a COLA on the fourth January after retirement.
- Mortality Assumption
Actives - PSRS: RP 2006 White Collar Employee Mortality Table, multiplied by an adjustment factor of 0.75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.
Actives - PEERS: RP 2006 Total Dataset Employee Mortality Table, multiplied by an adjustment factor of 0.75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.
Non-Disabled Retirees, Beneficiaries and Survivors - PSRS: RP 2006 White Collar Mortality Tables with plan-specific experience
adjustments and static projection to 2028 using the 2014 SSA Improvement Scale.
Non-Disabled Retirees, Beneficiaries and Survivors - PEERS: RP 2006 Total Dataset Mortality Tables with plan-specific experience
adjustments and static projection to 2028 using the 2014 SSA Improvement Scale.
Disabled Retirees – PSRS & PEERS: RP 2006 Disabled Retiree Mortality Tables with static projection to
2028 using the 2014 SSA Improvement Scale.
Changes in Actuarial Assumptions and Methods
The following assumptions were updated by the Board at the October 29, 2018, meeting:
PSRS & PEERS:
The investment return assumption was lowered from 7.60% to 7.50% per year.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
22
V. RETIREMENT PLAN (CONTINUED) Fiduciary Net Position
The Systems issue a publicly available financial report (CAFR) that can be obtained at www.psrs-peers.org.
Expected Rate of Return The long-term expected rate of return on investments was determined in accordance with Actuarial Standard of Practice (ASOP) No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. ASOP No. 27 provides guidance on the selection of an appropriate assumed rate of return. The long-term expected rate of return on the Systems’ investments was determined using a building-block method in which best-estimate ranges of expected future real rates of returns (expected returns, net of 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. Best estimates of arithmetic real rates of return for each major asset class included in the Systems’ target allocation as of June 30, 2018, are summarized below along with the long term geometric return. Geometric return (also referred to as the time weighted return) is considered standard practice within the investment management industry. Geometric returns represent the compounded rate of growth of a portfolio. The method eliminates the effects created by cash flows.
Asset Class
Target Asset Allocation
Long-term Expected Real
Return Arithmetic
Basis
Weighted Long-term Expected Real Return
Arithmetic Basis U.S. Public Equity 27.0% 5.16% 1.39%Public Credit 7.0% 2.17% 0.15%Hedged Assets 6.0% 4.42% 0.27%Non-U.S. Public Equity 15.0% 6.01% 0.90%U.S. Treasuries 16.0% 0.96% 0.15%U.S. TIPS 4.0% 0.80% 0.03%Private Credit 4.0% 5.60% 0.22%Private Equity 12.0% 9.86% 1.18%Private Real Estate 9.0% 3.56% 0.32%Total 100.0% 4.61%
Inflation 2.25%Long-term arithmetical nominal return 6.86%
Effect of covariance matrix 0.64%
Long-term expected geometric return 7.50%
- Discount Rate The long-term expected rate of return used to measure the total pension liability was 7.5% as of June, 30, 2018, and is consistent with the long-term expected geometric return on plan investments. The actuarial assumed rate of return was 8.0% from 1980 through fiscal year 2016. The Board of Trustees adopted a new actuarial assumed rate of return of 7.75% effective with June 30, 2016, valuation based on the actuarial experience studies and asset-liability study conducted during the 2016 fiscal year. As previously discussed, the Board of Trustees further reduced the assumed rate of return to 7.6% effective with the June 30, 2017, valuation, and to 7.5% effective with the June 30, 2018, valuation.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
23
V. RETIREMENT PLAN (CONTINUED) Expected Rate of Return (Concluded) - Discount Rate (Concluded) The projection of cash flows used to determine the discount rate assumed that employer contributions would be made at the actuarially calculated rate computed in accordance with assumptions and methods stated in the funding policy adopted by the Board of Trustees, which requires payment of the normal cost and amortization of the unfunded actuarial accrued liability in level percent of employee payroll installments over 30 years utilizing a closed period, layered approach. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. - Discount Rate Sensitivity The sensitivity of the District's net pension liability to changes in the discount rate is presented below. The District's net pension liability calculated using the discount rate of 7.50% is presented as well as the net pension liability using a discount rate that is 1.0% lower (6.50%) or 1.0% higher (8.50%) than the current rate.
Discount Rate 1% Decrease (6.50%) Current Rate (7.50%) 1% Increase (8.50%)
PSRS Proportionate share of the Net Pension
Liability / (Asset) $20,251,880 $11,297,649 $3,855,749
PEERS Proportionate share of the Net Pension
Liability / (Asset) $2,502,781 $1,329,065 $344,675
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios - PSRS
Actual Net Pension Fiduciary Proportion of the Proportionate Share Covered Liability (Asset) Net Position as
Year Net Pension Of the Net Pension Member As a Percentage A Percentage of Ended Liability (Asset) Liability (Asset) Payroll Of Covered Payroll Total Pension
Liability 6/30/14 0.1823% $ 7,478,995 $8,114,900 92.16% 89.34% 6/30/15 0.1579% $ 9,115,346 $7,167,651 127.17% 85.78% 6/30/16 0.1438% $ 10,699,653 $6,651,536 160.86% 82.18% 6/30/17 6/30/18
0.1520% 0.1518%
$ 10,976,718 $ 11,297,649
$7,222,139 $7,322,792
151.99% 154.28%
83.77% 84.06%
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
24
V. RETIREMENT PLAN (CONCLUDED)
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios - PEERS
Actual Net Pension Fiduciary Proportion of the Proportionate Share Covered Liability (Asset) Net Position as
Year Net Pension Of the Net Pension Member As a Percentage A Percentage of Ended Liability (Asset) Liability (Asset) Payroll Of Covered Payroll Total Pension
Liability 6/30/14 0.1799% $ 656,934 $ 2,624,074 25.03% 91.33% 6/30/15 0.1652% $ 873,753 $ 2,476,790 35.28% 88.28% 6/30/16 0.1587% $1,273,306 $ 2,451,349 51.94% 83.32% 6/30/17 6/30/18
0.1588% 0.1720%
$1,211,566 $1,329,065
$ 2,552,327 $ 2,862,294
47.47% 46.43%
85.35% 86.06%
Schedule of Employer Contributions - PSRS
Actual Statutorily Actual Contribution Covered Contributions as a
Year Required Employer Excess/ Member Percentage of Ended Contribution Contributions (Deficiency) Payroll Covered Payroll
6/30/13 $1,175,307 $1,175,307 $ - $8,134,407 14.45% 6/30/14 1,173,943 1,173,943 - 8,114,900 14.47% 6/30/15 1,037,062 1,037,062 - 7,167,651 14.47% 6/30/16 963,511 963,511 - 6,651,536 14.49% 6/30/17 1,040,085 1,040,085 - 7,222,139 14.40% 6/30/18 1,058,224 1,058,224 - 7,322,792 14.45%
Schedule of Employer Contributions - PEERS
Actual Statutorily Actual Contribution Covered Contributions as a
Year Required Employer Excess/ Member Percentage of Ended Contribution Contributions (Deficiency) Payroll Covered Payroll
6/30/13 $180,897 $180,897 $ - $2,636,976 6.86% 6/30/14 180,012 180,012 - 2,624,074 6.86% 6/30/15 169,908 169,908 - 2,476,790 6.86% 6/30/16 168,163 168,163 - 2,451,349 6.86% 6/30/17 175,089 175,089 - 2,552,327 6.86% 6/30/18 196,354 196,354 - 2,862,294 6.86%
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
25
VI. COMPENSATED ABSENCES PAYABLE
Compensated absences payable at June 30, 2019, consist of accumulated sick leave by employees. The District’s policy only pays employees who retire or leave the District and reimbursement is not provided to employees who break a contract or who are terminated for cause. Non-certified ten, eleven, and twelve-month employees are allowed nine days per year cumulative to 100 days. Non-certified nine-month employees are allowed nine days per year cumulative to 90 days. All non-certified employees are paid for unused sick leave at ½ of the daily rate for a beginning employee in a similar position for hours accumulated through June 30, 2009. Hours accumulated after July 1, 2009, for employees who work less than seven hours and more than seven hours are reimbursed at a rate of $20 and $30 per day, respectively. Certified employees are allowed ten days per year cumulative to 180 days. Total Compensated absences payable at June 30, 2019, is $171,025 for Certified staff and $112,925 for Classified Staff, for a total of $283,950.
VII. PARTICIPATION IN A PUBLIC ENTITY RISK POOL
As of January 1, 2018, the District is covered through Midwest Public Risk of Missouri. The total in annual assessments is $205,229.72.
VIII. CONTINGENCIES
The District receives federal grants and state funding for specific purposes that are subject to review and audit. These reviews and audits could lead to requests for reimbursement or to withholding future funding for disallowed expenditures or other noncompliance with terms of grants and state funding. The District is not aware of any noncompliance with federal or state provisions that might require the District to provide reimbursement.
The District is not involved in pending litigation as of the audit report date.
IX. POST-EMPLOYMENT BENEFITS
In addition to the pension benefits described in Note V, the District allows employees who retire from the District to participate in the District's health and dental insurance plans. Upon meeting the retirement requirements per PSRS and PEERS, the employees can elect to participate in the District's plans. The retirees must pay for 100% of their coverage for each plan in which they elect to participate. The premiums are based on a single-blended rate used for both active employees and retirees. The difference between the amount the retiree is required to pay and the actual cost to the District is considered to be a post-employment benefit. The District has not established an irrevocable trust fund for the accumulation of resources for the future payment of benefits under the plan; benefits are paid on a pay-as- you go basis. A stand-alone financial report is not available for the plan. During the year, all retirees pay the consortium directly and the District does not handle the payments from Retirees.
The District has 32 former employees that participated in Cobra as of June 30, 2019. The premiums were paid directly to the consortium so the District does not handle the payments from COBRA Participants.
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
26
X. INTERFUND TRANSFERS
During 2019, transfers were made to the Special Revenue Fund from the General Fund. A transfer of $691,044.34 was made to the Special Revenue Fund in order to achieve a zero balance in the account. The following is a summary of interfund transfers for the year ended June 30, 2019:
Transfers From
Special Revenue
(Teachers) Fund
General (Incidental) Fund $ 691,044.34 $ 691,044.34
XI. SUBSEQUENT EVENTS
There are no subsequent events to report for the fiscal year ending 6/30/2019.
XII. TAX ABATEMENT There were no tax abatements noted for the current year.
SUPPLEMENTARY INFORMATION
Modified Cash Basis Final
Original Final Actual to Actual
Local Sources 5,674,550.00$ 5,498,042.86$ 5,498,042.86$ -$
County Sources 355,000.00 339,763.71 339,763.71 -
State Sources 861,500.00 650,044.07 650,044.07 -
Federal Sources 1,222,735.00 1,334,526.45 1,334,526.45 -
Total Revenues 8,113,785.00 7,822,377.09 7,822,377.09 -
Expenditures
Current
Instruction 1,958,501.00 2,082,223.14 2,082,223.14 -
Attendance 48,268.00 47,902.60 47,902.60 -
Guidance 52,000.00 33,554.97 33,554.97 -
Health, Psych Speech & Audio 177,819.00 176,961.61 176,961.61 -
Improvement of Instruction 155,683.00 186,850.70 186,850.70 -
Professional Development 46,562.00 38,985.77 38,985.77 -
Media Services 60,191.00 33,703.82 33,703.82 -
Board of Education Services 481,368.72 438,940.66 438,940.66 -
Executive Administration 789,206.00 324,663.20 324,663.20 -
Building Level Administration 305,667.00 307,077.61 307,077.61 -
Administrative Technology Services 728,730.00 758,514.14 758,514.14 -
Business Central Services - - - -
Operation of Plant 974,721.00 973,969.83 973,969.83 -
Security Services - - - -
Pupil Transportation 1,315,836.00 1,397,547.16 1,397,547.16 -
Food Service 806,168.00 843,443.32 843,443.32 -
Central Office Support Services - - - -
Other Supporting Services - - - -
Adult Continuing Education - - - -
Community Services 54,283.00 54,648.69 54,648.69 -
Capital Outlay - - - -
Debt Service:
Principal - - - -
Interest and Charges - - - -
Total Expenditures 7,955,003.72 7,698,987.22 7,698,987.22 -
Revenues Collected Over (Under)
Expenditures 158,781.28 123,389.87 123,389.87 -
Other Financing Sources (Uses):
Transfers - (691,044.34) (691,044.34) -
Sale of Bonds - - - -
Net Insurance Recovery - - - -
Sale of School Buses - - - -
Sale of Other Property - - - -
Refunding Bonds - - - -
Tuition from other Districts - - - -
Area Voc Fees from Other LEAS (200,000.00) - - -
Contracted Educational Services - - - -
Trans from other LEAS Non-Handi - - - -
Trans from other LEAS for Handi - - - -
Trans from other LEAS for ECSE Handi - - - -
Total Other Financing
Sources (Uses) (200,000.00) (691,044.34) (691,044.34) -
NET CHANGE IN FUND BALANCE (41,218.72) (567,654.47) (567,654.47) -
Fund Balance July 1, 2018 4,232,070.59 4,232,070.59 4,232,070.59 -
Fund Balance June 30, 2019 4,190,851.87$ 3,664,416.12$ 3,664,416.12$ -$
Revenues
Budgeted Amounts
DALLAS COUNTY R-I SCHOOL DISTRICTBUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS - GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2019
27
Modified Cash Basis Final
Original Final Actual to Actual
Local Sources 883,000.00$ 671,323.02$ 671,323.02$ -$
County Sources 82,000.00 99,374.58 99,374.58 -
State Sources 6,786,066.00 7,082,588.81 7,082,588.81 -
Federal Sources 1,067,182.00 918,345.60 918,345.60 -
Total Revenues 8,818,248.00 8,771,632.01 8,771,632.01 -
Expenditures
Current
Instruction 7,775,910.00 7,674,851.72 7,674,851.72 -
Attendance - - - -
Guidance 329,660.00 375,793.60 375,793.60 -
Health, Psych Speech & Audio - - - -
Improvement of Instruction 170,070.00 172,610.00 172,610.00 -
Professional Development 20,352.00 18,077.50 18,077.50 -
Media Services 182,333.00 184,082.76 184,082.76 -
Board of Education Services - 869.66 869.66 -
Executive Administration 496,276.00 502,981.38 502,981.38 -
Building Level Administration 520,172.00 526,407.54 526,407.54 -
Administrative Technology services - - - -
Business Central Services - - - -
Operation of Plant - - - -
Security Services - - - -
Pupil Transportation 59,911.00 59,923.66 59,923.66 -
Food Service - - - -
Central Office Support Services - - - -
Other Supporting Services - - - -
Adult Continuing Education - - - -
Community Services 168,978.00 170,604.40 170,604.40 -
Capital Outlay - - - -
Debt Service:
Principal - - - -
Interest and Charges - - - -
Total Expenditures 9,723,662.00 9,686,202.22 9,686,202.22 -
Revenues Collected Over (Under)
Expenditures (905,414.00) (914,570.21) (914,570.21) -
Other Financing Sources (Uses):
Transfers - 691,044.34 691,044.34 -
Sale of Bonds - - - -
Net Insurance Recovery - - - -
Sale of School Buses - - - -
Sale of Other Property - - - -
Refunding Bonds - - - -
Tuition from other Districts 33,000.00 31,025.87 31,025.87 -
Area Voc Fees from Other LEAS 200,000.00 192,500.00 192,500.00 -
Contracted Educational Services - - - -
Trans from other LEAS Non-Handi - - - -
Trans from other LEAS for Handi - - - -
Trans from other LEAS for ECSE Handi - - - -
Total Other Financing
Sources (Uses) 233,000.00 914,570.21 914,570.21 -
NET CHANGE IN FUND BALANCE (672,414.00) - - -
Fund Balance July 1, 2018 - - - -
Fund Balance June 30, 2019 -$ -$ -$ -$
Revenues
Budgeted Amounts
DALLAS COUNTY R-I SCHOOL DISTRICT
FOR THE YEAR ENDED JUNE 30, 2019BUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS - SPECIAL REVENUE FUND
28
Modified Cash Basis Final
Original Final Actual to Actual
Local Sources -$ -$ -$ -$
County Sources - - - -
State Sources - - - -
Federal Sources - - - -
Total Revenues - - - -
Expenditures
Current
Instruction - - - -
Attendance - - - -
Guidance - - - -
Health, Psych Speech & Audio - - - -
Improvement of Instruction - - - -
Professional Development - - - -
Media Services - - - -
Board of Education Services - - - -
Executive Administration - - - -
Building Level Administration - - - -
Administrative Technology services - - - -
Business Central Services - - - -
Operation of Plant - - - -
Security Services - - - -
Pupil Transportation - - - -
Food Service - - - -
Central Office Support Services - - - -
Other Supporting Services - - - -
Community Services - - - -
Capital Outlay - - - -
Debt Service:
Principal - - - -
Interest and Charges - - - -
Total Expenditures - - - -
Revenues Collected Over (Under)
Expenditures - - - -
Other Financing Sources (Uses):
Transfers - - - -
Sale of Bonds - - - -
Net Insurance Recovery - - - -
Sale of School Buses - - - -
Sale of Other Property - - - -
Refunding Bonds - - - -
Tuition from other Districts - - - -
Area Voc Fees from Other LEAS - - - -
Contracted Educational Services - - - -
Trans from other LEAS Non-Handi - - - -
Trans from other LEAS for Handi - - - -
Trans from other LEAS for ECSE Handi - - - -
Total Other Financing
Sources (Uses) - - - -
NET CHANGE IN FUND BALANCE - - - -
Fund Balance July 1, 2018 - - - -
Fund Balance June 30, 2019 -$ -$ -$ -$
Revenues
Budgeted Amounts
DALLAS COUNTY R-I SCHOOL DISTRICT
FOR THE YEAR ENDED JUNE 30, 2019BUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS - DEBT SERVICE FUND
29
Modified Cash Basis Final
Original Final Actual to Actual
Local Sources 489,920.00$ 485,512.21$ 485,512.21$ -$
County Sources - 17,838.99 17,838.99 -
State Sources 350,000.00 423,486.55 423,486.55 -
Federal Sources 76,167.00 - - -
Total Revenues 916,087.00 926,837.75 926,837.75 -
Expenditures
Current
Instruction 114,167.00 133,572.89 133,572.89 -
Attendance - - - -
Guidance - - - -
Health, Psych Speech & Audio - - - -
Improvement of Instruction - - - -
Professional Development - - - -
Media Services - - - -
Board of Education Services - - - -
Executive Administration 10,000.00 - - -
Building Level Administration - - - -
Administrative Technology services - 8,155.00 8,155.00 -
Business Central Services - - - -
Operation of Plant 280,000.00 191,500.03 191,500.03 -
Security Services - 15,250.00 15,250.00 -
Pupil Transportation 50,000.00 - - -
Food Service 15,000.00 8,912.50 8,912.50 -
Central Office Support Services - - - -
Other Supporting Services - - - -
Adult Continuing Education - - - -
Community Services - - - -
Capital Outlay 1,700,000.00 1,173,912.23 1,173,912.23 -
Debt Service:
Principal - 22,360.07 22,360.07 -
Interest and Charges - 3,353.97 3,353.97 -
Total Expenditures 2,169,167.00 1,557,016.69 1,557,016.69 -
Revenues Collected Over (Under)
Expenditures (1,253,080.00) (630,178.94) (630,178.94) -
Other Financing Sources (Uses):
Transfers 871,530.40 - - -
Sale of Bonds - - - -
Net Insurance Recovery 465.33 - - -
Sale of School Buses 8,818.00 - - -
Sale of Other Property 2,417.89 65,600.00 65,600.00 -
Refunding Bonds - - - -
Tuition from other Districts - - - -
Area Voc Fees from Other LEAS - - - -
Contracted Educational Services - - - -
Total Other Financing
Sources (Uses) 883,231.62 65,600.00 65,600.00 -
NET CHANGE IN FUND BALANCE (369,848.38) (564,578.94) (564,578.94) -
Fund Balance July 1, 2018 1,170,374.19 1,170,374.19 1,170,374.19 -
Fund Balance June 30, 2019 800,525.81$ 605,795.25$ 605,795.25$ -$
Revenues
Budgeted Amounts
DALLAS COUNTY R-I SCHOOL DISTRICT
FOR THE YEAR ENDED JUNE 30, 2019BUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS - CAPITAL PROJECTS FUND
30
Modified Cash Basis Final
Original Final Actual to Actual
Local Sources 7,047,470.00$ 6,654,878.09$ 6,654,878.09$ -$
County Sources 437,000.00 456,977.28 456,977.28 -
State Sources 7,997,566.00 8,156,119.43 8,156,119.43 -
Federal Sources 2,366,084.00 2,252,872.05 2,252,872.05 -
Total Revenues 17,848,120.00 17,520,846.85 17,520,846.85 -
Expenditures
Current
Instruction 9,848,578.00 9,890,647.75 9,890,647.75 -
Attendance 48,268.00 47,902.60 47,902.60 -
Guidance 381,660.00 409,348.57 409,348.57 -
Health, Psych Speech & Audio 177,819.00 176,961.61 176,961.61 -
Improvement of Instruction 325,753.00 359,460.70 359,460.70 -
Professional Development 66,914.00 57,063.27 57,063.27 -
Media Services 242,524.00 217,786.58 217,786.58 -
Board of Education Services 481,368.72 439,810.32 439,810.32 -
Executive Administration 1,295,482.00 827,644.58 827,644.58 -
Building Level Administration 825,839.00 833,485.15 833,485.15 -
Administrative Technology Services 728,730.00 766,669.14 766,669.14 -
Business Central Services - - - -
Operation of Plant 1,254,721.00 1,165,469.86 1,165,469.86 -
Security Services - 15,250.00 15,250.00 -
Pupil Transportation 1,425,747.00 1,457,470.82 1,457,470.82 -
Food Service 821,168.00 852,355.82 852,355.82 -
Central Office Support Services - - - -
Adult Continuing Education - - - -
Other Support Services - - - -
Community Services 223,261.00 225,253.09 225,253.09 -
Capital Outlay 1,700,000.00 1,173,912.23 1,173,912.23 -
Debt Service:
Principal - 22,360.07 22,360.07 -
Interest and Charges - 3,353.97 3,353.97 -
Total Expenditures 19,847,832.72 18,942,206.13 18,942,206.13 -
Revenues Collected Over (Under)
Expenditures (1,999,712.72) (1,421,359.28) (1,421,359.28) -
Other Financing Sources (Uses):
Transfers 871,530.40 - - -
Sale of Bonds - - - -
Net Insurance Recovery 465.33 - - -
Sale of School Buses 8,818.00 - - -
Sale of Other Property 2,417.89 65,600.00 65,600.00 -
Refunding Bonds - - - -
Tuition from other Districts 33,000.00 31,025.87 31,025.87 -
Area Voc Fees from Other LEAS - 192,500.00 192,500.00 -
Contracted Educational Services - - - -
Trans from other LEAS Non-Handi - - - -
Total Other Financing
Sources (Uses) 916,231.62 289,125.87 289,125.87 -
NET CHANGE IN FUND BALANCES (1,083,481.10) (1,132,233.41) (1,132,233.41) -
Fund Balance July 1, 2018 5,402,444.78 5,402,444.78 5,402,444.78 -
Fund Balance June 30, 2019 4,318,963.68$ 4,270,211.37$ 4,270,211.37$ -$
Revenues
Budgeted Amounts
DALLAS COUNTY R-I SCHOOL DISTRICT
FOR THE YEAR ENDED JUNE 30, 2019BUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS - ALL GOVERNMENTAL FUNDS
31
DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE BUDGETARY COMPARISON SCHEDULES
YEAR ENDED JUNE 30, 2019
32
Budgets and Budgetary Accounting The District follows these procedures in establishing the budgetary data reflected in the financial statements:
1) In accordance with Chapter 67, RSMo, the District adopts a budget for each fund of the political subdivision.
2) Prior to July, the Superintendent, who serves as the budget officer, submits to the Board of
Education a proposed budget for the fiscal year beginning July 1. The proposed budget includes estimated revenues and proposed expenditures for all district funds. Budgeted expenditures cannot exceed beginning available monies plus estimated revenues for the year.
3) A public hearing is conducted to obtain taxpayer comments. Prior to its approval by the Board
of Education, the budget document is available for public inspection.
4) On June 18, 2018, the budget was legally enacted by vote of the Board of Education.
5) Subsequent to its formal approval of the budget, the Board of Education has the authority to make necessary adjustments to the budget by formal vote of the board. Adjustments made during the year are reflected in the budget information included in the financial statements.
6) Budgets for District funds are prepared and adopted on the modified cash basis (budget basis),
recognizing revenues when collected and expenditures when paid.
DALLAS COUNTY R-I SCHOOL DISTRICT OTHER POST-EMPLOYMENT BENEFITS
YEAR ENDED JUNE 30, 2019
33
POST-EMPLOYMENT BENEFITS In addition to the pension benefits described in Note V, the District allows employees who retire from the District to participate in the District's health and dental insurance plans. Upon meeting the retirement requirements per PSRS and PEERS, the employees can elect to participate in the District's plans. The retirees must pay for 100% of their coverage for each plan in which they elect to participate. The premiums are based on a single-blended rate used for both active employees and retirees. The difference between the amount the retiree is required to pay and the actual cost to the District is considered to be a post-employment benefit. The District has not established an irrevocable trust fund for the accumulation of resources for the future payment of benefits under the plan; benefits are paid on a pay-as-you go basis. A stand-alone financial report is not available for the plan. During the year, all retirees pay the consortium directly and the District does not handle the payments from retirees.
The District has 32 former employees that participated in Cobra as of June 30, 2019. The premiums were paid directly to the consortium so the District does not handle the payments from COBRA Participants.
STATE COMPLIANCE SECTION
34
INDEPENDENT ACCOUNTANT’S REPORT ON MANAGEMENT’S ASSERTIONS
ABOUT COMPLIANCE WITH SPECIFIED REQUIREMENTS OF MISSOURI STATE LAWS AND REGULATIONS
To the Members of the Board of Education Dallas County R-I School District Report on Compliance with State Requirements
We have examined management’s assertions that the Dallas County R-I School District (“District”) complied with the requirements of Missouri laws and regulations regarding budgetary and disbursement procedures; accurate disclosure by the District’s records of average daily attendance and average daily transportation of pupils, and other statutory requirements as listed in the Schedule of Selected Statistics for the year ended June 30, 2019.
Management’s Responsibility
Management is responsible for the District’s compliance with the aforementioned requirements.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s assertions about the District’s compliance based on our examination. Our examination was made in accordance with the attestation standards established by the American Institute of Certified Public Accountants and, accordingly, includes examining, on as test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our opinion does not provide a legal determination on the District’s compliance with specified requirements.
Opinion on Compliance with State Requirements
In our opinion, management’s assertions that the Dallas County R-I School District complied with the aforementioned requirements for the year ended June 30, 2019, are fairly stated, in all material respects. This report is intended solely for the information and use of the Board of Education, District management, the Missouri Department of Elementary and Secondary Education and other audit agencies and is not intended to be and should not be used by anyone other than these specified parties.
DANIEL JONES & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS ARNOLD, MISSOURI December 9, 2019
DALLAS COUNTY R-I SCHOOL DISTRICT DISTRICT COUNTY NUMBER 030-093
SCHEDULE OF SELECTED STATISTICS YEAR ENDED JUNE 30, 2019
35
1. CALENDAR (SECTIONS 160.041, 171.029, 171.031, AND 171.033 RSMO)
School Begin End Half Day Standard Hours InCode Grade Grade Indicator Day Length Days Session
1050 9 12 6.6500 164 1,084.3000 3000 5 8 6.6500 164 1,084.3000 4020 K 4 6.6500 164 1,084.3000
2. AVERAGE DAILY ATTENDANCE (ADA)
School Grade Full- Part- Remedial SummerCode Level Time Time Hours Other School Total
1050 9-12 451.7016 2.9449 3.8007 0.9289 6.4889 465.8650 3000 5-8 536.5150 1.6015 - - 23.2232 561.3397 4020 K-4 560.7550 - 0.3615 0.8561 24.1008 586.0734
Total 1,548.9716 4.5464 4.1622 1.7850 53.8129 1,613.2781
3. SEPTEMBER MEMBERSHIP
School Grade Full- Part-Code Level Time Time Other Total
1050 9-12 498.00 2.67 - 500.67 3000 5-8 572.00 1.12 - 573.12 4020 K-4 606.00 - - 606.00
Total 1,676.00 3.79 - 1,679.79
4. FREE AND REDUCED PRICED LUNCH FTE COUNT (SECTION 163.011(6), RSMO)
School Free Reduced Deseg In Deseg InCode Lunch Lunch Free Reduced Total
1050 211.00 45.00 - - 256.00 3000 287.12 67.00 - - 354.12 4020 344.00 45.00 - - 389.00
Total 842.12 157.00 - - 999.12
DALLAS COUNTY R-I SCHOOL DISTRICT DISTRICT COUNTY NUMBER 030-093
SCHEDULE OF SELECTED STATISTICS YEAR ENDED JUNE 30, 2019
36
5. FINANCE
5.1 The District maintained a calendar in accordance with 160.041, 171.029, 171.031, and 171.033, RSMo and all attendance hours were reported.
TRUE
5.2 The District maintained complete and accurate attendance records
allowing for the accurate calculation of Average Daily Attendance for all students in accordance with all applicable state rules and regulations. Sampling of records included those students receiving instruction in the following categories:
TRUE
Academic Programs Off-Campus N/A Career Exploration Program – Off Campus TRUE Cooperative Occupational Education (COE) or Supervised
Occupational Experience Program
TRUE Dual Enrollment N/A Homebound Instruction TRUE Missouri Options TRUE Prekindergarten eligible to be claimed for state aid N/A Remediation TRUE Sheltered Workshop participation N/A Students participating in the school flex program N/A Traditional instruction (full and part-time students) TRUE Virtual instruction (MOCAP or other option) TRUE Work Experience for Students with Disabilities TRUE 5.3 The District maintained complete and accurate attendance records
allowing for the accurate calculation of September Membership for all students in accordance with all applicable state rules and regulations.
TRUE
5.4 The District maintained complete and accurate attendance and other
applicable records allowing for the accurate reporting of the State FTE count for Free and Reduced Lunch for all students in accordance with all applicable state rules and regulations.
TRUE
5.5 As required by Section 162.401, RSMo, a bond was purchased for
the district’s treasurer in the total amount of:
$50,000 5.6 The District’s deposits were secured during the year as required by
Sections 110.010 and 110.020, RSMo.
TRUE 5.7 The District maintained a separate bank account for all Debt Service
Fund monies in accordance with Section 108.180 and 165.011, RSMo. (Not applicable to charter schools)
N/A
DALLAS COUNTY R-I SCHOOL DISTRICT DISTRICT COUNTY NUMBER 030-093
SCHEDULE OF SELECTED STATISTICS YEAR ENDED JUNE 30, 2019
37
5. FINANCE (Concluded)
5.8 Salaries reported for educators in the October MOSIS Educator Core
and Educator School files are supported by complete and accurate payroll and contract records.
TRUE
5.9 If a $162,326 or 7% x SAT x WADA transfer was made in excess of
adjusted expenditures, the board approve a resolution to make the transfer, which identified the specific projects to be funded by the transfer and an expected expenditure date for the projects to be undertaken. (Not applicable to charter schools)
N/A
5.10 The District published a summary of the prior year’s audit report
within thirty days of the receipt of the audit pursuant to Section 165.121, RSMo.
TRUE
5.11 The District has a professional development committee plan adopted
by the board with the professional development committee plan identifying the expenditure of seventy-five percent (75%) of one percent (1%) of the current year basic formula apportionment. Remaining 25% of 1% if not spent must be restricted and spent on appropriate expenditures in the future. Spending requirement is modified to seventy-five percent (75%) of one half percent (1/2%) of the current year basic formula apportionment if through fiscal year 2024 the amount appropriated and expended to public schools for transportation is less than twenty-five percent (25%) of allowable cost. (Not applicable to charter schools.)
TRUE
5.12 The amount spent for approved professional development committee
plan activities was:
$57,063.27
DALLAS COUNTY R-I SCHOOL DISTRICT DISTRICT COUNTY NUMBER 030-093
SCHEDULE OF SELECTED STATISTICS YEAR ENDED JUNE 30, 2019
38
6. TRANSPORTATION (SECTION 163.161, RSMO)
6.1 The school transportation allowable costs substantially conform to 5 CSR 30-261.040, Allowable Costs for State Transportation Aid
TRUE
6.2 The District’s school transportation ridership records are maintained in a manner to accurately disclose in all material respects the average number of regular riders transported
TRUE
6.3 Based on the ridership records, the average number of students (non-
disabled K-12, K-12 students with disabilities and career education) transported on a regular basis (ADT) was:
Eligible ADT 1,175
Ineligible ADT 81
6.4 The District’s transportation odometer mileage records are
maintained in a manner as to accurately disclose in all material respects the eligible and ineligible mileage for the year
TRUE
6.5 Actual odometer records show the total District-operated and
contracted mileage for the year was:
481,427 6.6 Of this total, the eligible non-disabled and students with disabilities
route miles and the ineligible non-route and disapproved miles (combined) was:
Eligible Miles 414,989
Ineligible Miles (Non-Route/Disapproved) 66,438
6.7 Number of days the District operated the school transportation
system during the regular school year:
164
DALLAS COUNTY R-I SCHOOL DISTRICT SCHEDULE OF STATE FINDINGS
YEAR ENDED JUNE 30, 2019
39
I. Chapter 67 RSMO (Budget Statute)
Chapter 67 RSMo requires that each political subdivision of the State of Missouri adopts an annual budget, itemized by fund. It further requires that in no event shall the total proposed expenditures from any fund exceed the estimated revenues to be received plus any unencumbered balance or less any deficit estimated for the beginning of the budget year.
There were no state budget findings for the year ended June 30, 2019. II. Other Findings
There were no other state findings for the year ended June 30, 2019.
FEDERAL COMPLIANCE SECTION
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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 AUDITOR’S REPORT
To the Members of the Board of Education Dallas County R-I School District
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of Dallas County R-I School District (District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 9, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2019-001, 2019-002 and 2019-003 that we consider to be a significant deficiencies.
41
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. District’s Response to Findings The District’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The District’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
DANIEL JONES & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS ARNOLD, MISSOURI December 9, 2019
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REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
INDEPENDENT AUDITOR’S REPORT
To the Members of the Board of Education Dallas County R-I School District Report on Compliance for Each Major Federal Program
We have audited Dallas County R-I School District’s (District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended June 30, 2019. The District’s major federal 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 the District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District’s compliance. Opinion on Each Major Federal Program
In our opinion, the 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.
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Report on Internal Control Over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
DANIEL JONES & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS ARNOLD, MISSOURI
December 9, 2019
Cash Federal Expenditures
Federal Grantor Federal Pass-Through Entity Pass-through Grantor CFDA Identifying Provided Total Federal Program Title Number Number to Subrecipients Expenditures
U.S. Department of Education Passed-through Missouri Department of Elementary and Secondary Education
Special Education Cluster: Special Education Grants to States - IDEA 84.027 030-093 -$ 388,112.00$ Special Education Grants to States - Early Childhood 84.027 030-093 - 8,293.83 Special Education Grants to States - High Need Fund 84.027 030-093 - 6,701.01 Special Education Preschool Grants 84.137 030-093 - 8,784.00
Total Special Education Cluster - 411,890.84
Career and Technical Education 84.048 030-093 - 98,542.19 Title I Grants to Local Educational Agencies 84.010 030-093 - 850,458.94 21st Century Grant- Community Learning Centers 84.287 030-093 - 219,442.16 Rural Education 84.358 030-093 - 25,782.85
Total U.S. Department of Education - 1,606,116.98
U.S. Department of Agriculture Passed-through Missouri Department of Elementary and Secondary Education Child Nutrition Cluster: School Breakfast Program 10.553 030-093 - 203,458.50 National School Lunch Program - Commodities 10.555 030-093 - 51,057.39 National School Lunch Program 10.555 030-093 - 424,829.63 National School Snack Payment 10.555 030-093 - 18,726.26
Total U.S. Department of Agriculture and Child Nutrition Cluster - 698,071.78
Total Federal Expenditures -$ 2,304,188.76$
DALLAS COUNTY R-I SCHOOL DISTRICTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2019
The notes to the Schedule of Expenditures of Federal Awards are an integral part of this statement.
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DALLAS COUNTY R-I SCHOOL DISTRICT NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2019
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NOTE 1 – BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the Dallas County R-I School District under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Dallas County R-I School District, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Dallas County R-I School District.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the modified cash basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
NOTE 3 – INDIRECT COST RATE The District has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
NOTE 4 - RELATIONSHIP TO ACCOMPANYING FINANCIAL STATEMENTS Federal awards are reported in the District's accompanying financial statements as follows:
Federal Sources General Fund $1,334,526.45Special Revenue Fund 918,345.60 Total $2,252,872.05
NOTE 5 – RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the accompanying schedule agree with the amounts reported in the related federal financial reports except for changes made to reflect amounts in accordance with the Modified Cash Basis of Accounting. NOTE 6 –MATCHING REVENUES For those funds that have matching revenues and state funding, federal expenditures were determined by deducting matching revenues from total expenditures. NOTE 7 – NON-CASH PROGRAMS The commodities received, which are non-cash revenues, are valued using prices provided by the United States Department of Agriculture.
DALLAS COUNTY R-I SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2019
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I. SUMMARY OF AUDITOR’S RESULTS
A. Financial Statements 1. Type of auditor’s report issued: Unmodified 2. Internal control over financial reporting:
a. Material weakness(es) identified? Yes X No
b. Significant deficiency(ies) identified?
X Yes
None Reported
3. Noncompliance material to financial statements
noted?
Yes
X
No
B. Federal Awards
1. Internal control over major federal programs:
a. Material weakness(es) identified? Yes X No
b. Significant deficiency(ies) identified?
Yes
X
None Reported
2. Type of auditor’s report issued on compliance for major federal programs: Unmodified
3. Any audit findings disclosed that are required to be
reported in accordance with 2 CFR 200.516(a)?
Yes
X
No
4. Identification of major federal programs: CFDA Number(s): Name of Federal Program or Cluster:
10.555, 10.553 Child Nutrition Cluster
84.287 Twenty-First Century Community Learning
Centers 84.027, 84.173 Special Education Cluster 5. Dollar threshold used to distinguish between type A and type B programs: $ 750,000
6. Auditee qualified as low-risk auditee? Yes X No
DALLAS COUNTY R-I SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2019
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Section II – FINANCIAL STATEMENT FINDINGS
2019-001 Criteria: SAS No. 55, Consideration of Internal Control in a Financial Statement Audit, as amended by
SAS No. 78, Consideration of Internal Control in a Financial Statement Audit: An Amendment to SAS No. 55.
Condition: Lack of sufficient segregation of duties.
Context: We, the auditors, noted a small staff with lack of segregation of duties.
Effect: The design of the internal control over financial reporting that could adversely affect the ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements.
Cause: Size and budget constraints limiting the number of personnel within the accounting department.
Recommendation: These areas should be reviewed periodically and consideration given to improving the segregation of duties.
Views of responsible officials and planned corrective actions: The limited number of available personnel prohibits segregation of incompatible duties and the District does not have the resources to hire additional personnel.
2019-002 Criteria: Management is responsible for the preparation and fair presentation of the financial
statements. Condition: Lack of training in preparation of financial statements.
Context: We, the auditors, noted that management needed assistance with preparation of the financial statements.
Effect: Incorrect financial information could lead to erroneous decisions made using those financial
statements. Cause: Lack of training in preparation of financial statements. Recommendation: We recommend management seek additional training in the preparation of the
District’s financial statements. Views of responsible officials and planned corrective actions: The District (with assistance from its
auditor and school business organization in Missouri) will seek and identify training which would benefit our staff who prepares financial statements in the 2019-2020 school year.
DALLAS COUNTY R-I SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2019
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Section II – FINANCIAL STATEMENT FINDINGS (Concluded)
2019-003 Criteria: Management is responsible for the accuracy and completeness of financial records. Condition: Payroll is not properly recorded.
Context: We, the auditors, noted that contracts did not agree to the amount paid per payroll and an employee was not given his or her salary increase for the year that the Board approved it due to the District not updating contracts once the Board approved raises. We also noted four employees whose retirement could not be recalculated.
Effect: Employees could be improperly paid. Cause: Payroll records were not updated after the Board approved raises. Recommendation: We recommend management implement procedures to update contracts after the
Board approves changes. Views of responsible officials and planned corrective actions: The District does not intend to issue
contracts multiple times each year, and with the State of Missouri financial conditions it is not possible to issue contracts with the raised amount prior to April 15th. The District believes multiple contracts being issued would cause confusion and can create a legal issue regarding acceptance of contracts. The District plans to increase communication with our payroll staff regarding the correct amounts being paid following board approved raises.
Section III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no federal award findings or questioned costs for the year ended June 30, 2019.
DALLAS COUNTY R-I SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2019
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I. PRIOR YEAR FINDINGS – FINANCIAL STATEMENT AUDIT
Finding: FS 2018-001 Criteria: SAS No. 55, Consideration of Internal Control in a Financial Statement Audit, as amended by SAS No. 78, Consideration of Internal Control in a Financial Statement Audit: An Amendment to SAS No. 55.
Condition: Lack of sufficient segregation of duties.
Context: We, the auditors, noted a small staff with lack of segregation of duties.
Effect: The design of the internal control over financial reporting that could adversely affect the ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements.
Cause: Size and budget constraints limiting the number of personnel within the accounting department.
Recommendation: These areas should be reviewed periodically and consideration given to improving the segregation of duties.
Views of responsible officials and planned corrective actions: The limited number of available personnel prohibits segregation of incompatible duties and the District does not have the resources to hire additional personnel. Status: This finding has not been resolved as is repeated as current year finding 2019-001.
II. PRIOR YEAR FINDINGS – FEDERAL AWARDS
There were no federal award findings or questioned costs for the year ended June 30, 2018.
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APPENDIX C
DEFINITIONS OF WORDS AND TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS
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APPENDIX C
DEFINITIONS OF WORDS AND TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS
The summaries of the Declaration of Trust, the Lease and the Base Lease contained in this Appendix C do not purport to be comprehensive or definitive and are qualified in their entirety by reference to such documents, copies of which may be viewed at the designated corporate office of the Trustee, or will be provided by the Trustee to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request.
DEFINITIONS The definitions of certain words and terms used in this Official Statement are set forth below: “Additional Certificates” means any Certificates executed and delivered pursuant to the Declaration of Trust.
“Architect” means Dake Wells Architecture, Springfield, Missouri, or any other architect or engineer
hired by the District with respect to the Improvements.
“Authorized Representative” means the President or the Vice President of the Board of Education or any other person designated as an Authorized Representative by the Superintendent, such designation being approved by the governing body of the District by a resolution or order that is filed with the Trustee. “Available Revenues” means, for any Fiscal Year, any balances of the District from previous Fiscal Years encumbered to pay Rent, amounts budgeted or appropriated by the District for such Fiscal Year plus any unencumbered balances of the District from previous Fiscal Years that are legally available to pay Rent during such Fiscal Year, plus all moneys and investments, including earnings thereon, held by the Trustee pursuant to the Declaration of Trust. “Base Lease” means the Base Lease dated as of March 15, 2020, between the District, as lessor, and the Trustee, as lessee. “Basic Rent” means the Basic Rent Payments comprised of a Principal Portion and an Interest Portion. “Basic Rent Payment” means a payment of Basic Rent. “Basic Rent Payment Date” means each April 1 and October 1 during the Lease Term, commencing on April 1, 2021. “Business Day” means a day other than (a) a Saturday, Sunday or legal holiday, (b) a day on which banks located in any city in which the principal payment office or designated payment office of the Trustee is located are required or authorized by law to remain closed, or (c) a day on which the Securities Depository or the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., as nominee name of The Depository Trust Company, New York, New York, and any successor nominee of the Securities Depository with respect to the Certificates. “Certificate Payment” means the payments to be made to the Owners of the Certificates, whether representing Interest Portion only or Principal Portion and Interest Portion of Basic Rent under the Lease. “Certificates” means the Series 2020 Certificates and any Additional Certificates.
C-2
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. “Completion Certificate” means the certificate of the District given in accordance with the Lease. “Completion Date” means the date of completion of the Improvements as that date shall be certified as provided in the Lease. “Construction Agreement” means one of any agreements between the District and various parties, if any, providing for the acquisition, construction and installation of various portions of the Improvements. “Continuing Disclosure Undertaking” means the Continuing Disclosure Undertaking dated as of March 23, 2020, entered into by the District, as from time to time amended. “Costs of Improvements” means all reasonable or necessary expenses related or incidental to the acquisition and construction of the Improvements, including the expenses of studies, surveys, title policies, architectural and engineering services, legal and other special services and all other necessary and incidental expenses, including the Interest Portion of Basic Rent to the Completion Date. The term Costs of Improvements includes Costs of Issuance. “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the District or the Trustee and related to the authorization, execution, sale and delivery of the Certificates, including but not limited to advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, initial fees and charges of the Trustee, fees and charges of Special Counsel, legal fees of parties to the transaction, the fees of a financial advisor to the District, if any, and all other initial fees and disbursements contemplated by the Lease and the Declaration of Trust. “Declaration of Trust” means the Declaration of Trust dated as of March 15, 2020, made by the Trustee, as the same may from time to time be amended or supplemented in accordance with its terms. “Directive” means an instrument in writing executed in one or more counterparts by the Owners of Certificates, as determined from the records of the Trustee, or their lawful attorneys-in-fact, representing no less than a majority of the aggregate unpaid Principal Portion distributable to Owners of the then Outstanding Certificates. “District” means Dallas County R-I School District, a seven-director school district duly created, organized and existing under and by virtue of the laws of the State of Missouri, and its successors. “Event of Default” with respect to the Lease has the meaning specified under the caption “SUMMARY OF THE LEASE - Events of Default” and with respect to the Declaration of Trust has the meaning specified under the caption “SUMMARY OF THE DECLARATION OF TRUST - Events of Default.” “Event of Lease Default” means an Event of Default under the Lease. “Event of Nonappropriation” means an Event of Nonappropriation as described under the caption “SUMMARY OF THE LEASE - Nonappropriation.” “Fiscal Year” means the fiscal year of the District, currently the twelve-month period beginning July 1 and ending on June 30. “Funds” means, collectively, the Project Fund, the Lease Revenue Fund, the Rebate Fund, and all accounts therein.
C-3
“Government Obligations” means (a) direct noncallable obligations of the United States of America and obligations the timely payment of principal and interest on which is fully and unconditionally guaranteed by the United States of America, and (b) trust receipts or certificates evidencing participation or other direct ownership interests in principal or interest payments to be made upon obligations described in clause (a) above that are held in a custody or trust account free and clear of all claims of persons other than the holders of such trust receipts or certificates. “Improvements” means constructing, furnishing and equipping a new technical center and agricultural facility and related site improvements, as described in the Lease, being financed with Proceeds of the Series 2020 Certificates, including any modifications, additions, improvements, replacements or substitutions thereto or therefor. “Interest Portion” means the portion of each Basic Rent Payment that represents the payment of interest. “Investment Securities” means and includes any of the following securities, if and to the extent the same are permitted by law: (a) Government Obligations; (b) other obligations issued by or on behalf of agencies or instrumentalities of the United
States of America except for the Federal Farm Credit Bank;
(c) negotiable certificates of deposit, demand deposits and other deposit arrangements, repurchase agreements, and investment agreements issued by banks or trust companies, including without limitation, the Trustee and its affiliates, continuously secured (to the extent not fully insured by the Federal Deposit Insurance Corporation), for the benefit of the Trustee by lodging with a bank or trust company (which may or may not be the bank or trust company issuing such negotiable certificates of deposit, repurchase agreement or investment agreement), as collateral security, Government Obligations having a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit, demand deposits and other deposit arrangements; and
(d) any other securities of investments that are lawful for the investment of moneys held in such funds or accounts under the laws of the State of Missouri.
“Lease” or “Lease Agreement” means the Lease Purchase Agreement dated as of March 15, 2020, between the Trustee, as lessor, and the District, as lessee, as amended and supplemented from time to time in accordance with its terms. “Lease Revenue Fund” means the fund by that name established pursuant to the Declaration of Trust. “Lease Revenues” means the Basic Rent Payments, Supplemental Rent Payments and all other amounts due and owing pursuant to or with respect to the Lease, including prepayments, insurance proceeds, condemnation proceeds, and any and all interest, profits or other income derived from the investment thereof in any fund or account established pursuant to the Declaration of Trust. “Leased Property” means the Real Property and the Improvements. “Net Proceeds” means the amount remaining from the gross proceeds of any insurance claim, condemnation award or sale under threat of condemnation after deducting all reasonable expenses, including attorneys’ fees, incurred in the collection thereof.
C-4
“Notice by Mail” or “Notice” of any action or condition “by Mail” means a written notice meeting the requirements of the Declaration of Trust mailed by first-class mail to the Owners of specified Certificates at the addresses shown on the registration books maintained by the Registrar. “Opinion of Counsel” means a written opinion of counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the District. “Original Term” means the period from the date of delivery of the Series 2020 Certificates, until the end of the Fiscal Year then in effect. “Outstanding” means, as of the date of determination, all Certificates theretofore executed and delivered pursuant to the Declaration of Trust except (i) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation, (ii) Certificates for the transfer or exchange of or in lieu of or in substitution for which other Certificates shall have been executed and delivered by the Trustee pursuant to the Declaration of Trust, (iii) Certificates whose payment or prepayment has been provided for, and (iv) Certificates paid or deemed to be paid pursuant to the Declaration of Trust. “Owner” of a Certificate means the registered owner of such Certificate as shown on the register kept by the Registrar. “Participants” means those financial institutions for whom the Securities Depository effects book-entry transfers and pledges of securities deposited with the Securities Depository, as such listing of Participants exists at the time of such reference. “Prepayment Date” means any date set for prepayment of the Principal Portion of Basic Rent distributable to Owners of Certificates. “Prepayment Price” means with respect to any Certificate (or portion thereof) the amount specified in the Declaration of Trust. “Principal Portion” means the principal portion of the Basic Rent Payments. “Proceeds” means the aggregate moneys initially paid to the Trustee for the Certificates. “Project Fund” means the fund by that name established pursuant to the Declaration of Trust. “Purchase Price” means the amount designated as such in the Lease that the District shall pay to the Trustee to purchase the Trustee’s interest in the Leased Property. “Real Property” means the real property described in the Lease. “Rebate Fund” means the fund by that name established pursuant to the Declaration of Trust. “Record Date” means the 15th day of the month (whether or not a Business Day) prior to the applicable Basic Rent Payment Date. “Registrar” means the Trustee when acting in that capacity, or its successor as Registrar. “Renewal Term” means each renewal term of the Lease, each having a duration of one year and a term coextensive with the then current Fiscal Year as provided in the Lease, except that the last possible Renewal Term shall end on April 2, 2045. “Rent” means, collectively, Basic Rent and Supplemental Rent.
C-5
“Rent Payment” means a payment of Rent. “Representation Letter” means the Blanket Representation Letter from the District to the Securities Depository. “Securities Depository” means, initially, The Depository Trust Company, New York, New York, and its successors and assigns. “Series 2020 Certificates” means the $12,605,000* aggregate principal amount Certificates of Participation (Dallas County R-I School District Technical Center Project), Series 2020, evidencing a proportionate interest in Basic Rent Payments to be made by Dallas County R-I School District, pursuant to an Annually Renewable Lease Purchase Agreement, executed and delivered pursuant to the Declaration of Trust.
“Special Counsel” means Gilmore & Bell, P.C., or any other attorney or firm of attorneys (which is mutually acceptable to the District and the Trustee) of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on obligations issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America. “State” means the State of Missouri. “Supplemental Declaration of Trust” means any amendment or supplement to the Declaration of Trust entered pursuant to the Declaration of Trust. “Supplemental Lease” means any amendment or supplement to the Lease entered pursuant to the Lease. “Supplemental Rent” means all amounts due under the Lease other than Basic Rent. “Supplemental Rent Payment” means a payment of Supplemental Rent. “Tax Compliance Agreement” means, with respect to a series of Certificates, the Tax Compliance Agreement entered by the District and the Trustee in connection with the execution and delivery of each series of Certificates. “Trust Estate” means the assets, property and interests held by the Trustee pursuant to the Declaration of Trust and the Lease. “Trustee” means BOKF, N.A., Kansas City, Missouri, and its successor or successors and their respective assigns. “Underwriter” means [Underwriter], the original purchaser of the Series 2020 Certificates.
SUMMARY OF THE DECLARATION OF TRUST General Provisions The Declaration of Trust is made by the Trustee. The Declaration of Trust authorizes the Trustee to execute and deliver the Series 2020 Certificates, provides the terms of the Series 2020 Certificates and provides for various Funds related to the Leased Property and the Lease.
* Preliminary, subject to change.
C-6
Trust Estate The Trustee has executed and delivered the Declaration of Trust in order to secure the payment of the Principal Portions of Basic Rent Payments, premium, if any, and Interest Portions of Basic Rent Payments distributable to Owners of the Certificates, and to secure the performance and observance of all covenants and conditions contained in the Certificates and the Declaration of Trust. The Trustee has further declared that it will hold all of the assets, property and interests received by it under the terms of the Declaration of Trust, the Base Lease and the Lease and all agreements and instruments contemplated thereby (except amounts in the Rebate Fund, and except any compensation, indemnification or other amounts that are due directly to the Trustee thereunder) (collectively, the “Trust Estate”), as trustee, upon the terms and trusts set forth in the Declaration of Trust, for the equal and proportionate benefit, security and protection of all present and future Owners of the Certificates, without privilege, priority or distinction as to the lien or otherwise of any of the Certificates over any of the other Certificates. Additional Certificates Additional Certificates evidencing the right of the Owners thereof to receive the Principal Portion and the Interest Portion of such additional Basic Rent may be executed and delivered under and equally and ratably secured by the Declaration of Trust on a parity with the Series 2020 Certificates and any other Additional Certificates, at any time and from time to time, upon compliance with the conditions provided in the Declaration of Trust, for any of the following purposes: (i) To provide funds to pay all or any part of the costs of repairing, replacing or restoring
the Leased Property in the event of damage, destruction or condemnation thereto or thereof, but only to the extent that such costs exceed the Net Proceeds of the insurance or condemnation awards out of which such costs are to be paid pursuant to the Lease.
(ii) To provide funds to pay all or any part of the costs of acquisition, construction,
renovation, furnishing and equipping of additions to the Leased Property or other facilities that may be added to the Leased Property, all as the District may deem necessary or desirable.
(iii) To provide funds for refunding all or any portion of the Certificates of any series then
Outstanding, including the payment of any premium thereon and interest to accrue to the designated prepayment date and any expenses in connection with such refunding.
(iv) Any other purpose permitted by law as the District may deem necessary or desirable.
The principal amount of any Additional Certificates may include an amount sufficient to pay the costs and expenses of delivery, any required funding of reserves and such capitalized amounts as are permitted by law. Establishment of Funds There is established with the Trustee the following funds and accounts: (a) Project Fund; (b) Lease Revenue Fund; and (c) Rebate Fund. All funds and accounts established pursuant to the Declaration of Trust, except the Rebate Fund, shall be held by the Trustee in trust for the benefit of the Certificate Owners. The money in all of the funds and the accounts will be held in trust and applied as provided in the Declaration of Trust.
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Application of Lease Revenues Lease Revenues will be deposited, as received, pursuant to the Lease, as follows: (a) The Basic Rent will be deposited to the Lease Revenue Fund.
(b) Optional prepayments of the Principal Portion of Basic Rent (in amounts equal to the applicable Prepayment Price) will be deposited to the Lease Revenue Fund.
(c) Payments of Supplemental Rent pursuant to the Lease will be applied as provided in the Lease.
Undesignated payments of Rent that are insufficient to discharge the full amount then due will be applied first to the Interest Portion of Basic Rent, next to the Principal Portion of Basic Rent and finally to Supplemental Rent. Disbursements from the Project Fund Moneys in the Project Fund will be used to pay Costs of Improvements. Payment will be made from moneys in the Project Fund upon receipt by the Trustee of a requisition certificate therefor signed by an Authorized Representative of the District and, except for requisitions for Costs of Issuance, an architect, engineer or contractor (which architect, engineer or contractor shall not be an employee of the District). In making disbursements for Costs of Improvements, the Trustee will be entitled to conclusively rely upon each written requisition certificate executed by the Authorized Representative of the District and, if required, by an architect, engineer or contractor, without inquiry or investigation. It is understood that the Trustee will not make any inspections of the Leased Property, make any provision to obtain completion bonds, mechanic’s or materialmen’s lien releases or otherwise supervise any phase of the construction or furnishing of the Leased Property. The approval of each requisition certificate by the Authorized Representative of the District will constitute unto the Trustee an irrevocable determination that all conditions precedent to the payment of the specified amounts from the Project Fund have been completed. The Trustee will make disbursements to pay Costs of Improvements for which any such request is made within five Business Days of the receipt of a properly executed certificate with all necessary supporting information. The Completion Date of the Improvements and the payment of all Costs of Improvements (other than Costs of Improvements for which sufficient amounts are retained in the Project Fund in accordance with the Lease) will be evidenced by the filing with the Trustee of the Completion Certificate pursuant to the Lease. Upon receipt of the Completion Certificate, any moneys remaining in the Project Fund will be transferred by the Trustee without further authorization to the Lease Revenue Fund. In the event of the acceleration of all of the Certificates pursuant to the Declaration of Trust, any moneys then remaining in any account of the Project Fund will be transferred and deposited to the credit of the Lease Revenue Fund and will be used to pay Basic Rent to be distributed to the Owners of Certificates of the same series from which the account within the Project Fund was established. Application of Moneys in the Lease Revenue Fund Except as otherwise provided in the Declaration of Trust, all amounts in the Lease Revenue Fund will be used and withdrawn by the Trustee solely to pay Basic Rent distributable to Owners of the Certificates when due and payable or on a Prepayment Date.
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Payments Due on Days other than Business Days In any case where the date of maturity of Principal Portions of Basic Rent Payments, premium, if any, or Interest Portions of Basic Rent Payments distributable to Owners of the Certificates or the date fixed for prepayment of any Certificates is not a Business Day, then payment of Principal Portions of Basic Rent Payments, premium, if any, or Interest Portions of Basic Rent Payments distributable to Owners of the Certificates need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest will accrue for the period after such date. Separate Accounting of Funds Allocable to each Series of Certificates The Trustee will maintain separate accounts for funds and securities attributable to each series of Certificates in the Funds held by the Trustee under the Declaration of Trust so that the calculations for each series of Certificates can be made separately for such series. Any transfer of funds or securities or earnings thereon from one fund or account to another will be made to the appropriate account or subaccount of the same series of Certificates to which such funds or securities are attributed. If, at any time, a payment is made to any such fund that is less than the amount due and payable to such fund, the amount payable will be credited pro rata to each such separate account within such fund, based on the amount owed to each such account. Investment of Moneys in Various Funds Moneys held in the Project Fund and the Lease Revenue Fund will, subject to the requirements of the Tax Compliance Agreement and as provided in the Declaration of Trust, be invested and reinvested by the Trustee, pursuant to written direction of the District, signed by an Authorized Representative of the District, in Investment Securities that mature or are subject to prepayment by the holder prior to the date such funds will be needed. The Trustee will sell and reduce to cash a sufficient amount of such Investment Securities held by the Trustee in any fund held under the Declaration of Trust whenever the cash balance in such Fund is insufficient for the purpose of such Fund. Any such Investment Securities will be held by or under the control of the Trustee and will be deemed at all times a part of the Fund or account in which such moneys are originally held, and the interest accruing thereon and any profit realized from such Investment Securities will be credited to such Fund or account, and any loss resulting from such Investment Securities will be charged to such Fund or account. For purposes of determining the amount in any Fund or account, the value of any investments will be computed at the market value thereof (excluding accrued interest), the purchase price thereof (excluding accrued interest) or principal amount, whichever is lower. The Trustee may, in making or disposing of any investment permitted by the Declaration of Trust, deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. Amendments to the Declaration of Trust, the Lease or the Base Lease The Declaration of Trust, the Lease and the Base Lease and the rights and obligations of the District and of the Owners of the Certificates and of the Trustee may be modified or amended from time to time and at any time by an amendment or supplement hereto or thereto that the parties hereto or thereto may enter into when the written consent of the Trustee and the District, if not a party hereto or thereto, and the Owners of a majority in aggregate Principal Portion of Basic Rent Payments distributable to Owners of the Certificates then Outstanding has been filed with the Trustee. No such modification or amendment will (i) extend the stated maturity of any Certificate, or reduce the amount of principal represented thereby, or extend the time of payment or reduce the amount of any Prepayment Price provided in the Declaration of Trust for the payment of any Certificate, or
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reduce the rate of interest with respect thereto, or extend the time of payment of interest with respect thereto without the consent of the Owner of each Certificate so affected, (ii) reduce the aforesaid percentage of Certificates the consent of the Owners of which is required to effect any such modification or amendment or, except in connection with the delivery of any Additional Certificates, permit the creation of any lien on the moneys in the Project Fund, the Lease Revenue Fund, or deprive the Owners of the trust created by the Declaration of Trust with respect to the moneys in the Project Fund or the Lease Revenue Fund, or (iii) create a preference or priority of any Certificate or Certificates over any other Certificate or Certificates without the consent of the Owners of all of the Certificates then Outstanding. Promptly after the execution by the Trustee of any amendment pursuant to the Declaration of Trust, the Trustee will give Notice by Mail, setting forth in general terms the substance of such amendment to the Owners at the addresses listed on the registration books kept by the Trustee pursuant to the Declaration of Trust. Any failure to give such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amendment. Notwithstanding the foregoing paragraph, the Declaration of Trust, the Lease or the Base Lease and the rights and obligations of the District, of the Trustee and of the Owners of the Certificates may also be modified or amended from time to time and at any time by an agreement that the parties hereto or thereto may enter into without the consent of any Certificate Owners, only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the covenants and agreements of the Trustee in the Declaration of Trust, other
covenants and agreements thereafter to be observed, to pledge or assign additional security for the Certificates (or any portion thereof), or to surrender any right or power in the Declaration of Trust that is reserved to or conferred upon the District; provided, however, that no such covenant, agreement, pledge, assignment or surrender will in the sole judgment of the Trustee materially adversely affect the interests of the Trustee or the Owners of the Certificates;
(ii) to add to the covenants and agreements of the District in the Base Lease or the Lease,
other covenants and agreements thereafter to be observed or to surrender any right or power therein reserved to or conferred upon the Trustee or the District; provided, however, that no such covenant, agreement or surrender will in the sole judgment of the Trustee materially adversely affect the interests of the Owners of the Certificates;
(iii) to make such provisions for the purpose of curing any ambiguity, inconsistency or
omission, or of curing or correcting any defective provision, contained in the Declaration of Trust, the Base Lease or the Lease, or in regard to matters or questions arising under the Declaration of Trust, the Base Lease or the Lease as the Trustee and the District may deem necessary or desirable and not inconsistent with said agreements, or as may be requested by the District or the Trustee and that will not, in any such case in the sole judgment of the Trustee materially adversely affect the interests of the Owners of the Certificates;
(iv) to modify, amend or supplement the Declaration of Trust in such manner as to permit
the qualification of the Declaration of Trust under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and that will not in the sole judgment of the Trustee materially adversely affect the interests of the Owners of the Certificates;
(v) to provide for any additional procedures, covenants or agreements necessary to
maintain the exclusion of the Interest Portion of Basic Rent from gross income for purposes of federal income taxation with respect to any tax-exempt Certificates Outstanding;
(vi) to provide for the execution and delivery of Additional Certificates;
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(vii) to make any other change that in the sole judgment of the Trustee does not have a materially adverse effect on the rights of the Certificate Owners; or
(viii) to release a portion of the Real Property comprising the Leased Property as set forth in
Section 12.04 of the Lease. See “SUMMARY OF THE LEASE – Conditions for Partial Release of Leased Property.”
Opinion of Counsel Notwithstanding anything to the contrary in the Declaration of Trust, before the Trustee or the District consents to any modification or amendment of the Declaration of Trust, the Base Lease or the Lease, there will be delivered to the Trustee an Opinion of Special Counsel to the effect that such amendment (1) is permitted by the Declaration of Trust and the instrument modified or amended (if other than the Declaration of Trust), (2) complies with their terms, (3) will, upon execution and delivery thereof, be valid and binding upon the District in accordance with the terms of the instrument modified or amended, and (4) will not adversely affect the exclusion from gross income for purposes of federal income taxation of the Interest Portion of Basic Rent Payments distributable to Owners of the Certificates. In any instance in which the Trustee may be required to determine that a modification or amendment will not materially adversely affect the interest of the Owners of the Certificates, prior to consenting to such modification or amendment, the Trustee will be entitled to require that there be delivered to it an Opinion of Counsel to the effect that no such materially adverse effect would result from such modification or amendment. The Trustee will be fully protected and will incur no liability in relying upon such Opinion of Counsel in making such determination. Defaults The occurrence of any of the following events, subject to the provisions permitting waivers of defaults, is defined as an “Event of Default” under the Declaration of Trust:
(a) Default in the due and punctual payment of any Interest Portion of Basic Rent distributable to Owners of a Certificate; or (b) Default in the due and punctual payment of the Principal Portion of Basic Rent distributable to Owners of a Certificate, whether at the stated payment date thereof or the Prepayment Date set therefor in accordance with the terms of the Declaration of Trust; or (c) Any Event of Lease Default.
Acceleration Upon the occurrence of an Event of Default under the Declaration of Trust, the Trustee may, and upon receipt of a Directive will, by notice in writing delivered to the District, declare the Principal Portion and Interest Portion of Basic Rent distributable to Owners of all Certificates Outstanding to the end of the then current Fiscal Year immediately due and payable. Other Remedies Upon an Event of Default Upon the occurrence of an Event of Lease Default or Event of Nonappropriation, the Trustee may exercise any remedies available under the Lease and, to the extent consistent therewith, may sell, lease or manage any portion of the Leased Property or Trustee’s interest in the Leased Property and apply the net proceeds thereof in accordance with the Declaration of Trust and, whether or not it has done so, may pursue any other remedy available to it under the Lease or at law or in equity.
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No remedy by the terms of the Declaration of Trust conferred upon or reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, but each and every such remedy will be cumulative and will be in addition to any other remedy given to the Trustee or to the Certificate Owners hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default hereunder whether by the Trustee or by the Certificate Owners will extend to or will affect any subsequent default or will impair any rights or remedies consequent thereon. Rights of Certificate Owners If an Event of Default or an Event of Nonappropriation has occurred and is continuing and if instructed to do so by a Directive and if indemnified as provided in the Declaration of Trust, the Trustee will be obligated to exercise such one or more of the rights and the remedies conferred by the Declaration of Trust as the Trustee, upon the advice of counsel, deems to be in the interests of the Certificate Owners; provided that such Directive will not be otherwise than in accordance with the provisions of law and of the Declaration of Trust, and provided further that the Trustee will have the right to decline to follow any such Directive if the Trustee in good faith determines that the proceedings so directed would involve it in personal liability. Notwithstanding any contrary provision in the Declaration of Trust, the Owners of not less than a majority in aggregate principal amount of Certificates then Outstanding will have the right, at any time, by a Directive, to direct the time, method and place of conducting all proceedings to be taken in connection with the enforcement of the Declaration of Trust, or for the appointment of a receiver or any other proceedings hereunder; provided that such Directive will not be otherwise than in accordance with the provisions of law and of the Declaration of Trust, and provided, further, that the Trustee has been indemnified as provided in the Declaration of Trust, and will have the right to decline to follow any such direction if the Trustee in good faith determines that the proceeding so directed would involve it in personal liability. Limitation on Rights of Certificate Owners No Owner of any Certificates will have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Base Lease, the Lease or the Declaration of Trust, for the execution of any trust thereof, for the appointment of a receiver or to enforce any other remedy thereunder or hereunder, unless (i) an Event of Default or an Event of Nonappropriation has occurred and is continuing; (ii) the Owners of at least a majority in aggregate principal amount of all Certificates then Outstanding have given a Directive to the Trustee and have offered reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (iii) such Certificate Owners have provided to the Trustee indemnification satisfactory to the Trustee; and (iv) the Trustee thereafter fails or refuses to exercise the powers hereinbefore granted or to institute such action suit or proceedings in its, his, her or their name or names. Such notification, request and indemnity are hereby declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and the trusts of the Declaration of Trust and to any action or cause of action for the enforcement of the Declaration of Trust or for the appointment of a receiver or for any other right or remedy thereunder. No one or more Owners of the Certificates will have any right in any manner whatsoever to affect, to disturb or to prejudice the lien of the Declaration of Trust by its, his, her or their action or to enforce any right or remedy under the Declaration of Trust except in the manner provided in the Declaration of Trust and all proceedings at law or in equity will be instituted, had and maintained in the manner provided therein, and for the equal benefit of the Owners of all Certificates then Outstanding.
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Nothing in the Declaration of Trust contained will, however, affect or impair the right of any Certificate Owner to enforce the payment of the Principal Portion of and the Interest Portion of the Basic Rent distributable to Owners of any Certificate at and after the maturity or earlier Mandatory Prepayment thereof. Defeasance; Deposit of Moneys or Securities When (i) the obligations of the District under the Lease have been satisfied in connection with the exercise by the District of its option to purchase the Leased Property in accordance with the Lease by the irrevocable deposit in escrow of moneys or Government Obligations (maturing as to principal and interest in such amounts and at such times as are sufficient to make any required payments without reinvestment of any earnings thereon) or both moneys and Government Obligations, and (ii) the District has deposited sufficient moneys to pay the fees, charges and expenses of the Trustee (or has made provision satisfactory to the Trustee for their payment), thereupon the obligations created by the Declaration of Trust will cease, determine and become void, except for the right of the Certificate Owners and the obligation of the Trustee to apply such moneys and Government Obligations to the payment of the Certificates as set forth in the Declaration of Trust; provided, however, that all provisions of the Declaration of Trust relating to the compensation or indemnification of the Trustee will survive the satisfaction and discharge of the Declaration of Trust. In determining the sufficiency of the moneys and Government Obligations so deposited, the Trustee shall receive, at the expense of the District, and may rely upon: (x) an Opinion of Special Counsel to the effect that (A) the conditions for such discharge contained in the Declaration of Trust have been satisfied or irrevocably provided for, and (B) defeasance of the Certificates will not cause the Interest Portion distributable to Owners of any tax-exempt Certificates to be includable in gross income for federal income tax purposes; and (y) if sufficiency of the deposited moneys is dependent upon investment earnings, an accountant’s certificate verifying the sufficiency of moneys or Government Obligations or both so deposited for the payment of the Principal Portion and Interest Portion of the Certificates and any applicable Prepayment Price to be paid with respect to the Certificates. After all amounts owing to the Certificate Owners have been paid hereunder and under the Lease, the Trustee will turn over to the District any surplus in the Lease Revenue Fund and all balances remaining in any other funds or accounts other than moneys and Government Obligations held for the payment of the Certificates at maturity or on prepayment, which moneys and Government Obligations will continue to be held by the Trustee in trust for the benefit of the Certificate Owners and will be applied by the Trustee to the payment, when due, of the Principal Portions and any premium and Interest Portions of Basic Rent distributable to Owners of the Certificates. If moneys or Government Obligations as provided in the Declaration of Trust, are deposited with and held by the Trustee or other commercial bank or trust company, the Trustee or other commercial bank or trust company will within 30 days after such Government Obligations have been deposited with it give Notice by Mail, to the Owners at the addresses listed on the registration books kept by the Registrar pursuant to the Declaration of Trust, setting forth (i) the maturity date or Prepayment Date, as the case may be, of the Certificates, (ii) a description of the moneys and/or Government Obligations, if any, so held by it, and (iii) that the Declaration of Trust has been released in accordance with the provisions of the Declaration of Trust. Whenever in the Declaration of Trust or the Lease it is provided or permitted that there be deposited with or held in trust by the Trustee or other commercial bank or trust company moneys or Government Obligations in the necessary amount to pay or prepay any Certificates, the money or Government Obligations so to be deposited or held may include money or Government Obligations held by the Trustee in the Funds established pursuant to the Declaration of Trust (exclusive of the Project Fund) the principal of and interest on which when due together with any moneys held by the Trustee for such purpose will provide moneys sufficient to pay the Principal Portions and Interest Portions of the Basic Rent distributable to Owners of the Certificates as same becomes due, except that, in the case of Certificates that are to be prepaid prior to maturity and in respect of which irrevocable notice of such prepayment have been given as provided in the Declaration of Trust or irrevocable provision satisfactory to the Trustee has been made for the giving of such notice, the amount to be deposited or held will be the Prepayment Price with respect to such Certificates and all unpaid interest to the Prepayment Date.
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The Trustee The Trustee will, prior to an Event of Default or Event of Nonappropriation, and after the curing of all Events of Default or Events of Nonappropriation that may have occurred, perform only such duties as are specifically set forth in the Declaration of Trust. The Trustee will have no implied duties. The permissive right or power to take any action may not be construed as a duty to take action under any circumstances, and the Trustee will not be liable except in the event of its gross negligence or willful misconduct. The Trustee will, during the existence of any Event of Default or Event of Nonappropriation, exercise such of the rights and powers vested in it by the Declaration of Trust, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. The Trustee will not be obligated to risk its own funds in the administration of the Trust Estate. Notwithstanding any contrary provision of the Declaration of Trust, the Trustee need not take any action under the Declaration of Trust that may involve it in any expense or liability until indemnified to its satisfaction for any expense or liability, including liability related to environmental contamination, it reasonably believes it may incur. The Trustee is not responsible for any recitals contained in the Declaration of Trust or in the Certificates, or for the recording, filing, rerecording or refiling of the Declaration of Trust or security agreements (excluding the continuation of Uniform Commercial Code financing statements) in connection therewith, or for insuring the Leased Property or for collecting any insurance moneys or for the sufficiency of the security for the Certificates. The Trustee makes no representations as to the value or condition of the Trust Estate or any part thereof, or as to the validity or sufficiency of the Declaration of Trust or of the Certificates. The Trustee will not be accountable for the use or application by the District of any of the Certificates or the proceeds thereof or of any money paid to or upon the order of the District under any provision of the Declaration of Trust or the Lease. The Trustee will not be required to give any bond or surety or report to any court despite any statute, custom or rule to the contrary. The Trustee may execute any of the duties under the Declaration of Trust by or through agents, attorneys, trustees or receivers and the Trustee will not be responsible for any misconduct or negligence on the part of any agent, attorney, trustee or receiver appointed with due care by it hereunder. The Trustee will not be required to take notice or be deemed to have notice of any default, or Event of Default, Event of Nonappropriation or other fact or event under the Declaration of Trust other than the District’s failure to pay Basic Rent Payments required by the Lease, unless the Trustee is specifically notified in writing of the default or Event of Default, Event of Nonappropriation, fact or event by the District or the Owners of not less than 25% of the unpaid Principal Portion of Basic Rent Payments distributable to Owners of the Certificates then Outstanding. The Trustee may consult legal counsel, may conclusively rely on the opinion or advice of such legal counsel and will not be liable for any act or omission taken or suffered pursuant to the opinion or advice of such counsel. The fees and expenses of the counsel will be deemed to be a proper expense of the Trustee. Unless specifically required by the terms of the Declaration of Trust, the Trustee need not take notice of or enforce any other document or relationship, including any contract, settlement, arrangement, plan, assignment, pledge, release, decree or the like, other than the Lease, but its duties will be solely as set out in the Declaration of Trust. The Trustee may be removed at any time, upon 30 days written notice in advance of the removal, (1) by a Directive or (2) so long as no Event of Default or Event of Nonappropriation has occurred or condition exists that with the giving of notice or the passage of time or both would constitute an Event of Default, an instrument in writing delivered to the Trustee and signed by the District. The Trustee will resign at any time the Trustee
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ceases to be eligible in accordance with the Declaration of Trust, or becomes incapable of acting, or is adjudged as bankrupt or insolvent, or a receiver of the Trustee or its property is appointed, or any public officer takes control or charge of the property or affairs of the Trustee for the purpose of rehabilitation, conservation or liquidation, and thereupon a successor Trustee will be appointed by either (1) a Directive, or (2) so long as no Event of Default or Event of Nonappropriation has occurred or condition exists that with the giving of notice or the passage of time or both would constitute an Event of Default, the District. The Trustee may at any time resign by giving written notice of such resignation to the District and by giving the Certificate Owners Notice by Mail of such resignation at the addresses listed on the registration books kept by the Registrar. Upon receiving such notice of resignation, a successor Trustee will be appointed by a Directive. Any removal or resignation of the Trustee and appointment of a successor Trustee will become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee has been appointed and has accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Certificate Owner (on behalf of himself and all other Certificate Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under the Declaration of Trust will signify its acceptance of such appointment by executing and delivering to the District and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, will become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee held by it as security for the Certificates, including its interest in the Base Lease and Lease, with like effect as if originally named Trustee in the Declaration of Trust, and the duties and obligations of the predecessor Trustee hereunder will thereafter cease and terminate; but, nevertheless at the request of the District or the request of the successor Trustee, such predecessor Trustee will execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be requested for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under the Declaration of Trust and will pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions set forth in the Declaration of Trust. Upon request of the predecessor or the successor Trustee, the District will execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in the Declaration of Trust, such successor Trustee will cause Notice by Mail to all Owners of such acceptance. Any Trustee appointed under the provisions of the Declaration of Trust, in succession to the Trustee, will be a state or national trust company or bank having the powers of a trust company and being duly authorized to execute trust powers having a designated payment office in the State, in good standing in the State, having a combined capital and surplus of at least fifty million dollars ($50,000,000), and subject to supervision and examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for these purposes, the combined capital and surplus of such bank or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee will cease to be eligible in accordance the Declaration of Trust, the Trustee will resign immediately in the manner and with the effect specified in the Declaration of Trust. Any action taken by the Trustee pursuant to and in accordance with the Declaration of Trust upon the request or authority or consent of any person who, at the time of making such request or giving such authority or consent is the Owner of any Certificate will be conclusive and binding upon all future Owners of the same Certificate and upon Certificates delivered in exchange therefor or upon transfer or in place thereof.
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The Trustee will have the right, but will not be required, to demand, in respect of the execution of any Certificate, the withdrawal of any moneys, the release of any property, or any action whatsoever within the purview of the Declaration of Trust, appraisals or other information, or corporate action or evidence thereof, in addition to that required by the terms of the Declaration of Trust, as a condition of such action by the Trustee as are deemed desirable for the purpose of establishing the right of the District to any such action. The Trustee may become the owner of Certificates with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Certificate Owners, whether or not such committee will represent the Owners of a majority in principal amount of the Certificates then Outstanding. Any entity into which the Trustee may be merged or converted or with which it may be consolidated or any entity resulting from any merger, conversion or consolidation to which it will be a party or any entity to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company will be eligible to be the successor to such Trustee (as described above), without the execution or filing of any paper or any further act, anything in the Declaration of Trust to the contrary notwithstanding. Liability of Trustee; Indemnity The Trustee will not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. Before taking any action under the Declaration of Trust, the Trustee may require that satisfactory indemnity be furnished to it for the reimbursement of all reasonable fees, costs and expenses (including without limitation attorney’s fees and expenses) to which it may be put and to protect it against all liability, except liability that is adjudicated to have resulted from its gross negligence or willful misconduct by reason of any action so taken. The Trustee may rely upon an Opinion of Counsel in determining whether any action may result in such liability. The Trustee may elect not to proceed in accordance with the directions of the Owners of the Certificates without incurring any liability to the Certificate Owners if in the opinion of the Trustee such direction may result in environmental or other liability to the Trustee, in its individual capacity, for which the Trustee has not received indemnity from the Certificate Owners, and the Trustee may rely upon an Opinion of Counsel addressed to the Trustee in determining whether any action directed by Certificate Owners may result in such liability. The Trustee may inform the Certificate Owners of environmental hazards that the Trustee has reason to believe exist, and the Trustee has the right to take no further action and, in such event no fiduciary duty exists that imposes any obligation for further action with respect to the Trust Estate or any portion thereof if the Trustee, in its individual capacity, determines that any such action would materially and adversely subject the Trustee to environmental or other liability for which the Trustee has not received indemnity pursuant to the Declaration of Trust. Notwithstanding any other provision of the Declaration of Trust to the contrary, any provision intended to provide authority to act, right to payment of fees and expenses, protection, immunity and indemnification to the Trustee will be interpreted to include any action of the Trustee whether it is deemed to be in its capacity as Trustee, Registrar or Paying Agent. The Trustee will not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with the Declaration of Trust.
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SUMMARY OF THE LEASE General The Lease has been entered into between the Trustee and the District and contains the terms and conditions under which the Leased Property will be leased to and used by the District. Lease Term The Original Term of the Lease shall terminate the last day of the current Fiscal Year. The Lease Term may be continued, solely at the option of the District, at the end of the Original Term or any Renewal Term for an additional one year, provided that the final Renewal Term shall not extend beyond April 2, 2045. At the end of the Original Term and at the end of each Renewal Term, unless the District has terminated the Lease and for no other reason, the District shall be deemed to have exercised its option to continue the Lease for the next Renewal Term. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except for any difference in the Rent as provided in the Lease. Continuation of Lease Term by the District The District reasonably believes that legally available funds in an amount sufficient to make all payments of Rent during the Original Term and each of the Renewal Terms can be obtained. The District covenants in the Lease that its responsible financial officer shall do all things lawfully within his power to obtain and maintain funds from which the Rent may be paid, including making provision for such payments to the extent necessary in each proposed budget or appropriation request submitted for adoption in accordance with applicable provisions of law and to exhaust all available reviews and appeals in the event such portion of the budget or appropriation request is not approved. Notwithstanding the foregoing, the decision to budget and appropriate funds or to extend the Lease for any Renewal Term is to be made in accordance with the District’s normal procedures for such decisions by the then current governing body of the District. Nonappropriation The District is obligated only to pay periodic payments under the Lease as may lawfully be made from Available Revenues. If an Event of Nonappropriation occurs, the Lease will be deemed terminated at the end of the then current Original Term or Renewal Term. An Event of Nonappropriation will be deemed to have occurred if the District fails to budget, appropriate or otherwise provide for sufficient funds to pay Basic Rent and any reasonably anticipated Supplemental Rent to come due during the immediately following Renewal Term. The District agrees to deliver notice to the Trustee of such termination at least 90 days prior to the end of the then current Original Term or Renewal Term, but failure to give such notice will not extend the term beyond such Original Term or Renewal Term. If the Lease is terminated in accordance with such provision, the District agrees peaceably to transfer and surrender possession of the Leased Property to the Trustee. Payment for Construction of the Improvements In compliance with the Declaration of Trust, costs and expenses of every nature incurred in the construction of the Improvements that qualify as Costs of Improvements shall be paid by the Trustee from the Project Fund upon receipt by the Trustee of a completed request of the District signed by the Authorized Representative of the District and, except for requisitions for Costs of Issuance, the Architect and containing the statements, representations and certifications set forth in the form of such request attached to the Declaration of Trust.
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Completion Date; Excess Funds The Completion Date shall be evidenced to Trustee upon receipt by the Trustee of a certificate signed by the Authorized Representative of the District (the “Completion Certificate”) stating (a) the date on which the Improvements were substantially completed, (b) that all other facilities necessary in connection with the Improvements have been purchased, constructed and installed, (c) that the Improvements and such other facilities have been purchased, constructed, made and installed in accordance with the plans and specifications therefor and in conformance with all applicable zoning, planning, building, environmental and other similar governmental regulations, (d) that, except for Costs of Improvements described in accordance with clause (e), all Costs of Improvements have been paid, and (e) the amounts, if any, to be retained in the Project Fund for the payment of Costs of Improvements, if any, not yet due or Costs of Improvements whose liability the District is contesting, and amounts that otherwise should be retained and the reasons they should be retained. The Completion Certificate may state that it is given without prejudice to any rights of the District that then exist or may subsequently come into being against third parties. Upon receipt of the Completion Certificate, any moneys remaining in the Project Fund will be transferred by the Trustee without further authorization to the Lease Revenue Fund. Enjoyment of Leased Property The Trustee shall provide the District during the Lease Term with quiet use and enjoyment of the Leased Property, and the District shall during the Lease Term peaceably and quietly have, hold and enjoy the Leased Property, without suit, trouble or hindrance from the Trustee, except as expressly set forth in the Lease. The District shall have the right to use the Leased Property for any essential governmental or proprietary purpose of the District, subject to the limitations contained in the Lease. Notwithstanding any other provision in the Lease, the Trustee shall have no responsibility to cause the Improvements to be constructed or to maintain, repair or insure the Leased Property. The District shall comply with all statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other governments or governmental authorities, now or hereafter applicable to the Leased Property, as to the manner and use or the condition of the Leased Property. The District shall also comply with the mandatory requirements, rules and regulations of all insurers under the policies required to be carried by the provisions of the Lease. The District shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of, or be imposed as a result of, the failure of the District to comply with the foregoing provisions. Notwithstanding any provision contained in the Lease, however, the District shall have the right, at its own cost and expense, to contest or review by legal or other appropriate procedures the validity or legality of any such governmental statute, law, ordinance, order, judgment, decree, regulation, direction or requirement, or any such requirement, rule or regulation of an insurer and during such contest or review, the District may refrain from complying therewith, if the District furnishes, on request, to the Trustee, at the District’s expense, indemnity satisfactory to the Trustee. Basic Rent The District will promptly pay all Basic Rent, subject to its right to terminate the Lease as described under “Nonappropriation” on each Basic Rent Payment Date. A portion of each Basic Rent Payment is paid as, and represents payment of, interest as set forth in the Lease (said interest to be attributable to the various Principal Portions in accordance with the per annum rates set forth in the Lease). To provide for the timely payment of Basic Rent, the District shall pay to the Trustee for deposit in the Lease Revenue Fund not less than five Business Days before each Basic Rent Payment Date, the amount due on such Basic Rent Payment Date. The District will, in accordance with the requirements of law and its normal budgeting procedures, fully budget and appropriate sufficient funds for the current Fiscal Year to make the Rent Payments scheduled to come due during the Original Term, and to meet its other obligations for the Original Term and such funds will not be expended for other purposes.
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Supplemental Rent The District will pay, subject to its right to terminate the Lease as described under “Nonappropriation,” as Supplemental Rent (a) all Impositions (as defined in the Lease); (b) all amounts required and all other payments which the District has agreed to pay or assume under the Lease; (c) all expenses, including attorneys’ fees to the extent permitted by law, incurred in connection with the enforcement of any rights under the Lease or the Base Lease by the Trustee and (d) all fees and charges of the Trustee as provided in the Lease. Rent Payments to Constitute a Current Expense and Limited Obligation of the District THE OBLIGATION OF THE DISTRICT TO PAY RENT UNDER THE LEASE IS LIMITED TO PAYMENT FROM AVAILABLE REVENUES AND CONSTITUTES A CURRENT EXPENSE OF THE DISTRICT AND WILL NOT IN ANY WAY BE CONSTRUED TO BE A DEBT OF THE DISTRICT IN CONTRAVENTION OF ANY APPLICABLE CONSTITUTIONAL, CHARTER OR STATUTORY LIMITATION OR REQUIREMENT CONCERNING THE CREATION OF INDEBTEDNESS BY THE DISTRICT, NOR SHALL ANYTHING CONTAINED THEREIN CONSTITUTE A PLEDGE OF THE GENERAL TAX REVENUES, FUNDS OR MONEYS OF THE DISTRICT, AND ALL PROVISIONS OF THE LEASE WILL BE CONSTRUED SO AS TO GIVE EFFECT TO SUCH INTENT. Net Lease; Rent Payments to be Unconditional The Lease is intended to be net, net, net to the Trustee. Subject to the right of the District to terminate the Lease described under the caption “Nonappropriation,” the obligations of the District to make payment of the Rent Payments and to perform and observe the other covenants and agreements contained therein will be absolute and unconditional in all events without abatement, diminution, deduction, setoff or defense, for any reason, including any failure of the Leased Property to be constructed or installed, any defects, malfunctions, breakdowns or infirmities in the Leased Property or any accident, condemnation or unforeseen circumstances. Nothing in the Lease will be construed as a waiver by the District of any rights or claims the District may have against the Trustee, but any recovery upon such rights and claims shall be from the Trustee separately. Increased Basic Rent Notwithstanding any other provision of the Lease, the Trustee and the District may enter into a Supplemental Lease or Supplemental Leases that increase the amount of Basic Rent payable by the District on any Basic Rent Payment Date to provide funds to pay the costs of (a) repairing, replacing or restoring the Leased Property, (b) improving, upgrading or modifying the Leased Property, (c) additional improvements to the Leased Property or the acquisition of additional real property to be included in the Leased Property or the acquisition, purchase, construction or equipping of additions to or expansions or remodeling or modification of the Leased Property, and (d) refunding any or all of the Certificates. Each such Supplemental Lease will include an amended payment schedule reflecting separately the Principal Portion and the Interest Portion of Basic Rent allocable to the original Lease and to each Supplemental Lease due on each Basic Rent Payment Date as well as the total Basic Rent on each Basic Rent Payment Date. Disclaimer of Warranties THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE LEASED PROPERTY OR ANY PART THEREOF, OR WARRANTY WITH RESPECT THERETO. IN NO EVENT WILL THE TRUSTEE BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGE IN CONNECTION WITH OR ARISING OUT OF
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THE LEASE OR THE EXISTENCE, FURNISHING, FUNCTIONING OR THE DISTRICT’S USE OF THE LEASED PROPERTY OR ANY PART THEREOF. Deficiency of Project Fund If the Project Fund is insufficient to pay fully all Costs of Improvements and to complete fully the Leased Property lien free, the District shall pay, in cash, the full amount of any such deficiency by making payments directly to the contractors and to the suppliers of materials and services as the same shall become due. The Trustee is not obligated to pay and shall not be responsible for any such deficiency, and the District shall save the Trustee whole and harmless from any obligation to pay such deficiency. The District’s obligation to pay any such deficiency will be limited to its current budgeted appropriations for the Leased Property, and the District will have no obligation to appropriate additional funds therefore and may amend the Leased Property to reduce or eliminate such deficiency. Impositions The District shall bear, pay and discharge, before the delinquency thereof, as Supplemental Rent, all taxes and assessments, general and special, if any, which may be lawfully taxed, charged, levied, assessed or imposed upon or against or be payable for or in respect of the Leased Property, including any taxes and assessments not of the kind enumerated above to the extent that the same are lawfully made, levied or assessed in lieu of or in addition to taxes or assessments now customarily levied against real or personal property, and including all water and sewer charges, assessments and other general governmental charges and impositions whatsoever, foreseen or unforeseen, which if not paid when due would impair the security of the Trustee or encumber the Leased Property (all of the foregoing being referred to as “Impositions”). Contest of Impositions The District shall have the right, in its own name or in the Trustee’s name, to contest the validity or amount of any Imposition which the District is required to bear, pay and discharge pursuant to the terms of the Lease by appropriate legal proceedings instituted at least ten days before the Imposition complained of becomes delinquent and may permit the Imposition so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Trustee shall notify the District that, in the opinion of counsel, by nonpayment of any such items the interest of the Trustee in the Leased Property will be endangered or the Leased Property or any part thereof will be subject to loss or forfeiture, in which event the District shall promptly pay such taxes, assessments or charges or provide the Trustee with full security against any loss which may result from nonpayment in form satisfactory to the Trustee. Insurance The District will, during the Lease Term, cause the Leased Property to be kept continuously insured against such risks customarily insured against for facilities such as the Leased Property and will pay (except as otherwise provided herein), as the same become due, all premiums in respect thereof, such insurance to include the following policies of insurance: (a) Insurance insuring the Leased Property against loss or damage by fire, lightning and all other risks covered by the extended coverage insurance endorsement then in use in the State in an amount not less than the replacement value of the Leased Property, with standard deductibles, and issued by such insurance company or companies authorized to do business in the State as may be selected by the District, provided that the insurer must be rated “A” or better by Standard & Poor’s or A.M. Best. The policy or policies of such insurance will name the District and the Trustee as insureds, as their respective interests may appear. All proceeds from such policies of insurance will be applied as provided in the Lease. During acquisition, construction and installation of the Improvements, the District will cause to be provided, insofar as the Improvements are concerned, the
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insurance required by subparagraph (b) below in lieu of the insurance required by this subparagraph (a) to the extent appropriate. (b) To the extent appropriate, during the acquisition, construction and installation of the Improvements and in lieu of the insurance required in subparagraph (a) of this Section for the portion of the Leased Property constituting the Improvements, builder’s risk-completed value insurance insuring the Improvements against fire, lightning and all other risks covered by the extended coverage endorsement then in use in the State to the full insurable value of the Improvements (subject to reasonable loss deductible clauses) issued by such insurance company or companies authorized to do business in the State as may be selected by the District, provided that the insurer must be rated “A” or better by Standard & Poor’s or A.M. Best. Such policy or policies of insurance will name the District and the Trustee as insureds, as their respective interests may appear, and all payments received under such policy or policies by the District will be paid over to the Trustee. (c) Comprehensive general accident and public liability insurance (including coverage for all losses whatsoever arising from the ownership, maintenance, operation or use of any automobile, truck or other motor vehicle), under which the District and the Trustee are named as insureds, in an amount not less than $500,000 combined single limit for bodily injuries and property damage Such insurance shall be issued by such insurance company or companies authorized to do business in the State as may be selected by the District, provided that the insurer must be rated “A” or better by Standard & Poor’s or A.M. Best. (d) Workers’ compensation and unemployment coverages to the extent, if any, required by the laws of the State. (e) Owner’s policy of title insurance, issued on ALTA forms by a title insurance underwriter acceptable to the Underwriter, insuring the Trustee’s leasehold estate created by the Base Lease, in an amount equal to the original principal amount of the Series 2020 Certificates hereunder, subject only to exceptions acceptable to the Underwriter, with endorsements and affirmative coverages reasonably required by the Underwriter. (f) Performance and labor and material payment bonds with respect to the Construction Agreements in the full amount of the Construction Agreements from surety companies qualified to do business in the State. All policies of such insurance, and all renewals thereof, will contain a provision that such insurance may not be cancelled by the issuer thereof without at least 30 days’ written notice to the District and the Trustee. Not less than annually, the District will provide the Trustee with a certificate signed by an Authorized District Representative stating that the District is in compliance with the insurance requirements of this Section. Nothing in the Lease will be construed as preventing the District from satisfying the insurance requirements herein set forth by using blanket policies of insurance or self-insurance; provided, however, that each and all of the requirements and specifications of the Lease respecting insurance are complied with. The District may elect to be self–insured for all or any part of the foregoing requirements of the Lease if (i) the District annually obtains a written evaluation with respect to such self-insurance program from an individual or firm selected by the District and acceptable to the Trustee qualified to survey risks and to recommend insurance coverage for entities engaged in operations similar to those of the District and having a favorable reputation for skill and experience in making such surveys and recommendations (an “Insurance Consultant”), (ii) the evaluation is to the effect that the self-insurance program is sound, (iii) unless the evaluation states that such reserves are not necessary, the District maintains adequate reserves for the self-insurance program, and (iv) in the case of workers’ compensation, adequate reserves created by the District for
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such self-insurance program are maintained in such amount and manner as are acceptable to the State. The District will pay any fees and expenses of such Insurance Consultant in connection therewith. In accordance with the requirements of Section 427.120, Revised Statutes of Missouri, unless the District provides evidence of the insurance coverage required under the Lease, the Trustee may (but shall not be obligated to) purchase insurance at the District’s expense to protect its interest in the Leased Property. This insurance may, but need not, protect the District’s interests. The coverage that the Trustee purchases may not pay any claim that the District makes or any claim that is made against the District in connection with the Leased Property. The District may later cancel any insurance purchased by the Trustee, but only after providing evidence to the Trustee that the District has obtained insurance as required in this Section. If the Trustee purchases insurance for the Leased Property, the District shall promptly reimburse the Trustee for the costs of that insurance as Supplemental Rent as provided in the Lease together with interest equal to the prime lending rate of the Trustee plus 2% or the maximum amount permitted by law, whichever is less. The costs of the insurance that the Trustee obtains may be more than the cost of insurance the District may be able to obtain on its own. Maintenance and Modification of Leased Property by the District The District will at its own expense (a) keep the Leased Property in a safe condition, (b) with respect to the Leased Property, comply with all applicable health and safety standards and all other industrial requirements or restrictions enacted or promulgated by the State, or any political subdivision or agency thereof, or by the government of the United States of America or any agency thereof, and (c) keep the Leased Property in good repair and in good operating condition and make from time to time all necessary repairs thereto and renewals and replacements thereof; provided, however, that the District will have no obligation to operate, maintain, preserve, repair, replace or renew any element or unit of the Leased Property the maintenance, repair, replacement or renewal of which becomes uneconomical to the District because of damage, destruction or obsolescence, or change in economic or business conditions, or change in government standards and regulations. The District shall not permit or suffer others to commit a nuisance in or about the Leased Property or itself commit a nuisance in connection with its use or occupancy of the Leased Property. The District will pay all costs and expenses of operation of the Leased Property. The District may, also at its own expense, make from time to time any additions, modifications or improvements to the Leased Property that it may deem desirable for its business purposes and that do not materially impair the structural strength or effective use, or materially decrease the value, of the Leased Property. All such additions, modifications or improvements made by the District shall (a) be made in a workmanlike manner and in strict compliance with all laws and ordinances applicable thereto, (b) when commenced, be pursued to completion with due diligence and (c) when completed, be deemed a part of the Leased Property. During the Lease Term, the Leased Property will be used by the District only for the purpose of performing essential governmental or proprietary functions of the District consistent with the permissible scope of the District’s authority. Tax Covenants The District ratifies and confirms all of its covenants, representations and warranties contained in the Tax Compliance Agreement, as though set forth in full in the Lease. The District will, in addition, adopt such other resolutions and ordinances and take such other actions as may be necessary to comply with the Code and with all other applicable future laws, regulations, published rulings and judicial decisions, in order to ensure that the Interest Portion of the Basic Rent will remain excluded from federal gross income, to the extent any such actions can be taken by the District. Notwithstanding anything to the contrary contained in the Lease, the Tax Compliance Agreement may be amended or replaced if, in the opinion of Special Counsel, such amendments
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will not adversely affect the exclusion from gross income for federal income tax purposes of the Interest Portion of the Basic Rent. Continuing Disclosure The District covenants and agrees that it will comply and carry out all of the provisions of the Continuing Disclosure Undertaking. Notwithstanding any other provision of the Lease, failure of the District to comply with the Continuing Disclosure Undertaking shall not be considered a default or an Event of Default under the Lease; provided, however, that the Trustee, pursuant to the Declaration of Trust may (and, at the request of the Owners of Certificates of at least a majority in aggregate principal amount of Outstanding Certificates, and if indemnified to it satisfaction, will) or any Owners of Certificates may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the District to comply with its obligations under the Continuing Disclosure Undertaking. Damage, Destruction and Condemnation The District will bear the risk of loss with respect to the Leased Property during Lease Term. If (a) the Leased Property or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Leased Property or any part thereof shall be nonexistent or deficient or taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, the District and the Trustee will cause the Net Proceeds of any insurance claim, condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Leased Property, unless the District shall have exercised its option to purchase the Trustee’s interest in the Leased Property by making payment of the Purchase Price as provided in the Lease. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to the District and shall be held and appropriated by the District for the exclusive purpose of paying Rent under the Lease. If the District determines that the repair, restoration, modification or improvement of the Leased Property is not economically feasible or in the best interest of the District, then, in lieu of making such repair, restoration, modification or improvement and if permitted by law, the District shall promptly purchase the Trustee’s interest in the Leased Property pursuant to the Lease by paying the Purchase Price. The Net Proceeds shall be applied by the District to payment of the Purchase Price. Any balance of the Net Proceeds remaining after paying the Purchase Price shall belong to the District. In the Lease, the District acknowledges the provisions pertaining to eminent domain in the Base Lease. The Trustee and District agree that the terms of the Base Lease are and shall be incorporated in and made a part of the Lease to the same extent as if set forth in full at this point. This Section shall survive the termination of the Lease for any reason. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to above, and the District has not elected to purchase the Trustee’s interest in the Leased Property, the District shall complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds and, if the District shall make any payments as provided in this paragraph, the District will not be entitled to any reimbursement therefor from the Trustee nor will the District be entitled to any diminution of Rent. Conditions for Partial Release of Leased Property So long as no Event of Default or Nonappropriation has occurred under the Lease or the Indenture, the Trustee will release, without the consent of any of the Owners of the Certificates or any Additional Certificates, a portion of the Leased Property, other than the portion that includes the buildings currently housing the Buffalo
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High School and the Improvements (collectively, the “Essential Facilities”), upon receipt by the Trustee of the following:
(i) A written request of the District for such release, describing the property to be released (the “Released Property”), and certifying that (A) the Released Property is not needed for the operation and use of the buildings constituting the Essential Facilities, and (B) the remaining Leased Property (excluding the Released Property) is equal to at least 120% of the Principal Portion of the Certificates then Outstanding (but, such valuation comparison is not to be construed as a restriction on the issuance of Additional Certificates); (ii) An ALTA/ASCM survey showing the boundaries of that portion of the Leased Property remaining after the Released Property is removed, and showing the location of all improvements on the remaining portion of the Real Property, which shall show that the Essential Facilities are not part of the Released Property; and
(iii) An endorsement to the title insurance policy required under the Base Lease, recognizing the amendment to release the Released Property from the Base Lease and the Lease, reaffirming the existing coverage and reflecting no exceptions other than those included in the title insurance policy originally delivered.
Purchase Option The District shall have the option to purchase the Trustee’s interest in the Leased Property, upon giving written notice to the Trustee at least 45 days before the date of purchase (or such shorter period as the Trustee may agree), at the following times and on the following terms: (a) On or after the date when all Outstanding Certificates are subject to optional
prepayment by the District, upon payment in full of Rent Payments then due under the Lease plus a Purchase Price equal to 100% of the remaining Principal Portions of Basic Rent for the maximum Lease Term plus Interest Portions of Basic Rent accrued to the Prepayment Date.
(b) Upon deposit of moneys or Government Obligations or both with the Trustee in
accordance with the Declaration of Trust in the amount necessary to provide for the Basic Rent Payments until and on the Prepayment Date, and the Purchase Price calculated as described in (a) above on the Certificates to such Prepayment Date.
(c) In the event of substantial damage to or destruction or condemnation (other than
condemnation by the District or any entity controlled by or otherwise affiliated with the District) of, or loss of title to, substantially all of the Leased Property, or as a result of changes in the constitution of the State or legislative or administrative action by the State or the United States, the Base Lease or the Lease becomes unenforceable, on the date the District specifies as the purchase date in the District’s notice to the Trustee of its exercise of the purchase option, upon payment in full of the Rent Payments then due under the Lease plus then remaining Principal Portions of Basic Rent for the maximum Lease Term, plus Interest Portions of Basic Rent accrued to the prepayment date.
The Trustee’s interest in the Leased Property shall be transferred to the District (i) on the date on which
the District has indicated its intention to purchase the Leased Property, provided the District pays to the Trustee the amounts required to be paid on or before such date; or (ii) on the date on which the District has paid all Rent Payments for all Renewal Terms and all then accrued Supplemental Rent. It is the intent of the parties hereto that any transfer of the Trustee’s interest in the Leased Property pursuant to this provision shall occur automatically without the necessity of any deed, bill of sale, certificate of title or other instrument of conveyance.
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Nevertheless, the Trustee shall execute and deliver any such instruments as the District may request as are required to evidence such transfer. Partial Prepayment The District will have the option to prepay the Basic Rent Payments in part, upon giving written notice to the Trustee at least 30 days before the date of such prepayment, on April 1, 2025, and any date thereafter, at the Prepayment Price equal to the Principal Portion of Basic Rent being so prepaid plus the Interest Portion of Basic Rent accrued thereon to such prepayment date. The Principal Portion of Basic Rent prepaid will be in integral multiples of $5,000 and will be credited to the Principal Portions of Basic Rent Payments designated by the District. Upon any partial prepayment, the amount of each Interest Portion of Basic Rent coming due thereafter will be reduced by the amount of such Interest Portion attributable to such prepaid Principal Portion determined by applying the annual interest rate corresponding to such prepaid Principal Portion as shown in the Lease. Assignment and Subleasing by the District Except as provided in the Lease, none of the District’s right, title and interest in, to and under the Base Lease, the Lease and in the Leased Property may be assigned or encumbered by the District for any reason; except that the District may sublease any one or more parts of the Leased Property if the District obtains an Opinion of Special Counsel that such subleasing will not adversely affect the exclusion of the Interest Portion of the Basic Rent Payments from gross income for purposes of federal income taxation. Any such sublease of all or part of the Leased Property shall be subject to the Base Lease, the Lease and the rights of the Trustee in, to and under the Base Lease, the Lease, the Tax Compliance Agreement and the Leased Property. Events of Default Any of the following shall constitute an “Event of Default” under the Lease:
(a) Failure by the District to make any deposits required by the Lease to pay Basic Rent in the Lease Revenue Fund at the time specified in the Lease;
(b) Failure by the District to make any Supplemental Rent Payment when due and the continuance of such failure for ten days after written notice specifying such failure and requesting that it be remedied is given to the District by the Trustee;
(c) Failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Lease, other than as referred to in subparagraph (a) or (b) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to the District by the Trustee unless such party shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, such party will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the District within the applicable period and diligently pursued until the default is corrected;
(d) Any statement, representation or warranty made by the District in or pursuant to the Base Lease or the Lease or the execution, delivery or performance of either of them shall prove to have been false, incorrect or misleading or breached in any material respect on the date when made;
(e) Any provision of the Lease or the Base Lease at any time for any reason cease to be valid and binding on the District, or is declared to be null and void, or the validity or enforceability thereof is contested by the District or any governmental agency or authority if the loss of such provision would materially adversely affect the rights or security of the Trustee; or
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(f) The District becomes insolvent or admits in writing its inability to pay its debts as they
mature or applies for, consents to, or acquiesces in the appointment of a trustee, receiver or custodian for the District or a substantial part of its property; or in the absence of such application, consent or acquiescence, a trustee, receiver or custodian for the District or a substantial part of its property; or in the absence of such application, consent or acquiescence, a trustee, receiver or custodian is appointed by the District or a substantial part of its property and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, moratorium or any proceeding under bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is instituted by or against the State and, if instituted against the District, is consented to or acquiesced in by the District or is not dismissed within 60 days.
In the event the District fails to comply with the Continuing Disclosure Undertaking, such failure shall not be an Event of Default under the Lease. Remedies on Default Whenever any Event of Default under the Lease exists, the Trustee will have the right, without any further demand or notice, to take one or any combination of the following remedial steps:
(a) By written notice to the District, the Trustee may declare all Rent payable by the District under the Lease to the end of the then current Original Term or Renewal Term to be due;
(b) With or without terminating the Lease, the Trustee may take possession of the Leased Property (in which event the District shall take all actions necessary to authorize, execute and deliver to the Trustee for the remainder of the Trustee’s leasehold term under the Base Lease all documents necessary to vest in the Trustee for the remainder of the Trustee’s leasehold term under the Base Lease all of the District’s interest in the Leased Property), and sell the Trustee’s interest in the Leased Property or lease the Leased Property or, for the account of the District, sublease the Leased Property continuing to hold the District liable for the difference between (a) the Rent payable by the District under the Lease for the then current Original Term or Renewal Term, as the case may be, and (b) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of the Trustee in exercising its remedies under the Lease, including without limitation all expenses of taking possession, removing, storing, reconditioning, and selling or leasing or subleasing the Leased Property and all brokerage, auctioneers and attorneys’ fees);
(c) The Trustee may terminate any rights the District may have in any moneys held by the Trustee under the Declaration of Trust; and
(d) The Trustee may take whatever action at law or in equity necessary or desirable to enforce its rights in the Leased Property and under the Lease.
SUMMARY OF THE BASE LEASE
Generally The District and the Trustee have entered into the Base Lease under which the District leases the Real Property to the Trustee for the rentals and upon the terms and conditions set forth therein. So long as no Event of Default has occurred under the Lease or the Indenture, the Base Lease may be amended in accordance with the Indenture to release a portion of the Leased Property, other than the buildings currently housing the Buffalo High School and the Improvements, upon satisfaction of the conditions stated in the Lease. See “SUMMARY OF THE LEASE – Conditions for Partial Release of Leased Property.”
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Term The term of the Base Lease commences as of the date of delivery of the Series 2020 Certificates, and will continue until April 1, 2070, unless extended or terminated as provided therein. Rental As and for rental under the Base Lease and in consideration for the leasing of the Real Property to the Trustee, the Trustee take the following actions: (a) simultaneously with the delivery of the Base Lease, enter into the Lease; (b) simultaneously with the delivery of the Base Lease, pay to the District the sum of $10.00 and provide such other consideration as the Trustee and District may agree; and (c) deposit funds in the amount and in the funds and accounts established and as set forth in the Declaration of Trust, to be used to pay costs of the Improvements and the costs of executing and delivering the Base Lease, the Lease, the Declaration of Trust and the Series 2020 Certificates. Assignments and Subleases The Trustee will hold the Base Lease and its rights thereunder for the benefit of owners of the Certificates. The Trustee and its assigns may assign the Base Lease and its rights thereunder or lease or sublease the Leased Property without the written consent of the District (i) if the Lease is terminated for any reason, or (ii) if any Event of Default under the Lease has occurred. Termination The Base Lease will terminate at the end of its stated term, provided, however, in the event the District makes payment of the Purchase Price or makes all of the Rent Payments pursuant to the Lease and exercises its option to purchase the Trustee’s interest in the Leased Property, then the Base Lease is considered assigned to the District and terminated through merger of the leasehold interest under the Base Lease with the fee interest of the District if the District is the owner of the fee interest.
* * *
provided however
Appendix B
.
Appendix A
History of Property Valuations
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APPENDIX E
FORM OF OPINION OF SPECIAL COUNSEL
Dallas County R-I School District Board of Education Buffalo, Missouri BOKF, N.A, as Trustee Kansas City, Missouri [Underwriter Name] [Underwriter City and State] Re: $12,605,000* Certificates of Participation, (Dallas County R-I School District Technical Center
Project), Series 2020, evidencing proportionate interests of the owners thereof in Basic Rent Payments to be made by Dallas County R-I School District
Ladies and Gentlemen: We have acted as Special Counsel to Dallas County R-I School District (the “District”), in connection with a transaction involving the above-referenced Series 2020 Certificates, evidencing proportionate interests of the owners thereof in Basic Rent Payments to be made by the District under a Lease Purchase Agreement dated as of March 15, 2020 (the “Lease”), between BOKF, N.A., a national banking association, as lessor and trustee (the “Trustee”), and the District, as lessee. Capitalized terms used herein and not otherwise defined herein will have the meanings assigned to such terms in the Lease. We have examined (a) the Lease, (b) the Base Lease dated as of March 15, 2020, between the District, as lessor, and the Trustee, as lessee (the “Base Lease”), (b) the Declaration of Trust dated as of March 15, 2020, made and delivered by the Trustee (the “Declaration of Trust”), (c) the Tax Compliance Agreement, (d) certifications of officers and officials of the District and others and (e) the form of the Series 2020 Certificates. In addition, we have reviewed and considered the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable regulations thereunder promulgated by the United States Treasury Department. In rendering the opinions set forth herein, we have assumed without undertaking to verify the same by independent investigation, (a) as to questions of fact, the accuracy of all representations of the Trustee and the District set forth in the Base Lease, the Lease, the Declaration of Trust, the Tax Compliance Agreement and all certificates of officials of the Trustee, the District and others examined by us, and (b) the conformity to original documents of all documents submitted to us as copies and the authenticity of such original documents and all documents submitted to us as originals. Based on and subject to the foregoing, we are of the opinion, under existing law, as follows: 1. The Declaration of Trust has been approved by the District, and the Lease, the Base Lease and the Tax Compliance Agreement have been duly authorized, executed and delivered by the District and constitute legal, valid and binding agreements of the District, enforceable in accordance with their terms, except that the Lease is enforceable only during each fiscal year for which sufficient funds have been appropriated.
* Preliminary, subject to change.
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2. The Series 2020 Certificates have been duly authorized, executed and delivered in accordance with the Declaration of Trust, are entitled to the benefits and security of the Declaration of Trust and evidence interests in the right to receive Basic Rent Payments under the Lease, which right to receive Basic Rent Payments is enforceable against the District in accordance with the terms of the Series 2020 Certificates, the Declaration of Trust and the Lease. 3. The Interest Portion of each Basic Rent Payment represented by the Series 2020 Certificates (including any original issue discount properly allocable to an owner thereof) (i) is excludable from gross income for federal income tax purposes, (ii) is exempt from income taxation by the State of Missouri, and (iii) is not an item of tax preference for purposes of federal alternative minimum tax. The opinions set forth in this paragraph are subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the execution and delivery of the Lease and the Series 2020 Certificates in order that the Interest Portions of Basic Rent Payments represented by the Series 2020 Certificates be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such Interest Portions of Basic Rent Payments in gross income for federal and Missouri income tax purposes retroactive to the date of execution and delivery of the Lease and the Series 2020 Certificates. The District’s obligation to pay Basic Rent Payments under the Lease is not a “qualified tax-exempt obligation” within the meaning of Section 265(b)(3) of the Code.
We express no opinion regarding (a) other federal or Missouri tax consequences arising with respect to the Basic Rent or the Series 2020 Certificates, (b) the treatment for federal or Missouri income tax purposes of any money received by registered owners of the Series 2020 Certificates following an Event of Nonappropriation or an Event of Default, other than Basic Rent Payments made by the District pursuant to the Lease, (c) the title to or the description of the property subject to the Lease or (d) the accuracy, completeness or sufficiency of the Official Statement or other offering material related to the Series 2020 Certificates (except to the extent, if any, stated in the Official Statement). The rights of the owners of the Series 2020 Certificates and the enforceability of the Series 2020 Certificates, the Declaration of Trust, the Base Lease, the Lease and the Tax Compliance Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent applicable and their enforcement may be subject to the exercise of judicial discretion in appropriate cases. This opinion is given as of its date, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law that may occur after the date of this opinion.
Very truly yours,
