dated june 15, 2016 new issue rating electronic bidding via … · 2018. 7. 6. · dated june 15,...

DATED JUNE 15, 2016NEW ISSUE RATINGElectronic Bidding via Parity® Moody’s: " "Bank Interest Deduction EligibleBOOK-ENTRY-ONLY SYSTEM

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

$1,885,000*WASHINGTON COUNTY SCHOOL DISTRICT FINANCE CORPORATION

SCHOOL BUILDING REVENUE BONDS,SERIES OF 2016

Dated: July 1, 2016 Due: as shown below

Interest on the Bonds is payable each February 1 and August 1, beginning February 1, 2017. The Bonds will mature asto principal on August 1, 2017, and each August 1 thereafter as shown below. The Bonds are being issued in Book-Entry-OnlyForm and will be available for purchase in principal amounts of $5,000 and integral multiples thereof.

Maturing Interest Reoffering Maturing Interest ReofferingAugust 1 Amount Rate Yield CUSIP August 1 Amount Rate Yield CUSIP

2017 $70,000 % % 2027 $70,000 % %2018 $70,000 % % 2028 $65,000 % %2019 $70,000 % % 2029 $70,000 % %2020 $70,000 % % 2030 $70,000 % %2021 $65,000 % % 2031 $75,000 % %2022 $70,000 % % 2032 $65,000 % %2023 $75,000 % % 2033 $190,000 % %2024 $60,000 % % 2034 $195,000 % %2025 $65,000 % % 2035 $200,000 % %2026 $70,000 % % 2036 $200,000 % %

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

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

The Bonds constitute a limited indebtedness of the Washington County School District Finance Corporation and arepayable from and secured by a pledge of the gross income and revenues derived by leasing the Project on an annual renewable basisto the Washington County Board of Education.

The Washington County (Kentucky) School District Finance Corporation will until June 22, 2016, at 11:00 A.M., E.D.S.T.,receive competitive bids for the Bonds at the office of the Executive Director of the Kentucky School Facilities ConstructionCommission, 229 West Main Street, Suite 102, Frankfort, Kentucky 40601.

*As set forth in the "Official Terms and Conditions of Bond Sale," the principal amount of Bonds sold to thesuccessful bidder is subject to a Permitted Adjustment by increasing or decreasing the amount not to exceed $375,000.

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

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

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

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PRELIMINARY OFFICIAL STATEMENT

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WASHINGTON COUNTY, KENTUCKYBOARD OF EDUCATION

Curtis Hamilton, ChairpersonPatsy Lester, MemberPat Clements, Member

Julita Leachman, MemberJeremy Thompson, Member

Dr. Robin Cochran, Superintendent

MCCREARY COUNTY SCHOOL DISTRICTFINANCE CORPORATION

Curtis Hamilton, PresidentPatsy Lester, MemberPat Clements, Member

Julita Leachman, MemberJeremy Thompson, Member

Dr. Robin Cochran, SecretaryJudy Spalding, Treasurer

BOND COUNSEL

Steptoe & Johnson PLLCLouisville, Kentucky

FINANCIAL ADVISOR

Ross, Sinclaire & Associates, LLCLexington, Kentucky

PAYING AGENT AND REGISTRAR

The Huntington National BankCincinnati, Ohio

BOOK-ENTRY-ONLY-SYSTEM

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REGARDING USE OF THIS OFFICIAL STATEMENT

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

The information and expressions of opinion herein are subject to change without notice, and neither thedelivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the Corporation or the Board since the date hereof.

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

The Official Statement includes the front cover page immediately preceding this page and all Appendiceshereto.

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TABLE OF CONTENTS Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Book-Entry-Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1The Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Kentucky School Facilities Construction Commission . . . . . . . . . . . . . . . . . . . . 3Biennial Budget For Period Ending June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . 4Outstanding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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

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

State Intercept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Commission's Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6The Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Additional Parity Bonds for Completion of Project . . . . . . . . . . . . . . . . . . . . . . . 6Estimated Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Estimated Use of Bond Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8District Student Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8State Support of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Support Education Excellence in Kentucky (SEEK) . . . . . . . . . . . . . . . . . . . 8Capital Outlay Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Facilities Support Program of Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

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

Overlapping Bond Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11SEEK Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12State Budgeting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Potential Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Continuing Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Tax Exemption; Bank Qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Original Issue Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Original Issue Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Absence of Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Approval of Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15No Legal Opinion Expressed as to Certain Matters . . . . . . . . . . . . . . . . . . . . . . 15Bond Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Approval of Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Demographic and Economic Data . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX AFinancial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX BContinuing Disclosure Agreement . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX COfficial Terms & Conditions of Bond Sale . . . . . . . . . . . . . . . . . . APPENDIX DOfficial Bid Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX E

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OFFICIAL STATEMENTRelating to the Issuance of

$1,885,000*

WASHINGTON COUNTY SCHOOL DISTRICT FINANCE CORPORATIONSCHOOL BUILDING REVENUE BONDS,

SERIES OF 2016

* Subject to Permitted Adjustment

INTRODUCTION

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

The Bonds are being issued to finance improvements at Washington County Elementary School (the"Project").

The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds willbe secured by a pledge of the rental income derived by the Corporation from leasing the Project to the WashingtonCounty Board of Education (the "Board") on a year to year basis (see "Security" herein).

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

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

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


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

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

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

DTC, the world's largest depository, is a limited-purpose trust company organized under the New YorkBanking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the

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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 of1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues,corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participantsof sales and other securities transactions in deposited securities, through electronic computerized book-entrytransfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement ofsecurities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of TheDepository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participantsof DTC and Members of the National Securities Clearing Corporation, Government Securities ClearingCorporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC,and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American StockExchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also availableto others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearingcorporations that clear through or maintain a custodial relationship with a Direct Participant, either directly orindirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to itsParticipants are on file with the Securities and Exchange Commission. More information about DTC can be foundat www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which willreceive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Ownerswill not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected toreceive written confirmations providing details of the transaction, as well as periodic statements of their holdings,from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfersof ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and IndirectParticipants acting on behalf of Beneficial Owners.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered inthe name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorizedrepresentative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or suchother DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actualBeneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whoseaccounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and IndirectParticipants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participantsto Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governedby arrangements among them, subject to any statutory or regulatory requirements as may be in effect from timeto time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of noticesof significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendmentsto the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holdingthe Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the Paying Agent and Registrar and requestthat copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC's practiceis to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bondsunless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTCmails an Omnibus Proxy to the Corporation as soon as possible after the record date. The Omnibus Proxy assignsCede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on therecord date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., orsuch other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit DirectParticipants' accounts upon DTC's receipt of funds and corresponding detail information from the Corporation orthe Paying Agent and Registrar, on payable date in accordance with their respective holdings shown on DTC'srecords. Payments by Participants to Beneficial Owners will be governed by standing instructions and customarypractices, as is the case with Bonds held for the accounts of customers in bearer form or registered in "street name"and will be the responsibility of such Participant and not of DTC or its nominee, the Paying Agent and Registraror the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time.

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Payment of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee asmay be requested by an authorized representative of DTC) is the responsibility of the Corporation or the PayingAgent and Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct and IndirectParticipants.

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

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

THE CORPORATION

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

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

KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION

The Commission is an independent corporate agency and instrumentality of the Commonwealth ofKentucky established pursuant to the provisions of Sections 157.611 through 157.640 of the Kentucky RevisedStatutes, as repealed, amended, and reenacted (the "Act") for the purpose of assisting local school districts inmeeting the school construction needs of the Commonwealth in a manner which will ensure an equitabledistribution of funds based upon unmet need.

Pursuant to the provisions of the Act, the Regulations of the Kentucky Board of Education and theCommission, the Commission has determined that the Board is eligible for participation from the Commission inmeeting the costs of construction of the Projects and has entered into a Participation Agreement with the Boardwhereunder the Commission agrees to pay an annual Agreed Participation equal to approximately $31,499 towardthe annual debt service requirements for the Bonds herein identified each year until their retirement; provided,however, that the contractual commitment of the Commission to pay the annual Agreed Participation is limitedto the biennial budget period of the Commonwealth, with the first such biennial period terminating on June 30,2018; the right is reserved in the Commission to terminate its commitment to pay the Agreed Participation afterthe initial biennial period and every two years thereafter. The obligation of the Commission to make paymentsof the Agreed Participation shall be automatically renewed each two years for a period of two years unless theCommission shall give notice of its intention not to participate not less than sixty days prior to the end of thebiennium; however, by the execution of the Participation Agreement, the Commission has expressed its presentintention to continue to pay the Agreed Participation in each successive biennial budget period until the retirementof all of the Bonds, but such execution does not obligate the Commission to do so.

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

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

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

Total $173,306,300

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

BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2018

The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium endingJune 30, 2018 which was approved and signed by the Governor. Such budget is effective beginning July 1, 2016.

OUTSTANDING BONDS

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

Current Principal Principal ApproximateBond Original Principal Assigned to Assigned to Interest Rate FinalSeries Principal Outstanding Board Commission Range Maturity

2008A-REF $3,910,000 $2,545,000 $3,754,140 $155,860 3.350% - 3.750% 20232008B-REF $795,000 $100,000 $411,903 $383,097 3.200% - 3.200% 2016

2012 $15,185,000 $13,940,000 $13,172,258 $2,012,742 2.000% - 3.500% 20322013-REF $1,390,000 $1,005,000 $896,605 $493,395 1.300% - 1.300% 2023

Totals: $21,280,000 $17,590,000 $18,234,906 $3,045,094

AUTHORITY

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

i) the issuance of approximately $1,885,000 of Bonds subject to a permitted adjustment of$375,000;

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

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

iv) the President and Secretary of the Corporation to execute certain documents relative to the saleand delivery of the Bonds.

THE BONDS

General

The Bonds will be dated July 1, 2016, will bear interest from that date as described herein, payablesemi-annually on February 1 and August 1 of each year, commencing February 1, 2017 and will mature as toprincipal on August 1, 2017 and each August 1 thereafter in the years and in the principal amounts as set forth onthe cover page of this Official Statement.

Registration, Payment and Transfer

The Bonds are to be issued in fully-registered form (both principal and interest). The Huntington NationalBank, Cincinnati, Ohio, the Bond Registrar and Paying Agent, shall remit interest on each semiannual due dateto Cede & Co., as the nominee of The Depository Trust Company. Please see Book-Entry-Only-System. Intereston the Bonds will be paid at rates to be established upon the basis of competitive bidding as hereinafter set forth,such interest to be payable on February 1 and August 1 of each year, beginning February 1, 2017 (Record Dateis 15th day of month preceding interest due date).

Redemption

The Bonds maturing on or after August 1, 2027 are subject to redemption at the option of the Corporationprior to their stated maturity on any date falling on or after August 1, 2026, in any order of maturities (less thanall of a single maturity to be selected by lot),in whole or in part, upon notice of such prior redemption being givenby the Paying Agent in accordance with DTC requirements not less than thirty (30) days prior to the date ofredemption, upon terms of the face amount, plus accrued interest, but without redemption premium.

RedemptionRedemption Date Price

August 1, 2026 and thereafter 100%

Notwithstanding the foregoing, the Corporation reserves the right, upon thirty (30) days notice, to call theBonds in whole or in part for redemption on any day at par upon the total destruction by fire, lightning, windstormor other hazard of any of the building(s) constituting the Project(s) and apply casualty insurance proceeds to suchpurpose.

SECURITY

General

The Bonds are revenue bonds and constitute a limited indebtedness of the Corporation. The Bonds arepayable as to both principal and interest solely from the income and revenues derived from the leasing of theProjects financed from the Bond proceeds from the Corporation to the Board. The Bonds are secured by pledgesof revenues on and from the site of the Project; provided, however, that such lien and pledge are inferior andsubordinate to similar liens and pledges securing the Corporation's School Building Revenue Bonds previouslyissued to refinance the Project (the "Prior Lien Bonds").

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The Lease; Pledge of Rental Revenues

The Board has leased the school Project securing the Bonds for an initial period from July 1, 2016 throughJune 30, 2017 with the option in the Board to renew said Lease from year to year for one year at a time, at annualrentals, sufficient in each year to enable the Corporation to pay, solely from the rental due under the Lease, theprincipal and interest on all of the Bonds as same become due. The Lease provides further that so long as theBoard exercises its annual renewal options, its rentals will be payable according to the terms and provisions of theLease until August 1, 2036, the final maturity date of the Bonds. Under the lease, the Corporation has pledged therental revenue to the payment of the Bonds.

STATE INTERCEPT

Under the terms of the Lease and any renewal thereof, so long as the Bonds remain outstanding and inconformance with the intent and purpose of KRS 157.627(5) and KRS 160.160(5), in the event of a failure by theBoard to pay the rentals due under the Lease, and unless sufficient funds have been transmitted to the PayingAgent, or will be so transmitted, for paying said rentals when due, the Board has granted under the terms of theLease and Participation Agreement to the Corporation and the Commission the right to notify and request theKentucky Department of Education to withhold from the Board a sufficient portion of any undisbursed funds thenheld, set aside, or allocated to the Board and to request said Department or Commissioner of Education to transferthe required amount thereof to the Paying Agent for the payment of such rentals.

COMMISSION'S PARTICIPATION

The Commission has determined that the Board is eligible for an average annual participation equal toapproximately $31,499 from the Commission's appropriation by the Kentucky General Assembly which will beused to meet a portion of the debt service of the Bonds. The plan for financing the Project will require theCommission to pay approximately twenty-three percent (23%) of the debt service of the Bonds.

The Participation Agreement to be entered into with the Board will be limited to the biennial budgetperiod of the Commonwealth of Kentucky, with the first such biennial period terminating on June 30, 2016. Theright is reserved in the Commission to terminate the commitment to pay the agreed participation every two yearsthereafter. The obligation of the Commission to make payments of the agreed participation shall be automaticallyrenewed each two years thereafter unless the Commission gives notice to the Board of its intention not toparticipate not less than sixty days prior to the end of the biennium. However, the Commission has expressed itsintention to continue to pay the agreed participation in successive biennial budget periods until the Bonds areretired, but the Commission is not required to do so.

THE PROJECT

After payment of the Bond issuance costs, the Board plans to deposit the net Bond proceeds to financeimprovements at Washington County Elementary School (the "Project").

The Board has reported construction bids have been let for the Project and approval of the KentuckyDepartment of Education, Buildings and Grounds, to award the construction contract is expected prior to the saleand delivery of the Bonds.

Contractors for the Project are required to furnish to the Board a one hundred percent completion bondto assure their performance of the construction contract.

ADDITIONAL PARITY BONDS FOR COMPLETION OF PROJECT

The Corporation has reserved the right and privilege of issuing additional bonds from time to time payablefrom the income and revenues of said lands and school building Project and secured by the same pledges ofrevenues, but only if and to the extent the issuance of such additional parity bonds may be necessary to pay thecosts, for which funds are not otherwise available, of completing the construction of said school building Projectsin accordance with the plans and specifications of the architect in charge of said Projects, which plans have been

7

completed, approved by the Board, Commissioner of Education, and filed in the office of the Secretary of theCorporation.

ESTIMATED BOND DEBT SERVICE

The following table shows by fiscal year the current bond payments of the Board. The plan of financingprovides for the Board to pay approximately 77% of the debt service of the Bonds.

Fiscal Current TotalYear Local -----------------2016 Revenue Bonds-------------------- Local

Ending Bond Principal Interest Total SFCC Local BondJune 30 Payments Portion Portion Payment Portion Portion Payments

2017 $1,173,481 $33,002 $33,002 $7,590 $25,412 $1,173,481 2018 $1,165,943 $70,000 $55,963 $125,963 $28,971 $96,991 $1,165,943 2019 $1,165,762 $70,000 $54,738 $124,738 $28,690 $96,048 $1,165,762 2020 $1,166,801 $70,000 $53,513 $123,513 $28,408 $95,105 $1,166,801 2021 $1,165,083 $70,000 $52,200 $122,200 $28,106 $94,094 $1,165,083 2022 $1,172,183 $65,000 $50,850 $115,850 $26,646 $89,205 $1,172,183 2023 $1,168,204 $70,000 $49,500 $119,500 $27,485 $92,015 $1,168,204 2024 $1,167,859 $75,000 $47,863 $122,863 $28,258 $94,604 $1,167,859 2025 $1,181,326 $60,000 $46,175 $106,175 $24,420 $81,755 $1,181,326 2026 $1,180,878 $65,000 $44,613 $109,613 $25,211 $84,402 $1,180,878 2027 $1,178,997 $70,000 $42,750 $112,750 $25,933 $86,818 $1,178,997 2028 $1,180,456 $70,000 $40,650 $110,650 $25,450 $85,201 $1,180,456 2029 $1,184,905 $65,000 $38,625 $103,625 $23,834 $79,791 $1,184,905 2030 $1,182,155 $70,000 $36,513 $106,513 $24,498 $82,015 $1,182,155 2031 $1,182,432 $70,000 $34,238 $104,238 $23,975 $80,263 $1,182,432 2032 $1,180,139 $75,000 $31,825 $106,825 $24,570 $82,255 $1,180,139 2033 $1,193,298 $65,000 $29,413 $94,413 $21,715 $72,698 $1,193,298 2034 $1,182,155 $190,000 $24,950 $214,950 $49,439 $165,512 $1,182,155 2035 $1,182,432 $195,000 $18,213 $213,213 $49,039 $164,174 $1,182,432 2036 $1,180,139 $200,000 $11,100 $211,100 $48,553 $162,547 $1,180,139 2037 $1,193,298 $200,000 $3,700 $203,700 $46,851 $156,849 $1,193,298

Totals: $24,727,927 $1,885,000 $800,390 $2,685,390 $617,640 $2,067,750 $24,727,927

Note: Projections are based on an average interest rate of 3.32%; numbers are rounded to the nearest $1.00.

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ESTIMATED USE OF BOND PROCEEDS

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

portions thereof representing accrued interest:

Sources:

Par Amount of Bonds $1,885,000.00

Total Sources $1,885,000.00

Uses:

Deposit to Construction Fund $1,816,700.00

Underwriter's Discount (2%) 37,700.00

Cost of Issuance 30,600.00

Total Uses $1,885,000.00

DISTRICT STUDENT POPULATION

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

follows:

Average Daily Average DailyYear Attendance Year Attendance

1989-90 1,605.2 2002-03 1,684.01990-91 1,666.3 2003-04 1,720.31991-92 1,634.4 2004-05 1,681.11992-93 1,637.7 2005-06 1,700.21993-94 1,626.4 2006-07 1,675.81994-95 1,647.0 2007-08 1,627.91995-96 1,622.2 2008-09 1,586.91996-97 1,636.3 2009-10 1,553.31997-98 1,645.8 2010-11 1,512.71998-99 1,645.8 2011-12 1,529.71999-00 1,656.9 2012-13 1,516.62000-01 1,701.6 2013-14 1,504.82001-02 1,659.3 2014-15 1,506.2

______________

Source: Kentucky State Department of Education.

STATE SUPPORT

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

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

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

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

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

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

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

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

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

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

outlay purposes:

a. For direct payment of construction costs.

b. For debt service on voted and funding bonds.

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

of the school plant.

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

deficit resulted from certain declared emergencies.

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

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

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

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

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

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

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

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

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

attendance as required by law.

Capital CapitalOutlay Outlay

Year Allotment Year Allotment

1990-91 166,630.0 2003-04 172,030.01991-92 163,440.0 2004-05 168,110.01992-93 163,770.0 2005-06 170,020.01993-94 162,640.0 2006-07 167,580.01994-95 164,700.0 2007-08 162,790.01995-96 162,220.0 2008-09 158,689.01996-97 163,630.0 2009-10 155,327.01997-98 164,580.0 2010-11 151,265.01998-99 164,580.0 2011-12 152,971.01999-00 165,690.0 2012-13 151,664.02000-01 170,160.0 2013-14 150,478.02001-02 165,930.0 2014-15 150,618.02002-03 168,400.0

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

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

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

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

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

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

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

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

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

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

Education in a School Facilities Plan;

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

30 cents minimum current equivalent tax rate; and,

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

school building construction bonding.

LOCAL SUPPORT

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

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

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

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

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

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

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

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

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

effective January 1, 2015.

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

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

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

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

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

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

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

and (2) an amended KRS 157.440.

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

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

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

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

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

equivalent rate subjects the board of the district to removal.

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

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

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

hearing or recall provisions as set forth in KRS 160.470.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Local Tax Rates, Property Assessments and Revenue Collections

Combined Total PropertyTax Equivalent Property RevenueYear Rate Assessment Collections

1991-92 46.7 232,215,894 1,084,4481992-93 48.3 243,175,669 1,174,5381993-94 47 257,128,513 1,208,5041994-95 48.2 278,622,864 1,342,9621995-96 52.5 294,292,802 1,545,0371996-97 52 309,994,463 1,611,9711997-98 52.3 317,687,625 1,661,5061998-99 52.3 339,397,202 1,775,0471999-00 50.7 357,525,797 1,812,6562000-01 49 393,916,044 1,930,1892001-02 50.7 419,143,529 2,125,0582002-03 50.5 440,177,892 2,222,8982003-04 50.5 453,199,674 2,288,6582004-05 51.4 476,945,662 2,451,5012005-06 53.2 508,984,169 2,707,7962006-07 53.9 525,064,660 2,830,0992007-08 53.2 560,617,824 2,982,4872008-09 61.2 584,674,054 3,578,2052009-10 61.2 581,367,066 3,557,9662010-11 63.2 587,450,333 3,712,6862011-12 65.4 589,953,063 3,858,2932012-13 65.6 598,805,386 3,928,1632013-14 68.9 613,466,510 4,226,7842014-15 71 625,368,028 4,440,113

Overlapping Bond Indebtedness

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

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

June 30, 2013.

Original Amount CurrentPrincipal of Bonds Principal

Issuer Amount Redeemed OutstandingCounty of Washington General Obligation $70,000 $20,109 $49,891 Justice Center Revenue $11,960,000 $1,865,000 $10,095,000 Vehicles Renewable $80,000 $58,461 $21,539City of Springfield General Obligation $250,000 $100,000 $150,000 Water & Sewer Revenue $5,789,000 $1,416,500 $4,372,500 Refinancing Revenue $1,962,000 $543,000 $1,419,000 Educational Development Revenue $14,350,000 $2,980,000 $11,370,000 Improvement Project Revenue $2,419,218 $159,199 $2,260,019Special Districts Washington County Conservation Dist. $284,419 $230,617 $53,802Totals: $37,164,637 $7,372,886 $29,791,751

______________

Source: 2013 Kentucky Local Debt Report.

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SEEK Allotment

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

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

prior to enactment of the Kentucky Education Reform Act:

Base Local Total State &Funding Tax Effort Local Funding

2014-15 SEEK 6,943,374 4,440,113 11,383,4872013-14 SEEK 6,754,164 4,226,784 10,980,9482012-13 SEEK 6,849,361 3,928,163 10,777,5242011-12 SEEK 7,108,475 3,858,293 10,966,7682010-11 SEEK 6,547,867 3,712,686 10,260,5532009-10 SEEK 6,894,758 3,557,966 10,452,7242008-09 SEEK 7,796,272 3,578,205 11,374,4772007-08 SEEK 8,130,554 2,982,487 11,113,0412006-07 SEEK 7,701,895 2,830,099 10,531,9942005-06 SEEK 7,493,874 2,707,796 10,201,6702004-05 SEEK 6,855,519 2,451,501 9,307,0202003-04 SEEK 6,956,317 2,288,658 9,244,9752002-03 SEEK 6,202,237 2,222,898 8,425,1352001-02 SEEK 6,305,248 2,125,058 8,430,3062000-01 SEEK 6,221,280 1,930,189 8,151,4691999-00 SEEK 5,752,640 1,812,656 7,565,2961998-99 SEEK 5,527,876 1,775,047 7,302,9231997-98 SEEK 5,426,042 1,661,506 7,087,5481996-97 SEEK 5,283,691 1,611,971 6,895,6621995-96 SEEK 4,823,074 1,545,037 6,368,1111994-95 SEEK 4,842,338 1,342,962 6,185,3001993-94 SEEK 4,571,158 1,208,504 5,779,6621992-93 SEEK 4,593,339 1,174,538 5,767,8771991-92 SEEK 4,519,469 1,084,448 5,603,917

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

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

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

(2) The Board established a current equivalent tax rate (CETR) of $0.710 for FY 2014-15. The equivalent

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

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

certified by the Commonwealth of Kentucky Revenue Cabinet.

State Budgeting Process

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

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

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

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

sources.

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

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

forwarded to the State Department for approval or disapproval.

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

financially unsound or fails to provide for:

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

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

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

or

b) fails to comply with the law.

POTENTIAL LEGISLATION

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

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

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

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

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

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

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

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

tax advisers regarding any pending or proposed federal tax legislation.

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

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

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

issues, will not affect the market price for the Bonds.

CONTINUING DISCLOSURE

As a result of the Board and issuing agencies acting on behalf of the Board having outstanding at the time

the Bonds referred to herein are offered for public sale municipal securities in excess of $1,000,000, the

Corporation and the Board will enter into a written agreement for the benefit of all parties who may become

Registered or Beneficial Owners of the Bonds whereunder said Corporation and Board will agree to comply with

the provisions of the Municipal Securities Disclosure Rules set forth in Securities and Exchange Commission Rule

15c2-12 by filing annual financial statements and material events notices with the Electronic Municipal Market

Access (EMMA) System maintained by the Municipal Securities Rule Making Board.

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

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

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

following information:

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

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

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

(4) Failure to file Annual Financial Information for one (1) year on a timely basis.

The Annual Financial Information for FY ending June 30, 2010 and 2011 were filed after the deadline

(March 31st). Operating Data for FYs ending June 30, 2009, 2010, 2011, 2012 and 2013 was filed on

July 21, 2014.

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

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

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

School District Board of Education, 120 Mackville Hill Road, Springfield, Kentucky 40069, Telephone

859-336-5470.

TAX EXEMPTION; BANK QUALIFIED

Bond Counsel is of the opinion that:

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

Commonwealth of Kentucky and all of its political subdivisions.

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

for Federal income tax purposes under existing law; provided, that the corporate entities noted below are advised

of certain tax consequences as follows:

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

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

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

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

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

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

the Bonds are "qualified tax-exempt obligations" within the meaning of the Internal Revenue Code of 1986, as

amended.

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

for Federal income tax purposes under existing law for individuals; however, said income must be included in the

calculation of "modified adjusted gross income" in the determination of whether and to what extent Social Security

benefits are subject to Federal income taxation.

The Corporation will provide the purchaser the customary no-litigation certificate, and the final approving

Legal Opinions of Steptoe & Johnson PLLC, Bond Counsel and Special Tax Counsel, Louisville, Kentucky

approving the legality of the Bonds. These opinions will accompany the Bonds when delivered, without expense

to the purchaser.

Original Issue Premium

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

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

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

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

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

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

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

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

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

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

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

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

that semiannual period on a daily basis.

15

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

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

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

Original Issue Discount

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ABSENCE OF MATERIAL LITIGATION

There is no controversy or litigation of any nature now pending or threatened (i) restraining or enjoining

the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the

Bonds or any proceedings of the Board or Corporation taken with respect to the issuance or sale thereof or (ii)

which if successful would have a material adverse effect on the financial condition of the Board.

APPROVAL OF LEGALITY

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

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

will appear on each printed Bond.

NO LEGAL OPINION EXPRESSED AS TO CERTAIN MATTERS

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

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

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

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

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

16

BOND RATING

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

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

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

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

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

an adverse effect on the market price of the Bonds.

FINANCIAL ADVISOR

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

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

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

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

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

APPROVAL OF OFFICIAL STATEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By /s/

President

By /s/

Secretary

APPENDIX A

Washington County School District Finance CorporationSchool Building Revenue Bonds

Series of 2016

Demographic and Economic Data

(A-1)

WASHINGTON COUNTY, KENTUCKY

Washington County is located in central Kentucky Blue Grass Region, 57 miles southeast of Louisville,

Kentucky; 54 miles southwest of Lexington, Kentucky; and 183 miles northwest of Knoxville, Tennessee. In 2015,

Washington County had an estimated population of 12,063 persons. Springfield, the county seat of Washington

County, had a population of 2,651 persons in 2014.

The Economic Framework

The total number of Washington County residents employed in 2013 averages 3,126. Trade,

transportation and utilities provided 451 jobs; 226 people were employed in service occupations; manufacturing

firms reported 949 jobs; public administration accounted for 153 employees; and 165 jobs were present in contract

construction.

Power and Fuel

Electric power is provided to Springfield and Washington County by the East Kentucky Power

Cooperative and Kentucky Utilities. Natural gas service is provided by Atmos Energy Corporation and the

Louisville Gas and Electric Company.

Education

Primary and secondary education is provided to Springfield and Washington County by the Washington

County School System. Twelve colleges and universities are located within 50 miles of Springfield. Vocational

training is available at the Marion County Area Technology Center, 8 miles from Springfield.

LABOR MARKET STATISTICS

The Springfield Labor Market Area includes Washington County and the adjoining Kentucky counties

of Anderson, Mercer, Boyle, Marion, Nelson, Spencer, Bullitt, Hardin, Larue and Taylor.

Population

Area 2013 2014 2015Labor Market Area 390,557 392,500 392,445

Springfield 2,605 2,651 NA

Washington County 11,863 11,955 12,063

_______________

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

Population Projections

Area 2020 2025 2030Washington County 12,486 12,813 13,086

_______________

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

(A-2)

EDUCATION

Public SchoolsWashington County

Total Enrollment (2014-2015) 1,671

Pupil To Teacher Ratio (2014-2015) 16.5 - 1

Vocational Training

Kentucky Tech schools are operated by the Cabinet for Workforce Development and provide secondary (Sec)

and postsecondary (P/S) vocational-technical training.

Bluegrass State Skills Corporation

The Bluegrass State Skills Corporation, an independent public corporation created and funded by the

Kentucky General Assembly, provides programs of skills training to meet the needs of business and industry from

entry level to advanced training, and from upgrading present employees to retraining experienced workers.

The Bluegrass State Skills corporation is a major source for skills training assistance for a new or existing

company. The Corporation works in partnership with other employment and job training resources and programs,

as well as Kentucky's economic development activities, to package a program customized to meet the specific

needs of a company.

EnrollmentVocational School Location 2014-2015Marion County ATC Lebanon, KY 594

Nelson County ATC Bardstown, KY 364

Hughes Jones Harrodsburg ATC Harrodsburg, KY 238

Casey County ATC Liberty, KY 390

Green County ATC Greensburg, KY 508

Lincoln County ATC Stanford, KY 254

Bullitt County ATC Shepherdsville, KY 165

Garrard County ATC Lancaster, KY 250

Shelby County ATC Shelbyville, KY 658

Lake Cumberland ATC Russell Springs, KY 569

Eastside Technical Center Lexington, KY 645

Madison County ATC Richmond, KY 726

Rockcastle County ATC Mt. Vernon, KY 424

Pulaski County ATC Somerset, KY 365

Meade County ATC Brandenburg, KY 385

Grayson County AVEC Leitchfield, KY 734

Clark County ATC Winchester, KY 680

(A-3)

Colleges and UniversitiesEnrollment

Name Location (Fall 2014)Bellarmine College Louisville, KY 3,609

Spalding University Louisville, KY 2,311

University of Louisville Louisville, KY 21,561

Campbellsville University Campbellsville, KY 3,427

Centre College Danville, KY 1,387

Asbury College Wilmore, KY 1,470

Kentucky State University Frankfort, KY 1,895

Lindsey Wilson College Columbia, KY 2,641

Midway College Midway, KY 1,140

Transylvania University Lexington, KY 1,014

University of Kentucky Lexington, KY 29,203

Eastern Kentucky University Richmond, KY 16,305

Georgetown College Georgetown, KY 1,262

Berea College Berea, KY 1,621

FINANCIAL INSTITUTIONS

Institution Total Assets Total Deposits The Springfield State Bank $294,296,000 $218,323,000

________________

Source: McFadden American Financial Institutions Directory, January - June 2016 Edition.

EXISTING INDUSTRY

TotalFirm Product Employed

All Weather Insulation Company LLC Manufacture and sales of cellulose insulation

and hydro seeding mulch 10

Alltech Inc. Spray drying operation natural animal feed

additives 60

Barber Cabinet Co. Inc. Wooden, laminated & custom made vanities

and kitchen cabinets 43

Bluegrass Dairy and Food Dairy & food products 75

Boone Sheet Metal Inc. Sheet metal fabrication 3

Concept Packaging Group Corrugated paperboard, corrugated plastic, wood

packaging and other packaging materials 3

INOAC Group North America LLC Automobile armrests & interior plastic parts 340

Johnson Products LLC Distributors of fiberglass and metal building

insulation 9

Joseph Thomas True Candles Fragrance products, candles, botanicals, etc. 1

LB Manufacturing Robotic and manual MIG welding of carbon

and stainless steels 92

Toyotomi America Corp. Automotive after-market products 300

_________________

Source: Kentucky Cabinet for Economic Development. (6/1/2016).

APPENDIX B


Series of 2016

Audited Financial Statement ending June 30, 2015

WASHINGTON COUNTY

SCHOOL DISTRICT

AUDITED FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULES

For the year ended June 30, 2015

Prepared by:

WHITE & ASSOCIATES, PSC CERTIFIED PUBLIC ACCOUNTANTS

1407 Lexington Road

Richmond, Kentucky 40475

Phone (859) 624-3926 Fax (859) 625-0227

TABLE OF CONTENTS

***************

Page

INDEPENDENT AUDITOR’S REPORT.…..………………………………………….. 1-3

MANAGEMENT DISCUSSION AND ANALYSIS…………………………………… 4-9

BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements:

Statement of Net Position……………………………………………………….. 10

Statement of Activities…………………………………………………………... 11

Fund Financial Statements:

Balance Sheet-Governmental Funds………………...…..…….…………........... 12

Reconciliation of the Balance Sheet- Governmental

Funds to the Statement of Net Position .……….…………………………….. 13

Statement of Revenues, Expenditures and Changes in

Fund Balances – Governmental Funds ……………………………………… 14

Reconciliation of the Statement of Revenues, Expenditures and

Changes in Fund Balances of Governmental Funds to the

Statement of Activities………………………….…………………………... 15


Fund Balance – Budget and Actual - General Fund ………..………………. 16


Fund Balance – Budget and Actual – Special Revenue Fund…..…………... 17

Statement of Fund Net Position – Proprietary Funds…………….……………. 18

Statement of Revenues, Expenses and Changes in Fund Net Position –

Proprietary Funds….………………………………………..……………….. 19

Statement of Cash Flows – Proprietary Funds………………..………………… 20

Statement of Fiduciary Net Position – Fiduciary Funds……..…………….…… 21

Statement of Changes in Net Position – Fiduciary Funds…..…………….…… 22

Notes to the Financial Statements…………………………………..…………... 23-46

REQUIRED SUPPLEMENTAL INFORMATION

Schedule of the District’s Proportionate Share of the Net Pension Liability………. 47

Schedule of Contributions………………………………………………………….. 48

Notes to Required Supplementary Information………………………………….…. 49

SUPPLEMENTAL INFORMATION

Combining Statements – Non-Major Funds and Other:

Combining Balance Sheet – Nonmajor Governmental Funds ……..………….. 50

Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances – Non-major Governmental Funds ……………………… 51

Combining Balance Sheet of Fiduciary Funds – School Activity and Private

Purpose Trust..…………………………………………………………..….. 52

Combining Statement of Revenues, Expenses, and Changes in Fund Balance -

School Activity and Private Purpose Trust………………………………… 53

Statement of Revenues, Expenses, and Changes in Fund Balance -

Washington County High School…………………….…………………… 54

Notes to the Schedule of Expenditures of Federal Awards…………………….. 55

Schedule of Expenditures of Federal Awards………………….……………….. 56-57

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS……………. 58-59

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY OMB CIRCULAR A-133…………..……………………………… 60-61

SCHEDULE OF FINDINGS AND QUESTIONED COSTS……………...…………... 62

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS………………………….... 63

White & Associates, PSC CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR’S REPORT

To the Washington County Board of Education and

State Committee for School District Audits

Springfield, Kentucky

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type

activities, each major fund, and the aggregate remaining fund information of Washington County School

District (District) as of and for the year ended June 30, 2015, and the related notes to the financial

statements, which collectively comprise the District’s 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 accounting principles generally accepted in the United States of America; this includes

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 and the audit requirements prescribed by the Kentucky State

Committee for School District Audits in the Auditor Responsibilities and State Compliance Requirements

sections contained in the Kentucky Public School Districts’ Audit Contract and Requirements. 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.

2

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the

respective financial position of the governmental activities, the business-type activities, each major fund,

and the aggregate remaining fund information of the District, as of June 30, 2015, and the respective

changes in financial position, and, where applicable, cash flows, and the respective budgetary comparison

schedules for the General Fund and Special Revenue Fund thereof for the year then ended in accordance

with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As described in Note Q to the financial statements, in 2015, the District adopted new accounting

guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Our opinion is not

modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s

discussion and analysis, schedule of the district’s proportionate share of the net pension liability, and

schedule of contributions information as listed in the table of contents be presented to supplement the

basic financial statements. Such information, although not a part of the basic financial statements, is

required by the Governmental Accounting Standards Board, who considers it to be an essential part of

financial reporting for placing the basic financial statements in an appropriate operational, economic, or

historical context. We have applied certain limited procedures to the required supplementary information

in accordance with auditing standards generally accepted in the United States of America, which

consisted of inquiries of management about the methods of preparing the information and comparing the

information for consistency with management’s responses to our inquiries, the basic financial statements,

and other knowledge we obtained during our audit of the basic financial statements. We do not express an

opinion or provide any assurance on the information because the limited procedures do not provide us

with sufficient evidence to express an opinion or provide any assurance.

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 additional supplementary information, as listed in

the table of contents, is presented for purposes of additional analysis and is not a required part of the basic

financial statements. The schedule of expenditures of federal awards is presented for purposes of

additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of

States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic

financial statements.

The additional supplementary information and the schedule of expenditures of federal awards 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

3

the United States of America. In our opinion, the additional supplementary information 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 November 15,

2015, on our consideration of the District’s internal control over financial reporting and on our tests of its

compliance with certain provisions of laws, regulations, contracts, and grant agreements and other

matters. The purpose of that report is to describe the scope of our testing of internal control over financial

reporting and compliance and the results of that testing, and not to provide an opinion on 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.

White & Associates, PSC Richmond, Kentucky

November 15, 2015

WASHINGTON COUNTY PUBLIC SCHOOL DISTRICT

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

YEAR ENDED JUNE 30, 2015

4

As management of the Washington County School District, we offer readers of the District’s financial

statements this narrative overview and analysis of the financial activities of the District for the fiscal

year ended June 30, 2015. We encourage readers to consider the information presented here in

conjunction with additional information found within the body of the audit.

FINANCIAL HIGHLIGHTS

The restated beginning fund governmental fund balance for the district was $5,747,981 of

which $3,358,958 was the General Fund and $2,389,028 was in the restricted funds of Capital

Outlay, Building, District Activity and Construction funds. The ending governmental fund

balance was $4,964,597 of which $3,713,402 was the General Fund the remaining $1,251,195

was in the restricted funds of Capital Outlay, Building, District Activity and Construction

funds.

The General Fund ending cash balance at June 30, 2015 was $4,236,586. Accounts receivable

totaled $106,184. Accounts payable and accrued salaries and benefit payable totaled $629,368.

The result is an unassigned fund balance of $3,411,260, assigned fund balance $150,966 and a

committed fund balance of $151,176. General Fund Revenues totaled $13,438,279 which

primarily consists of state program funding (SEEK), property, utility and motor vehicle taxes.

General Fund expenditures total $13,037,056 exclusive of inter-fund transfers of $46,774. The

expenditures include on-behalf payments from the Commonwealth of Kentucky for health

insurance, life insurance and Kentucky Teachers’ Retirement contributions.

The first day of instruction in the new Washington County High School was January 5, 2015.

GASB 68 was implemented for the financial statements presented. It requires the entire plan

pension expense be allocated among the employers rather than what was actually paid. The

result was

Our District continues to look for outside funding sources through grants and other venues as a

means of achieving our Career and College readiness goals.

There was no new debt occurred during fiscal year 2015.

OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the Washington County School

District’s basic financial statements. The District’s basic financial statements are comprised of three

components: 1) district-wide financial statements, 2) fund financial statements, and 3) notes to the

financial statements. This report also contains other supplementary information in addition to the basic

financial statements themselves.




5

District-Wide Financial Statements - The district-wide financial statements are designed to provide

readers with a broad overview of the Washington County School District’s finances, in a manner similar

to a private-sector business.

The statement of net position presents information on all of the Washington County School District’s

assets and liabilities, with the difference between the two reported as net assets. Over time, increases or

decreases in net assets may serve as a useful indicator of whether the financial position of the

Washington County School District is improving or deteriorating.

The statement of activities presents information showing how the Washington County School District’s

net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as

the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.

Thus, revenues and expenses are reported in this statement for some items that will only result in cash

flows in future fiscal periods.

The district-wide financial statements outline functions of the Washington County School District that

are principally supported by property taxes and intergovernmental revenues (governmental activities).

The governmental activities of the District include instruction, support services, operation and

maintenance of plant, student transportation and operation of non-instructional services. Fixed assets

and related debt is also supported by taxes and intergovernmental revenues.

The district-wide financial statements can be found on the table of contents in this report.

Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control

over resources that have been segregated for specific activities or objectives. This is a state mandated

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

administrative software. The District uses fund accounting to ensure and demonstrate compliance with

finance-related legal requirements. All of the funds of the District can be divided into three categories:

governmental, proprietary funds and fiduciary funds. Fiduciary funds are trust funds established by

benefactors to aid in student education, welfare and teacher support. The only proprietary fund is our

food service operations. All other activities of the District are included in the governmental funds. The

basic governmental fund financial statements can be found on the table of contents in this report.

Notes to the Financial Statements - The notes provide additional information that is essential to a full

understanding of the data provided in the district-wide and fund financial statements. The notes to the

financial statements can be found on the table of contents in this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position may serve over time as a useful indicator of a government’s financial position. In the case

of the District, assets exceeded liabilities by approximately $15,208,639 as of June 30, 2015. The

largest portion of the District’s net assets reflects its investment in capital assets (e.g., land and

improvements, buildings and improvements, vehicles, furniture and equipment and construction in

progress), less any related debt used to acquire those assets that is still outstanding. The District uses




6

these capital assets to provide services to its students; consequently, these assets are not available for

future spending. Although the District’s investment in its capital assets is reported net of related debt, it

should be noted that the resources needed to repay this debt must be provided from other sources, since

the capital assets themselves cannot be used to liquidate these liabilities.

The District’s financial position is the product of several financial transactions including the net results

of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the

depreciation of capital assets.

2015 District-Wide Governmental Net Assets comparison is as follows:

Table 1

Net Position (in Millions)

Total

Governmental

Business-Type

Total

Percentage

Activities

Activities

School District

Change

2014

2015

2014

2015

2014

2015

2014-2015

Assets:

Current and Other Assets 7.20

6.13

0.31

0.32

7.51

6.45

-14%

Capital Assets

31.80

31.75

0.06

0.06

31.86

31.81

0%

Total Assets

39.00

37.88

0.37

0.38

39.37

38.26

-3%

Loss for the difference

Pension contribution subsequent

to measurement date 0.00

0.34

0.00

0.01

0.00

0.35

100%

Reacquisition and carrying

value of refunding debt 0.12

0.11

0.00

0.00

0.12

0.11

-8%

0.12

0.45

0.00

0.01

0.12

0.46

283%

Liabilities:

Current Liabilities 2.61

2.30

0.04

0.04

2.65

2.34

-12%

Noncurrent Liabilities 18.89

20.72

0.00

0.13

18.89

20.85

10%

Total Liabilities 21.50

23.02

0.04

0.17

21.54

23.19

8%

Deferred Inflows

0.31

0.01

0.00

0.33

100%

Net Position:

Invested in Capital Assets

Net of Debt

12.61

13.29

0.06

0.06

12.67

13.35

5%

Restricted

2.69

1.54

0.27

0.15

2.96

1.69

-43%

Deficit

0.00

0.00

0.00

0.02

0.00

0.02

100%

Unrestricted Net Position 2.32

0.16

0.00

0.00

2.32

0.16

-93%

Total Net Position 17.62

14.99

0.33

0.23

17.95

15.22

-15%




7

GOVERNMENTAL ACTIVITIES

The following is a comparison of the changes in net position:

Table 2

Changes in Net Position

(in millions)

Total

Total

Percentage

Governmental Activities Business-Type Activities School District

Change

2014 2015 2014 2015 2014 2015

2014-2015

Revenues:

Charges for services $ 0.18 $ 0.07 $ 0.38 $ 0.33 $ 0.56 $ 0.40

-29%

Operating grants and contributions 1.96 4.44 0.81 0.84 2.77 5.28

91%

Capital grants and contributions 0.88 0.91 - - 0.88 0.91

3%

General revenues 13.48 11.87 0.01 - 13.49 11.87

-12%

Total revenue 16.50 17.29 1.20 1.17 17.70 18.46

4%

Expenses:

Instruction 8.26 8.95

8.26 8.95

8%

Student support 0.70 0.52

0.70 0.52

-26%

Instructional staff suport 0.42 0.70

0.42 0.70

67%

District administration 0.79 0.86

0.79 0.86

9%

School administration 0.95 0.94

0.95 0.94

-1%

Business 0.62 0.69

0.62 0.69

11%

Plant operation & maintenance 1.27 1.26

1.27 1.26

-1%

Student transportation 0.65 0.82

0.65 0.82

26%

Community Services Operations 0.24 0.22

0.24 0.22

0%

Building improvements 0.21 0.67

0.21 0.67

100%

Amortization 0.02 0.01

0.02 0.01

100%

Depreciation 0.68 0.99 0.01 0.01 0.69 1.00

45%

Interest on long-term debt 0.58 0.56

0.58 0.56

-3%

Food Service Operations

1.08 1.06 1.08 1.06

-2%

Day care

0.12 0.11 0.12 0.11

-8%

Total Expenses $ 15.39 $ 17.19 $ 1.21 $ 1.18 $ 16.60 $ 18.37

11%

Change in net position $ 1.11 $ 0.10 $ (0.01) $ (0.01) $ 1.10 $ 0.09

92%

CAPITAL ASSETS

At the end of fiscal 2015, the District had $31,817,857 invested in capital assets, including land,

buildings, buses, computers and other equipment. This amount represents a decrease (including

additions and deductions) of $39,101 from last year. The primary reason for the decrease is the Board

approved to remove assets under $5,000 that have been fully depreciated.




8

2014 2015 2014 2015 2014 2015

Land 1,280,702 1,280,702 - - 1,280,702 1,280,702

Land and Improvements 55,916 43,559 - - 55,916 43,559

Buildings & Improvements 10,415,394 29,356,387 - - 10,415,394 29,356,387

Technology Equipment 157,176 243,042 - - 157,176 243,042

Vehicles 550,796 490,334 - - 550,796 490,334

General Equipment 307,295 331,383 58,611 64,995 365,906 396,378

Construction In Progress 19,030,858 7,455 - - 19,030,858 7,455

Governmental Activities Business Type Activities Totals

Capital Assets at Year-End

(Net of depreciation)

DEBT

The district has a total $18,460,000 of bonds outstanding at June 30, 2014 with $870,000 due within 1

year.

2014 2015

$ $

19.32 18.46

$ 19.32 $ 18.46Total Obligations

Outstanding Debt at Year-End

(in Millions)

Government

Activities

Capital Lease Obligations

General Obligation Bonds

THE DISTRICT’S FUNDS

As the District completed the year, the General Fund reflected a fund balance of $3,713,402, which is

$354,449 greater than last year’s fund balance of $3,358,953. The unassigned portion of the fund

balance at the end of fiscal year 2015 is $3,411,260 compared to $2,997,222 from the preceding year.

The following table presents a summary of revenue and expense for the District as a whole for the

fiscal year ended June 30, 2015:




9

REVENUE Fund Fund Fund Fund Fund Fund Fund Fund

1 2 21 310 320 360 400 51

Local Revenue Sources 3,981,073 432,117 625,368 20,561 265,093

State Revenue Sources 9,457,206 800,272 150,618 502,760 253,097 119,710

Federal Revenue Sources - 945,267 698,230

Other - 62,976 12,638

Transfers 46,774 1,170,614

TOTALS 13,438,279 2,224,430 62,976 150,618 1,128,128 33,199 1,423,711 1,083,033

Fund Fund Fund Fund Fund Fund Fund Fund

EXPENDITURES 1 2 21 310 320 360 400 51

Instruction 7,224,036 1,858,030 47,656

Student Support Services 504,812 10,435

Instructional Staff Support Services 627,361 74,543 7,642

District Admin Support 816,338 48,998

School Admin Support 938,755

Business Support Services 624,159 59,865

Plant Operation & Management 1,344,399 4,000 6,335 1,281,037

Student Transportation 913,382

Food Service Operations 1,074,094

Community Services 43,815 168,559

Debt Service 1,423,711

Site Improvement

Transfers 46,774 151,019 1,019,595

TOTALS 13,083,831 2,224,430 61,633 151,019 1,019,595 1,281,037 1,423,711 1,074,094

Excess / (Deficit) 354,448 - 1,343 (401) 108,533 (1,247,838) - 8,939

*Note This chart does not include beginning balances.

GENERAL FUND BUDETARY HIGHLIGHTS

The overall budgeted revenues were within $5,112 of the actual revenues received. Budgeted

expenditures were reduced for a two day contract reduction for staff and an $85,000 reduction in

district technology. General fund expenditures were 82% of the final budget. Actual expenditures

were lower than anticipated primarily due to continued conservative spending and the date the Board

would start paying fixed costs related to the new high school. The unassigned fund balance for the

general fund at the end of the fiscal year is $3,411,260, an increase from the prior year of $434,038.

As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance

and total fund balance to total fund expenditures. Unassigned fund balance represents 26% of

expenditures while total fund balance represents 28% of expenditures. This is a 15% increase

unassigned fund balance and an 11% increase total fund balance.

Questions regarding this report should be directed to the Judy Spalding, Chief Financial Officer or

Superintendent, Robin Cochran, EdD at (859)336-5470 or by mail at Washington County Board of

Education, PO Box 72, Springfield, KY 40069.

WASHINGTON COUNTY SCHOOL DISTRICT

Statement of Net Position

June 30, 2015

Business-

Governmental type

Activities Activities Total

ASSETS

Cash and cash equivalents $ 5,777,446 $ 284,145 $ 6,061,591

Receivables (net) 353,538 6,821 360,358

Inventories 24,765 24,765

Land, improvements, and construction in progress 1,288,157 1,288,157

Other capital assets, net of depreciation 30,464,706 64,995 30,529,701

Total capital assets 31,752,863 64,995 31,817,858

Total assets 37,883,846 380,725 38,264,572

DEFERRED OUTFLOWS OF RESOURCES

District pension contributions subsequent to the measurement date 345,559 10,986 356,545

Deferred savings from refunding bonds 108,723 108,723

Total deferred outflows of resources 454,282 10,986 465,268

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 38,338,128 391,711 38,729,839

LIABILITIES

Accounts payable and accrued expenses 39,623 39,623

Accrued salaries and benefit payable 670,427 40,241 710,668

Accrued interest payable 227,912 227,912

Unearned revenue 456,337 456,337

Long-term liabilities:

Due within 1 year:

Bond obligations 870,000 870,000

KSBIT payable 35,731 35,731

Total due within 1 year 905,731 - 905,731

Due in more than 1 year:

Bond obligations 17,590,000 17,590,000

KSBIT payable 115,235 115,235

Sick leave 228,694 228,694

Net pension liability 2,791,237 129,763 2,921,000

Total due in more than 1 year 20,725,166 129,763 20,854,929

Total liabilities 23,025,196 170,004 23,195,200

DEFERRED INFLOWS OF RESOURCES

Net difference between projected and actual earnings on pension plan investments 311,518 14,482 326,000

NET POSITION

Net Investment in capital assets 13,292,863 64,995 13,357,858

Restricted for:

Other purposes 379,634 379,634

Capital projects 1,163,348 1,163,348

Food Services 144,790 144,790

Unrestricted 165,569 165,569

Deficit (2,560) (2,560)

Total net position 15,001,414 207,225 15,208,639

TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 38,338,128 $ 391,711 $ 38,729,839

Primary Government

See accompanying notes to the financial statements.

10


Statement of Activities

Year ended June 30, 2015

Operating Capital Business-

Charges for Grants and Grants and Governmental type

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total

PRIMARY GOVERNMENT:

Governmental activities:

Instruction $ 10,125,273 $ 8,864 $ 3,779,647 $ $ (6,336,762) $ (6,336,762)

Support Services

Student 521,563 65,809 159,375 (296,380) (296,380)

Instructional Staff 695,282 212,458 (482,824) (482,824)

District Administration 860,520 262,950 (597,570) (597,570)

School Administration 938,729 286,848 (651,881) (651,881)

Business 691,127 211,188 (479,939) (479,939)

Plant Operation & Maintenance 1,258,139 384,451 653,378 (220,310) (220,310)

Student Transportation 824,402 251,913 (572,489) (572,489)

Community Services Operations 215,394 65,818 (149,576) (149,576)

Building acquistions 674,996 (674,996) (674,996)

Amortization 15,532 (15,532) (15,532)

Depreciation 992,384 (992,384) (992,384)

Interest on general long-term debt 560,944 253,097 (307,848) (307,848)

Total governmental activities 18,374,286 74,673 5,614,649 906,475 (11,778,490) (11,778,490)

Business-type activities:

Food service operations 1,063,868 258,699 817,940 $ 12,770 12,770

Day care operations 106,922 75,954 24,536 (6,432) (6,432)

Depreciation 10,226 (10,226) (10,226)

Total business-type activities 1,181,016 334,652 842,476 - - (3,888) (3,888)

Total primary government $ 19,555,302 $ 409,325 $ 6,457,125 $ 906,475 (11,778,490) (3,888) (11,782,377)

General revenues:

Taxes:

Property taxes 3,075,300 3,075,300

Motor vehicle taxes 413,228 413,228

Franchise taxes 154,492 154,492

Uitility taxes 741,314 741,314

State and formula grants 6,792,756 6,792,756

Other local revenue 511,258 511,258

Gain on retirement of capital assets 43,331 43,331

Unrestricted investment earnings 139,490 7,124 146,614

Total general revenues 11,871,171 7,124 11,878,295

Change in net position 92,681 3,236 95,917

Net position - beginning 17,617,927 333,478 17,951,405

Prior period adjustment 1 (2,785,343) (129,489) (2,914,832)

Prior period adjustment 2 76,149 76,149

Restated net position - beginning 14,908,732 203,989 15,112,722

Net position - ending $ 15,001,414 $ 207,225 $ 15,208,639

Program Revenues Net (Expense) Revenue and Changes in Net Position

Primary Government


11


Balance Sheet

Governmental Funds

June 30, 2015

Other

Special Debt Governmental

General Revenue Service Funds Total

ASSETS

Cash and cash equivalents $ 4,236,586 $ 291,095 $ - $ 1,249,765 $ 5,777,446

Receivables, net

Taxes-current 76,992 76,992

Taxes-delinquent 2,293 2,293

Accounts 26,899 1,430 28,329

Intergovernmental-state -

Intergovernmental-federal 245,924 245,924

Total assets 4,342,770 537,019 - 1,251,195 6,130,983

LIABILITIES

Accounts payable 39,424 199 39,623

Accrued salaries and benefit payable 589,944 80,483 670,427

Unearned revenue 456,337 456,337

Total liabilities 629,368 537,019 - - 1,166,387

FUND BALANCE

Nonspendable 7,907 7,907

Restricted 1,165,796 1,165,796

Committed 151,176 77,492 228,668

Assigned 150,966 150,966

Unassigned 3,411,260 3,411,260

Total fund balance 3,713,402 - - 1,251,195 4,964,597

FUND BALANCE - ENDING $ 4,342,770 $ 537,019 $ - $ 1,251,195 $ 6,130,984

Governmental Funds


12


Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Position

for the year ended June 30, 2015Fund balances-total governmental funds $ 4,964,597

Amounts reported for governmental activities in the statement of net position are

different because:

Capital assets are not reported in this fund financial statement because they are

not current financial resources, but they are reported in the statement of net

position. 31,752,863

Costs associated with bond issues and refundings are expensed in the fund financial

statements because they are a use of current financial resources but are capitalized

on the statement of net position using the economic resources focus 108,723

Certain liabilities (such as bonds payable, the long-term portion of accrued sick leave,

accrued interest payable, other accounts payable, and net pension obligations)

are not due and payble in the current period and, therefore, are not reported in the funds

Accrued interest payable (227,912)

Bonds payable (18,460,000)

KSBIT payable (150,966)

Sick leave liability (228,694)

Net pension liability (2,791,237)

Deferred outflows and inflows or resources related to pensions are applicable to future

periods and, therefore, are not reported in the funds

Deferred outflows of resources related to employer 2015 contributions to pensions 345,559

Deferred inflows of resources related to pensions (311,518)

Net position of governmental activities $ 15,001,414


13


Statement of Revenues, Expenditures, and Changes in Fund Balances

Governmental Funds

Year ended June 30, 2015Other Total

Special Debt Governmental Governmental

General Revenue Service Funds Funds

REVENUES

From Local Sources

Taxes

Property $ 2,449,932 $ - $ - $ 625,368 $ 3,075,300

Motor vehicle 413,228 413,228

Franchise 154,492 154,492

Utilities 741,314 741,314

Transportation 25,997 25,997

Tuition 8,864 8,864

Earnings on investments 117,335 573 21,583 139,490

Student activities 2,833 62,976 65,809

Other local revenue 78,774 419,847 12,638 511,258

Intergovernmental - state 9,457,206 800,272 253,097 653,378 11,163,952

Intergovernmental - federal 945,267 945,267

Total revenues 13,438,279 2,177,655 253,097 1,375,943 17,244,974

EXPENDITURES

Instruction 7,224,036 1,858,030 47,656 9,129,722

Support Services

Student 504,812 10,435 7,642 522,888

Instructional Staff 627,361 74,543 701,904

District Administration 816,338 48,998 865,335

School Administration 938,755 938,755

Business 624,159 59,865 684,024

Plant Operation & Maintenance 1,344,399 4,000 6,335 1,354,734

Student Transportation 913,382 913,382

Community Services Operations 43,815 168,559 493 212,867

Building acquistions & construction 1,281,037 1,281,037

Debt Service 1,423,710 1,423,710

Total expenditures 13,037,056 2,224,429 1,423,710 1,343,163 18,028,358

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 401,223 (46,774) (1,170,614) 32,780 (783,385)

OTHER FINANCING SOURCES (USES)

Operating transfers in 46,774 1,170,614 1,217,388

Operating transfers (out) (46,774) (1,170,614) (1,217,388)

Total other financing sources and (uses) (46,774) 46,774 1,170,614 (1,170,614) -

NET CHANGE IN FUND BALANCE 354,449 - - (1,137,833) (783,385)

FUND BALANCE-BEGINNING 3,358,953 - - 2,312,880 5,671,833

Prior Period Adjustment 76,149 76,149

Restated Fund Balance-Beginning 3,358,953 - - 2,389,028 5,747,981

FUND BALANCE-ENDING $ 3,713,402 $ - $ - $ 1,251,195 $ 4,964,597


14


Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of

Governmental Funds to the Statement of Activities


Net change in fund balances-total governmental funds $ (783,385)

Amounts reported for governmental activities in the statement of activities

are different because:

Governmental funds report district pension contributions as expenditures. However in the

Statement of Activities, the cost of pension benefits earned net of employee

contributions is reported as pension expense.

District pension contributions less costs of benefits earned net employee contributions 28,147

Capital outlays are reported as expenditures in this fund financial statement

because they use current financial resources, but they are presented as

assets in the statement of activities and depreciated over their estimated

economic lives. The difference is the amount by which capital outlays

exceeds depreciation expense for the year. (45,274)

The difference in the issue amount of the refunding of bond proceeds and the

amount for payment to the escrow account to pay the refunded bonds is

amortized over the life of the refunding issue. (15,532)

Bond and capital lease payments are recognized as expenditures of current

financial resources in the fund financial statement but are reductions of

liabilities in the statement of net position. 855,000

Generally, expenditures recognized in this fund financial statement are limited

to only those that use current financial resources, but expenses are

recognized in the statement of activities when they are incurred.

Accrued interest payable 7,766

KSBIT payable 60,893

Noncurrent sick leave payable (14,933)

Change in net position of governmental activities $ 92,681


15


Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual

General Fund

Year ended June 30, 2015Variance

with Final Budget

Favorable

Original Final Actual (Unfavorable)

REVENUES

From Local Sources

Taxes

Property $ 2,502,000 $ 2,502,000 $ 2,449,932 $ (52,068)

Motor vehicle 385,000 385,000 413,228 28,228

Franchise 130,000 130,000 154,492 24,492

Utilities 740,000 740,000 741,314 1,314

Transportation 21,600 21,600 25,997 4,397

Earnings on investments 120,000 120,000 117,335 (2,665)

Other local revenue 95,000 95,000 78,774 (16,226)

Intergovernmental - state 9,546,716 9,439,567 9,457,206 17,639

Total revenues 13,540,316 13,433,167 13,438,279 5,112

EXPENDITURES

Instruction 9,179,760 9,359,423 7,224,036 2,135,387

Support Services

Student 717,832 522,149 504,812 17,337

Instructional Staff 595,776 598,076 627,361 (29,285)

District Administration 810,465 810,465 816,338 (5,873)

School Administration 950,058 964,013 938,755 25,258

Business 586,221 586,221 624,159 (37,938)

Plant Operation & Maintenance 1,485,205 1,485,205 1,344,399 140,806

Student Transportation 978,882 982,177 913,382 68,795

Community Services 39,433 39,433 43,815 (4,382)

Total expenditures 15,343,632 15,347,162 13,037,056 2,310,106

EXCESS (DEFICIENCY) IN REVENUES OVER EXPENDITURES (1,803,316) (1,913,995) 401,223 2,315,218


Operating transfers (out) (50,200) (50,200) (46,774) 3,426

Total other financing sources and (uses) (50,200) (50,200) (46,774) 3,426

NET CHANGE IN FUND BALANCE (1,853,516) (1,964,195) 354,449 2,318,644

FUND BALANCE-BEGINNING 3,012,186 3,012,186 3,358,953 346,767

FUND BALANACE-ENDING $ 1,158,670 $ 1,047,991 $ 3,713,402 $ 2,665,411

Budgeted Amounts


16


Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual

Special Revenue Fund

Year ended June 30, 2015Variance

with Final Budget

Favorable

Original Final Actual (Unfavorable)

REVENUES

From Local Sources

Tuition $ - $ 8,854 $ 8,864 $ 10

Earnings on investments 400 400 573 173

Student activities 4,627 7,372 2,833 (4,539)

Other local revenue 375,895 407,562 419,847 12,285

Intergovernmental - state 499,464 747,971 800,272 52,300

Intergovernmental - federal 1,161,359 1,159,287 945,267 (214,020)

Total revenues 2,041,745 2,331,446 2,177,655 (153,790)

EXPENDITURES

Instruction 1,764,153 2,036,568 1,858,030 178,537

Support Services

Student 12,000 13,616 10,435 3,181

Instructional Staff 85,098 90,497 74,543 15,955

District Administration 15,000 14,917 48,998 (34,081)

Business 53,148 51,612 59,865 (8,253)

Plant Operation & Maintenance 4,000 (4,000)

Community Services Operations 162,546 169,081 168,559 522

Total expenditures 2,091,945 2,376,291 2,224,429 151,862

EXCESS (DEFICIENCY) IN REVENUES OVER EXPENDITURES (50,200) (44,845) (46,774) (1,929)


Operating transfers in/out 50,200 42,100 46,774 4,674

Total other financing sources and (uses) 50,200 42,100 46,774 4,674

NET CHANGE IN FUND BALANCE - (2,745) - 2,745

FUND BALANCE-BEGINNING - - - -

FUND BALANCE-ENDING $ - $ (2,745) $ - $ 2,745

Budgeted Amounts


17


Statement of Fund Net Position

Proprietary Funds

June 30, 2015

School Other

Food Proprietary

Services Fund Total

ASSETS

Cash and cash equivalents $ 258,677 $ 25,468 $ 284,145

Receivables 6,821 6,821

Inventories 24,765 24,765

Capital assets:

Other capital assets, net of depreciation 64,995 64,995

Total assets 355,257 25,468 380,725

DEFERRED OUTFLOWS OF RESOURCES

District pension contributions subsequent to the measurement date 9,228 1,758 10,986

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 364,485 27,226 391,711

LIABILITIES

Accrued salaries and benefits payable 33,534 6,707 40,241

Net pension liability 109,001 20,762 129,763

Total liabilities 142,535 27,469 170,004

DEFERRED INFLOWS OF RESOURCES

Net difference between projected and actual earnings on pension plan investments 12,165 2,317 14,482

NET POSITION

Net Investment in capital assets 64,995 - 64,995

Restricted for:

Expendable restricted for day care operations (2,560) (2,560)

Expendable restricted for food service 144,790 144,790

Total net position 209,785 (2,560) 207,225

TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES AND NET PENSION $ 364,485 $ 27,226 $ 391,711

Enterprise Funds


18


Statement of Revenues, Expenses, and Changes in Fund Net Position

Proprietary Funds


School Other

Food Proprietary

Services Fund Total

OPERATING REVENUES

Lunchroom sales $ 258,699 $ - $ 258,699

Tuition 75,954 75,954

Total operating revenues 258,699 75,954 334,652

OPERATING EXPENSES

Depreciation 10,226 10,226

Food service operations

Salaries and benefits 450,700 450,700

Operational 613,168 613,168

Day care operations

Salaries and benefits 82,916 82,916

Operational 24,005 24,005

Total operating expenses 1,074,094 106,922 1,181,016

Operating income (loss) (815,395) (30,968) (846,364)

NONOPERATING REVENUES (EXPENSES)

Federal grants 698,230 698,230

State grants 119,710 24,536 144,246

Earnings from investments 6,394 730 7,124

Total nonoperating revenues 824,334 25,266 849,599

CHANGE IN NET POSITION 8,938 (5,702) 3,236

NET POSITION-BEGINNING 309,617 23,861 333,478

Prior Period Adjustment (108,771) (20,718) (129,489)

RESTATED NET POSITION-BEGINNING 200,846 3,143 203,989

NET POSITION-ENDING $ 209,785 $ (2,560) $ 207,225

Enterprise Funds


19


Statement of Cash Flows - Proprietary Funds


School Other

Food Proprietary

Services Fund Total

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers $ 258,699 $ 75,954 $ 334,652

Payments to suppliers (609,225) (17,805) (627,030)

Payments to employees (450,700) (82,916) (533,617)

Net cash provided (used) by operating activities (801,226) (24,768) (825,994)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Purchase of capital assets (16,399) (16,399)

Pension costs 3,167 603 3,770

Operating grants and contributions 817,940 24,536 842,476

Net cash provided (used) by noncapital financing activities 804,708 25,139 829,847

CASH FLOWS FROM INVESTING ACTIVITIES

Interest 6,394 730 7,124

Net cash provided (used) by investing activities 6,394 730 7,124

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,875 1,101 10,976

CASH AND CASH EQUIVALENTS-BEGINNING 248,801 24,367 273,169

CASH AND CASH EQUIVALENTS-ENDING $ 258,677 $ 25,468 $ 284,145

Reconciliation of operating income (loss) to net cash used

by operating activities:

Operating income (loss) $ (815,395) $ (30,968) $ (846,364)

Adjustments to reconcile operating income (loss) to net cash

used by operating activities:

Depreciation 10,226 - 10,226

Changes in assets and liabilities:

Receivables 2,863 1,649 4,511

Inventories 624 624

Payroll accruals 474 4,552 5,026

Account payable (17) (17)

Net cash used by operating activities $ (801,226) $ (24,768) $ (825,994)

NONCASH NONCAPITAL FINANCING ACTIVITIES

During the year, the district received $65,541of food commodities from the U.S. Department of Agriculture.

During the year, the district recognized revenues and expenses for on-behalf payments relating to fringe

benefits in the amount of $109,683 for school food services and $21,386 for other proprietary fund which is

by state government.

Enterprise Funds


20


Statement of Fiduciary Net Position

Fiduciary Funds

June 30, 2015

School Private

Activity Purpose Fiduciary

Fund Trust Fund

ASSETS

Cash and cash equivalents $ 82,819 $ 19,895 $ 102,714

Accounts receivable - - -

Total Assets 82,819 19,895 102,714

LIABILITIES

Accounts payable 5,114 - 5,114

Due to student groups 77,705 - 77,705

Total Liabilities 82,819 - 82,819

NET POSITION HELD IN TRUST - 19,895 19,895

TOTAL LIABILITIES AND NET POSITION HELD IN TRUST $ 82,819 $ 19,895 $ 102,714


21

Washington County School District

Statement of Changes in Net Position

Fiduciary Funds


Private Purpose

Trust

Additions

Trust activities $ 493

Deductions

Benefits paid 2,300

Decrease in net position (1,807)

Net position, June 30, 2014 21,702

Net position, June 30, 2015 $ 19,895


22


NOTES TO THE FINANCIAL STATEMENTS


23

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Washington County Board of Education (“Board”), a five-member group, is the level of

government, which has oversight responsibilities over all activities related to public elementary and

secondary school education within the jurisdiction of the Washington County Board of Education

(“District”). The District receives funding from Local, State and Federal government sources and must

comply with the commitment requirements of these funding source entities. However, the District is not

included in any other governmental “reporting entity” as defined in Section 2100-Codification of

Governmental Accounting and Financial Reporting Standards. Board members are elected by the public

and have decision making authority, the power to designate management, the responsibility to develop

policies, which may influence operations and primary accountability for fiscal matters.

The District, for financial purposes, includes all of the funds relevant to the operation of the Washington

County Board of Education. The financial statements presented herein do not include funds of groups

and organizations, which although associated with the school system, have not originated within the

District itself such as Band Boosters, Parent-Teacher Associations, etc.

The financial statements of the District include those of separately administered organizations that are

controlled by or dependent on the Board. Control or dependence is determined on the basis of budget

adoption, funding and appointment of the respective governing board.

Based on the foregoing criteria, the financial statements of the following organization are included in the

accompanying financial statements:

Blended Component Unit

Washington County Board Of Education Finance Corporation

The Board authorized establishment of the Washington County Board Of Education Finance

Corporation a non-stock, non-profit corporation pursuant to Section 162.385 of the School Bond Act and

Chapter 273 and Section 58.180 of the Kentucky Revised Statutes (the “Corporation”) to act as an

agency of the District for financing the costs of school building facilities. The Board of Directors of the

Corporation shall be the same persons who are at any time the members of the Board of Education of the

Washington County Board of Education.

Basis of Presentation

Government-wide Financial Statements – The statement of net Position and the statement of activities

display information about the District as a whole. These statements include the financial activities of the

primary government, except for fiduciary funds. The statements distinguish between those activities of

the District that are governmental and those that are considered business-type activities.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24

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

is the same approach used in the preparation of the proprietary fund financial statements but differs from

the manner in which governmental fund financial statements are prepared. Governmental fund financial

statements therefore include reconciliation with brief explanations to better identify the relationship

between the government-wide statements and the statements for governmental funds.

The government-wide statement of activities presents a comparison between direct expenses and

program revenues for each segment of the business-type activities of the District and for each function

or program of the District’s governmental activities. Direct expenses are those that are specifically

associated with a service, program or department and are therefore clearly identifiable to a particular

function. Program revenues include charges paid by the recipient of the goods or services offered by the

program and grants and contributions that are restricted to meeting the operational or capital

requirements of a particular program. Revenues that are not classified as program revenues are

presented as general revenues of the District, with certain limited exceptions. The comparison of direct

expenses with program revenues identifies the extent to which each business segment or governmental

function is self-financing or draws from the general revenues of the District.

Fund Financial Statements – Fund financial statements report detailed information about the District.

The focus of governmental and enterprise fund financial statements is on major funds rather than

reporting funds by type. Each major fund is presented in a separate column. Nonmajor funds are

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

The accounting and reporting treatment applied to a fund is determined by its measurement focus. All

governmental fund types are accounted for using a flow of current financial resources measurement

focus. The financial statements for governmental funds are a balance sheet, which generally includes

only current assets and current liabilities and a statement of revenues, expenditures and changes in fund

balances, which reports on the changes in net total assets. Proprietary funds and fiduciary funds are

reported using the economic resources measurement focus. The statement of cash flows provides

information about how the District finances and meets the cash flow needs of its proprietary activities.

The District has the following funds:

I. Governmental Fund Types

(A) General Fund

The General Fund is the main operating fund of the District. It accounts for financial resources used for

general types of operations. This is a budgeted fund, and any fund balances are considered as resources

available for use. This is always a major fund of the District.

(B) Special Revenue (Grant) Fund

The Special Revenue (Grant) Fund accounts for proceeds of specific revenue sources (other than

expendable trust funds or major capital projects) that are legally restricted to disbursements for specified

purposes. It includes federal financial programs where unused balances are returned to the grantor at the

close of specified project periods as well as the state grant programs. Project accounting is employed to


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maintain integrity for the various sources of funds. The separate projects of federally-funded grant

programs are identified in the Schedule of Expenditures of Federal Awards included in this report. This

is a major fund of the District.

(C) District Activity Fund

The Special Revenue (District Activity) Fund is a district activity fund at the school level. It includes

yearbook sales, picture sales, student fees and donations.

(D) Capital Project Funds

Capital Project Funds are used to account for financial resources to be used for the acquisition or

construction of major capital facilities and equipment (other than those financed by Proprietary Fund).

SEEK Capital Outlay Fund

The Support Education Excellence in Kentucky (SEEK) Capital Outlay Fund receives those funds

designated by the state as Capital Outlay Funds and is restricted for use in financing projects as

identified in the District’s facility plan.

Building (FSPK) Fund

The Facility Support Program of Kentucky (FSPK) accounts for funds generated by the building tax

levy that is required to participate in the School Facilities Construction Commission’s construction

funding and state matching funds, where applicable. Funds may be used for projects identified in the

District’s facility plan.

Construction Fund

The Construction Fund accounts for proceeds from sale of bonds and other revenues to be used for

authorized construction and/or remodeling.

(E) Debt Service Fund

The Debt Service Fund is used to account for the accumulation of resources for, and the payment of,

general long-term debt principal and interest and related cost; and for the payment of interest on general

obligation notes payable, as required by Kentucky Law. This is a major fund of the District.

(F) Permanent Fund

The Private Purpose Trust Fund is to be spent based on the trust agreement and has a principal balance

of $7,907 that must remain intact.

II. Proprietary Funds (Enterprise Funds)

(A) Food Service Fund


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The School Food Service Fund is used to account for school food service activities, including the

National School Lunch Program, which is conducted in cooperation with the U.S. Department of

Agriculture (USDA). Amounts have been recorded for in-kind contribution of commodities from the

USDA. This is a major fund of the District.

(B) Child Care Fund

The Child Care Fund accounts for the funds raised at schools providing after school care for children.

The District applies all GASB pronouncements to proprietary funds.

III. Fiduciary Fund Types

Agency Funds

The Agency Fund accounts for activities of student groups and other types of activities requiring

clearing accounts. These funds are accounted for in accordance with “Accounting Procedures for

Kentucky School Activity Funds.”

The Private Purpose Trust Funds are maintained within MUNIS and account for revenues generated by

trusts set up to benefit students in Washington County.

Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on

the financial statements. Government-wide financial statements are prepared using the accrual basis of

accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and

fiduciary funds also use the accrual basis of accounting.

Revenues – Exchange and Non-exchange Transactions – Revenues resulting from exchange

transactions, in which each party receives essentially equal value, is recorded on the accrual basis when

the exchange takes place. On a modified accrual basis, revenues are recorded in the fiscal year in which

the resources are measurable and available. Available means that the resources will be collected within

the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities

of the current fiscal year. For the District, available means expected to be received within sixty days of

the fiscal year-end. Non-exchange transactions, in which the District receives value without directly

giving equal value in return, include property taxes, grants, entitlements and donations. On an accrual

basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied.

Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility

requirements have been satisfied. Eligibility requirements include timing requirements, which specify

the year when the resources are required to be used or the fiscal year when use is first permitted,

matching requirements, in which the District must provide local resources to be used for a specified

purpose, and expenditure requirements, in which the resources are provided to the District on a

reimbursement basis. On a modified accrual basis, revenues from nonexchange transactions must also

be available before it can be recognized.


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Unearned revenue – Unearned revenue arises when assets are recognized before revenue recognition

criteria have been satisfied.

Grants and entitlements received before the eligibility requirements are met are recorded as unearned

revenue.

Expenses/Expenditures – On the accrual basis of accounting, expenses are recognized at the time they

are incurred. The fair value of donated commodities used during the year is reported in the statement of

revenues, expenses, and changes in net position as an expense with a like amount reported as donated

commodities revenue. Unused donated commodities are reported as unearned revenue.

The measurement focus of governmental fund accounting is on decreases in net financial resources

(expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in

which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation, are

not recognized in governmental funds.

Property Taxes

Property Tax Revenues – Property taxes are levied each September on the assessed value listed as of the

prior January 1, for all real and personal property in the county. The billings are considered due upon

receipt by the taxpayer; however, the actual date is based on a period ending 30 days after the tax bill

mailing.

The property tax rates assessed for the year ended June 30, 2015, to finance the General Fund operations

were $.589 (including exonerations) per $100 valuation of real property, $.589 per $100 valuation for

business personal property and $.55 per $100 valuation for motor vehicles.

The District levies a utility gross receipts license tax in the amount of 3% of the gross receipts derived

from the furnishings, within the county, of telephonic and telegraphic communications services,

cablevision services, electric power, water, and natural, artificial and mixed gas.

Capital Assets

General capital assets are those assets not specifically related to activities reported in the proprietary

funds. These assets generally result from expenditures in the governmental funds. These assets are

reported in the governmental activities column of the government-wide financial statement of net

position but are not reported in the fund financial statements. Capital assets utilized by the proprietary

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

position and in the respective funds.

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

retirements during the year. Donated fixed assets are recorded at their fair market values as of the date

received. The District maintains a capitalization threshold of five thousand dollars. The District does

not possess any infrastructure. Improvements are capitalized; the cost of, normal maintenance and

repairs that do not add to the value of the asset or materially extend an assets life are not.


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All reported capital assets are depreciated. Improvements are depreciated over the remaining useful

lives of the related capital assets. Depreciation is computed using the straight-line method over the

following useful lives for both general capital assets and proprietary fund assets:

Description Estimated Lives

Buildings and improvements 25-50 years

Land improvements 20 years

Technology equipment 5 years

Vehicles 5-10 years

Audio-visual equipment 15 years

Food service equipment 10-12 years

Furniture and fixtures 7 years

Rolling stock 15 years

Other 10 years

Interfund Balances

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

classified as “inter-fund receivables/payables”. These amounts are eliminated in the governmental and

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

due between governmental and business-type activities, which are presented as internal balances.

Budgetary Process

The District prepares its budgets on the modified accrual basis of accounting, which is the same basis as

used to prepare the Statements of Revenues, Expenditures and Changes in Fund Balances –

Governmental Funds.

Once the budget is approved, it can be amended. Amendments are presented to the Board at their

regular meetings. Such amendments are made before the fact, are reflected in the official minutes of the

Board, and are not made after fiscal year-end as dictated by law.

Each budget is prepared and controlled by the budget coordinator at the revenue and expenditure

function/object level. All budget appropriations lapse at year-end.

The Kentucky Department of Education does not require the Capital Project Funds and Debt Service

Funds to prepare budgets.

Cash and Cash Equivalents

The District considers demand deposits, money market funds, and other investments with an original

maturity of 90 days or less, to be cash equivalents.


29

Inventories

On government-wide financial statements, including the proprietary fund, inventories are stated at cost

on the first-in, first-out basis, using the accrual method of accounting.

On governmental fund financial statements inventories are stated at cost. The cost of inventory items is

recorded as expenditure in the governmental fund types when purchased.

Prepaid Assets

Payments made that will benefit periods beyond the fiscal period end are recorded as prepaid items

using the consumption method. A current asset for the prepaid amount is recorded at the time of the

purchase and expenditure/expense is reported in the year in which services are consumed.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide financial

statements, and all payables, accrued liabilities and long-term obligations payable from proprietary

funds are reported on the proprietary fund financial statements.

In general, payables and accrued liabilities that will be paid from governmental funds are reported on the

governmental fund financial statements regardless of whether they will be liquidated with current

resources. However, claims and judgment, the non-current portion of capital leases, accumulated sick

leave, contractually required pension contributions and special termination benefits that will be paid

from governmental funds are reported as a liability in the fund financial statements only to the extent

that they will be paid with current, expendable, available financial resources. In general, payments

made within sixty days after year-end are considered to have been made with current available financial

resources. Bonds and other long-term obligations that will be paid from governmental funds are not

recognized as a liability in the fund financial statements until due.

Fund Balances

Fund balance is divided into five categories as defined by GASB 54 as follows:

Nonspendable: Permanently nonspendable by decree of the donor, such as an endowment, or

funds that are not in a spendable form, such as prepaid expenses or inventory on

hand.

Restricted Legally restricted under legislation, bond authority, or grantor contract.

Committed Commitments of future funds for specific purposes passed by the Board.

Assigned Funds that are intended by management to be used for a specific purpose, including

encumbrances.


30

Unassigned Funds available for any purpose; unassigned amounts are reported only in the

General Fund unless a fund has a deficit.

The Board has adopted a GASB 54 spending policy which states that the spending order of funds is to

first use restricted funds, followed by committed, assigned, and unassigned fund funds.

Net Position

The Statement of Net Position presents the reporting entity’s non-fiduciary assets and liabilities, the

difference between the two being reported as Net Position. Net Position are reported in three categories: 1) net investment in capital assets – consisting of capital assets, net of accumulated depreciation and

reduced by outstanding balances for debt related to the acquisition, construction, or improvement of the

assets; 2) restricted net position – resulting from constraints placed on net position by creditors, grantors,

contributors, and other external parties, including those constraints imposed by law through constitutional

provisions or enabling legislation adopted by the School District; 3) unrestricted net position – those

assets that do not meet the definition of restricted net position or net investment in capital assets. It is the

District’s policy to first apply restricted net position and then unrestricted net position when an expense is

incurred for which both restricted and unrestricted net position are available.

Operating and Non-Operating Revenues and Expenses

Operating revenues are those revenues that are generated directly from the primary activity of the

proprietary funds. For the School District, those revenues are primarily charges for meals provided by

the various schools.

Non-operating revenues are not generated directly from the primary activity of the proprietary funds.

For the School District those revenues come in the form of grants (federal and state), donated

commodities, and earnings from investments.

Contributions of Capital

Contributions of capital in proprietary fund financial statements arise from outside contributions of fixed

assets, or from grants or outside contributions of resources restricted to capital acquisition and

construction.

Interfund Activity

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

expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without

a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other

financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary

funds. Repayments from funds responsible for particular expenditures/expenses to the funds that

initially paid for them are not presented on the financial statements.


31

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of

resources related to pensions, and pension expense, information about the fiduciary net position of the

County Employees Retirement System Non-Hazardous (“CERS”) and Teachers Retirement System of the

State of Kentucky (“KTRS”) and additions to/deductions from fiduciary net position have been determined

on the same basis as they are reported by the pensions. For this purpose, benefit payments (including

refunds of employee contributions) are recognized when due and payable in accordance with the benefit

terms. Investments are reported at fair value.

Estimates

The process of preparing financial statements in conformity accounting principles generally accepted in

the United States of America requires District’s management to make estimates and assumptions that

affect reported amounts of assets, liabilities, revenues, expenditures, designated fund balances, and

disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could

differ from those estimates.

New Accounting Pronouncements

Effective July 1, 2014, the District was required to adopt Governmental Accounting Standards Board

(GASB) Statement no. 68, “Accounting and Financial Reporting for Pensions” (GASB 68). GASB 68

replaced the requirements of GASB 27, “Accounting for Pensions by State and Local Governmental

Employers” and GASB 50, “Pension Disclosures”, as they relate to governments that provide pensions

through pension plans administered as trusts or similar arrangements that meet certain criteria. GASB 68

requires governments providing defined benefit pensions to recognize their long-term obligation for

pension benefits as a liability to more comprehensively and comparably measure the annual costs of

pension benefits. Cost-sharing governmental employers, such as the District, are required to report a net

pension liability, pension expense and pension-related assets and liabilities based on their proportionate

share of the collective amounts for all governments in the plan.

NOTE B – CASH AND CASH EQUIVALENTS AND INVESTMENTS

The District’s cash and cash equivalents of amounts deposited in checking accounts include interest

bearing accounts deposited in various local banks. Due to the liquidity nature of these accounts the

carrying value is the fair market value.

SEE SCHEDULE ON NEXT PAGE


32

Bank

Balance

Springfield State Bank

Demand

FDIC $ 250,000

Securities pledged to district

6,652,012

Bank balance $ 6,902,012

Bank

Balance

Book Balance

Cash and equivalents

Governmental Activities

$

5,777,446

Business-type Activities

284,145

Fiduciary Funds

19,895

School Activity Funds

82,819

Total carrying amount

$

6,164,305

The Private Purpose Trust Fund holds cash and cash equivalents in the amount of $10,355 in a money

market account held by Edward Jones.

Due to the nature of the accounts and certain limitations imposed on the use of funds, each bank account

within the following funds is considered to be restricted: SEEK Capital Outlay Fund, Facility Support

Program (FSPK/Building) Fund, special Revenue (Grant Fund), Debt Service Fund, School Construction

Fund, School Food Service Fund, and School Activity Fund.


33

NOTE C – CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2015, was as follows:


July 1, 2014

Additions

Deductions

June 30, 2015

Land

$

1,280,702

$ -

$ -

$

1,280,702

Land improvements

481,972

-

30,394

451,579

Buildings

16,209,091

19,629,444

-

35,838,535

Technology equipment

1,284,423

130,477

579,925

834,974

Vehicles

1,999,075

93,150

-

2,092,225

General equipment

787,211

74,111

107,020

754,303

Construction in progress

19,030,858

827,028

19,850,432

7,455

Total at historical cost $

41,073,333

$

20,754,210

$

20,567,770

$

41,259,773

Less: Accumulated depreciation

Land improvements

$

426,057

$

12,357

$

30,394

$

408,020

Buildings

5,793,697

688,452

-

6,482,148


1,127,247

129,734

665,049

591,932

Vehicles

1,448,279

111,540

(42,072)

1,601,891

General equipment

479,917

50,302

107,299

422,920

Total accumulated depreciation

$

9,275,196

$

992,384

$

760,669

$

9,506,911


Capital Assets-net

$

31,798,137

$

19,761,827

$

19,807,101

$ 31,752,863

Business-Type Activities

July 1, 2014

Additions

Deductions

June 30, 2015


$

1,796

$ -

$

1,796

$ -

General equipment

316,682

16,399

114,690

218,391

Total at historical cost

$

318,478

$

16,399

$

116,486

$

218,391

Less: Accumulated depreciation


$

1,796

$ -

$

1,796

$ -

General equipment

257,860

10,226

114,690

153,397

Total accumulated depreciation

$

259,656

$

10,226

$

116,486

$

153,397

Business-Type Activities

Capital Assets-net

$

58,822

$

6,173

$ -

$

64,995

Depreciation expense was not allocated to governmental functions. It appears on the statement of

activities as “unallocated”.


34

NOTE D – BONDED DEBT AND LEASE OBLIGATIONS

The amount shown in the accompanying financial statements as bonded debt and lease obligations

represent the District’s future obligations to make payments relating to the bonds issued by the

Washington County School District Finance Corporation aggregating $18,460,000 and $870,000 is the

portion due within one year.

The District, through the General Fund (including utility taxes), Building (FSPK) Fund, and the SEEK

Capital Outlay Fund is obligated to make lease payments in amounts sufficient to satisfy debt service

requirements on bonds issued by the Washington County School District Finance Corporation to

construct school facilities. The District has an option to purchase the property under lease at any time

by retiring the bonds then outstanding.

The original amount of outstanding issues, the issue dates, interest rates, and outstanding balances, at

June 30, 2015 are summarized below:

2014

2015

Original Maturity Interest Outstanding

Outstanding

Bond Issue Amount Dates Rates Balance Additions Retirements Balance

2008A $ 3,910,000 8/1/2023 2.5 - 3.25% $ 3,000,000 $ - $ 225,000 $ 2,775,000

2008B 795,000 8/1/2016 2.3 - 2.75% 280,000 - 90,000.00 190,000

2012 15,185,000 8/1/2032 2.0 - 3.5% 14,780,000 - 415,000.00 14,365,000

2013R $ 1,390,000 12/1/2023 1.3% 1,255,000 - 125,000.00 1,130,000

Totals

$ 19,315,000 $ - $ 855,000 $ 18,460,000

The District has entered into “participation agreements” with the Kentucky School Facility Construction

Commission. The Kentucky Legislature, for the purpose of assisting local school districts in meeting

school construction needs, created the Commission. The table following sets forth the amount to be paid

by the District and the Commission for each year until maturity of all bond issues.

The bonds may be called prior to maturity at dates and redemption premiums specified in each issue.

Assuming no issues are called prior to maturity, the minimum obligations of the District, including

amounts to be paid by the Commission, at June 30, 2015 for debt service, (principal and interest) are as

follows:



35

LOCAL KSFCC

PRINCIPAL INTEREST

YEAR PRINCIPAL INTEREST PRINCIPAL INTEREST TOTAL TOTAL

2016 $ 679,984 $ 485,467 $ 190,016 $ 63,079 $ 870,000 $ 548,546

2017 704,657 468,824 190,343 58,828 895,000 527,653

2018 714,648 451,295 150,352 55,199 865,000 506,494

2019 732,736 433,026 147,264 52,283 880,000 485,309

2020 754,495 412,306 135,505 49,215 890,000 461,521

2021-2025 4,164,116 1,690,539 670,884 194,730 4,835,000 1,885,269

2026-2030 4,917,426 989,967 572,574 109,234 5,490,000 1,099,201

2031-2033 3,376,186 179,683 358,814 17,924 3,735,000 197,606

$ 16,044,248 $ 5,111,106 $ 2,415,752 $ 600,492 $ 18,460,000 $ 5,711,599

NOTE E – OTHER LONG TERM OBLIGATIONS

Upon retirement from the school system, an employee will receive from the District an amount equal to

30% of the value of accumulated sick leave. The activity during fiscal year 2015 for accumulated sick

leave is as follows:

2014

2015

Outstanding

Outstanding

Balance Additions Retirements Balance

Sick Leave $ 213,761 $ 14,933 $ - $ 228,694

Totals $ 213,761 $ 14,933 $ - $ 228,694

The District elected to take advantage of the 0% interest option repayment plan for the worker’s

compensation and property and liability insurance deficit with the now defunct Kentucky School Board

Insurance Trust. The repayment plan required the District to pay 25% of the worker’s compensation

deficit during fiscal year 2015 with the remaining balance to be repaid over the next six years, and to

pay 40% of the property and liability deficit during fiscal year 2015 with the remaining balance to be

repaid over the next two years. The activity during fiscal year 2015 for the worker’s compensation and

property and liability deficit are as follows:

2014

2015

Outstanding

Outstanding

Insurance Fund Balance Additions Retirements Balance

Worker's Compensation $ 159,007

$ 39,752 $ 119,255

Property and Liability 52,852

21,141 31,711

Totals $ 211,859 $ - $ 60,893 $ 150,966


36

The minimum payments are as follows:

Fiscal Year

Ended June 30,

Payment

2016 $ 35,731

2017 35,731

2018 19,876

2019 19,876

2020 19,876

2021 19,876

Total $ 150,966

NOTE F – RETIREMENT PLANS

The District’s employees are provided with two pension plans, based on each position’s college degree

requirement. The County Employees Retirement System covers employees whose position does not

require a college degree or teaching certification. The Kentucky Teachers Retirement System covers

positions requiring teaching certification or otherwise requiring a college degree.

General information about the County Employees Retirement System Non-Hazardous (“CERS”)

Plan description—Employees whose positions do not require a degree beyond a high school diploma are

covered by the CERS, a cost-sharing multiple-employer defined benefit pension plan administered by

the Kentucky Retirement System, an agency of the Commonwealth of Kentucky. Under the provisions

of the Kentucky Revised Statute (“KRS”) Section 61.645, the Board of Trustees of the Kentucky

Retirement System administers CERS and has the authority to establish and amend benefit provisions.

The Kentucky Retirement System issues a publicly available financial report that includes financial

statements and required supplementary information for CERS. That report may be obtained from

http://kyret.ky.gov/.

Benefits provided—CERS provides retirement, health insurance, death and disability benefits to Plan

employees and beneficiaries. Employees are vested in the plan after five years’ service. For retirement

purposes, employees are grouped into three tiers, based on hire date:

Tier 1 Participation date Before September 1, 2008

Unreduced retirement 27 years service or 65 years old

Reduced retirement At least 5 years service and 55 years old

At least 25 years service and any age

Tier 2 Participation date September 1, 2008 – December 31, 2013

Unreduced retirement At least 5 years service and 65 years old

Reduced retirement Or age 57+ and sum of service years plus age equal 87

At least 10 years service and 60 years old

Tier 3 Participation date After December 31, 2013

http://kyret.ky.gov/


37

Unreduced retirement At least 5 years service and 65 years old

Or age 57+ and sum of service years plus age equal 87

Reduced retirement Not available

Cost of living adjustments are provided at the discretion of the General Assembly. Retirement is based on

a factor of the number of years’ service and hire date multiplied by the average of the highest five years’

earnings. Reduced benefits are based on factors of both of these components. Participating employees

become eligible to receive the health insurance benefit after at least 180 months of service. Death benefits

are provided for both death after retirement and death prior to retirement. Death benefits after retirement

are $5,000 in lump sum. Five years’ service is required for death benefits prior to retirement and the

employee must have suffered a duty-related death. The decedent’s beneficiary will receive the higher of

the normal death benefit and $10,000 plus 25% of the decedent’s monthly final rate of pay and any

dependent child will receive 10% of the decedent’s monthly final rate of pay up to 40% for all dependent

children. Five years’ service is required for non-service-related disability benefits.

Contributions—Required contributions by the employee are based on the tier:

Required contribution

Tier 1 5%

Tier 2 5% + 1% for insurance

Tier 3 5% + 1% for insurance

Benefits provided—For employees who have established an account in a retirement system administered

by the Commonwealth prior to July 1, 2008, employees become vested when they complete five (5)

years of credited service. To qualify for monthly retirement benefits, payable for life, employees must

either:

1.) Attain age fifty-five (55) and complete five (5) years of Kentucky service, or

2.) Complete 27 years of Kentucky service.

Employees that retire before age 60 with less than 27 years of service receive reduced retirement

benefits. Non-university employees with an account established prior to July 1, 2002 receive monthly

payments equal to two (2) percent (service prior to July 1, 1983) and two and one-half (2.5) percent

(service after July 1, 1983) of their final average salaries for each year of credited service. New

employees (including second retirement accounts) after July 1, 2002 will receive monthly benefits equal

to 2% of their final average salary for each year of service if, upon retirement, their total service less

than ten years. New employees after July 1, 2002 who retire with ten or more years of total service will

receive monthly benefits equal to 2.5% of their final average salary for each year of service, including

the first ten years. In addition, employees who retire July 1, 2004 and later with more than 30 years of

service will have their multiplier increased for all years over 30 from 2.5% to 3.0% to be used in their

benefit calculation. Effective July 1, 2008, the System has been amended to change the benefit structure

for employees hired on or after that date.


38

Final average salary is defined as the member’s five (5) highest annual salaries for those with less than

27 years of service. Employees at least age 55 with 27 or more years of service may use their three (3)

highest annual salaries to compute the final average salary. KTRS also provides disability benefits for

vested employees at the rate of sixty (60) percent of the final average salary. A life insurance benefit,

payable upon the death of a member, is $2,000 for active contributing employees and $5,000 for retired

or disabled employees.

Cost of living increases are one and one-half (1.5) percent annually. Additional ad hoc increases and any

other benefit amendments must be authorized by the General Assembly.

Contributions—Contribution rates are established by Kentucky Revised Statutes (KRS). Non-university

employees are required to contribute 12.105% of their salaries to the System. University employees are

required to contribute 9.895% of their salaries. KRS 161.580 allows each university to reduce the

contribution of its employees by 2.215%; therefore, university employees contribute 7.68% of their

salary to KTRS.

The Commonwealth of Kentucky, as a non-employer contributing entity, pays matching contributions at

the rate of 13.105% of salaries for local school district and regional cooperative employees hired before

July 1, 2008 and 14.105% for those hired after July 1, 2008. For local school district and regional

cooperative employees whose salaries are federally funded, the employer contributes 15.355% of

salaries. If an employee leaves covered employment before accumulating five (5) years of credited

service, accumulated employee pension contributions plus interest are refunded to the employee upon

the member’s request.

Medical Insurance Plan

Plan description—In addition to the pension benefits described above, KRS 161.675 requires KTRS to

provide post-employment healthcare benefits to eligible employees and dependents. The KTRS Medical

Insurance Fund is a cost-sharing multiple employer defined benefit plan. Changes made to the medical

plan may be made by the KTRS Board of Trustees, the Kentucky Department of Employee Insurance

and the General Assembly.

To be eligible for medical benefits, the member must have retired either for service or disability. The

KTRS Medical Insurance Fund offers coverage to employees under the age of 65 through the Kentucky

Employees Health Plan administered by the Kentucky Department of Employee Insurance. Once retired

employees and eligible spouses attain age 65 and are Medicare eligible, coverage is obtained through the

KTRS Medicare Eligible Health Plan.

Funding policy—In order to fund the post-retirement healthcare benefit, six percent (6%) of the gross

annual payroll of employees before July 1, 2008 is contributed. Three percent (3%) is paid by member

contributions and three quarters percent (.75%) from Commonwealth appropriation and two and one


39

quarter percent (2.25%) from the employer. Also, the premiums collected from retirees as described in

the plan description and investment interest help meet the medical expenses of the plan.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of

Resources Related to Pensions

At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability

for CERS. The District did not report a liability for the District’s proportionate share of the net pension

liability for KTRS because the Commonwealth of Kentucky provides the pension support directly to

KTRS on behalf of the District. The amount recognized by the District as its proportionate share of the

net pension liability, the related Commonwealth support, and the total portion of the net pension liability

that was associated with the District were as follows:

District's proportionate share of CERS net pension liability $

2,921,000

Commonwealth's proportionate share of the KTRS net pension

liability associated with the district

46,336,988

$ 49,257,988

The net pension liability for each plan was measured as of June 30, 2014, and the total pension liability

used to calculate the net pension liability was determined by an actuarial valuation as of that date.

The District’s proportion of the net pension liability for CERS was based on the actual liability of the

employees and former employees relative to the total liability of the System as determined by the

actuary. At June 30, 2015, the District’s proportion was .090032% (percent).

For the year ended June 30, 2015, the District recognized pension expense of $332,168 related to CERS

and $3,944,725 related to KTRS. The District also recognized revenue of $3,944,725 for KTRS support

provided by the Commonwealth. At June 30, 2015, the District reported deferred outflows of resources

and deferred inflows of resources related to pensions from the following sources:



40

Deferred

Outflows of

Resources

Deferred

Inflows of

Resources

Differences between expected and actual $

$

experience

Changes of assumptions

Net difference between projected and actual

earnings on pension plan investments

326,000

Changes in proportion and differences

between District contributions and proportionate

share of contributions

District contributions subsequent to the

measurement date

356,545

$ 356,545 $ 326,000

$356,545 reported as deferred outflows of resources related to pensions resulting from District

contributions subsequent to the measurement date will be recognized as a reduction of the net pension

liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and

deferred inflows related to pensions will be recognized in pension expense as follows:

Year Ended June

30,

2016 $

71,309

2017

71,309

2018

71,309

2019

71,309

2020

71,309

$

356,545

Actuarial assumptions—The total pension liability in the June 30, 2014 actuarial valuation was

determined using the following actuarial assumptions, applied to all periods included in the

measurement:


41

CERS KTRS

Inflation 3.50% 3.50%

Projected salary increases 4.50% 4.0-8.2%

Investment rate of return, net of

investment expense & inflation 7.75% 7.50%

For CERS, mortality rates for the period after service retirement are according to the 1983 Group

Annuity Mortality Table for all retired employees and beneficiaries as of June 30, 2006 and the 1994

Group Annuity Mortality Table for all other employees. The Group Annuity Mortality Table set forward

five years is used for the period after disability retirement.

For KTRS, mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females,

as appropriate, with adjustments for mortality improvements based on a projection of Scale AA to 2020

with a setback of 1 year for females. The last experience study was performed in 2011 and the next

experience study is scheduled to be conducted in 2016.

For CERS, the long-term expected return on plan assets is reviewed as part of the regular experience

studies prepared every five years. The most recent analysis, performed for the period covering fiscal

years 2005 through 2008, is outlined in a report dated August 25, 2009. Several factors are considered in

evaluating the long-term rate of return assumption including long-term historical data, estimates inherent

in current market data, and a log-normal distribution analysis in which best-estimate ranges of expected

future real rates of return (expected return, net of investment expense and inflation) were developed by

the investment consultant for each major asset class. These ranges were combined to produce the long-

term expected rate of return by weighting the expected future real rates of return by the target asset

allocation percentage and then adding expected inflation. The capital market assumptions developed by

the investment consultant are intended for use over a 10-year horizon and may not be useful in setting

the long-term rate of return for funding pension plans which covers a longer timeframe. The assumption

is intended to be a long-term assumption and is not expected to change absent a significant change in the

asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters

expected returns in future years.

For KTRS, the long-term expected rate of return on pension plan investments was determined using a

log-normal distribution analysis in which best-estimate ranges of expected future real rates of return

(expected returns, net of pension plan investment expense and inflation) are developed for each major

asset class. These ranges are combined to produce the long-term expected rate of return by weighting the

expected future real rates of return by the target asset allocation percentage and by adding expected

inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset

class, as provided by KTRS’s investment consultant, are summarized in the following table:


42

Target Long-Term Expected

Asset Class Allocation Real Rate of Return

U.S. Equity 45.0% 6.4%

Non U.S. Equity 17.0% 6.5%

Fixed Income 24.0% 1.6%

High Yield Bonds 4.0% 3.1%

Real Estate 4.0% 5.8%

Alternatives 4.0% 6.8%

Cash 2.0% 1.5%

Total 100.0%

Discount rate—For CERS, the discount rate used to measure the total pension liability was 7.75%. The

projection of cash flows used to determine the discount rate assumed that contributions from plan

employees and employers will be made at statutory contribution rates. Projected inflows from

investment earnings were calculated using the long-term assumed investment return of 7.75%. The long-

term investment rate of return was applied to all periods of projected benefit payments to determine the

total pension liability.

For KTRS, the discount rate used to measure the total pension liability was 5.23%. The projection of

cash flows used to determine the discount rate assumed that plan member contributions will be made at

the current contribution rates and the employer contributions will be made at statutorily required rates.

Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to

make all projected future benefit payments of current plan employees until the 2036 plan year.

Therefore, the long-term expected rate of return on pension plan investments was applied to all periods

of projected benefit payments through 2035 and a municipal bond index rate of 4.35% was applied to all

periods of projected benefit payments after 2035. The Single Equivalent Interest Rate (SEIR) that

discounts the entire projected benefit stream to the same amount as the sum of the present values of the

two separate benefit payments streams was used to determine the total pension liability.

Sensitivity of CERS and KTRS proportionate share of net pension liability to changes in the discount

rate—The following table presents the net pension liability of the District, calculated using the discount

rates selected by each pension system, as well as what the District’s net pension liability would be if it

were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than

the current rate:



43

1%

Decrease

Current

Discount

Rate

1% Increase

CERS

6.75%

7.75%

8.75%

District's proportionate share

of net pension liability

3,297,874

2,920,974

2,544,074

KTRS

4.23%

5.23%

6.23%

District's proportionate share

of net pension liability

-

-

-

Pension plan fiduciary net position—Detailed information about the pension plan’s fiduciary net

position is available in the separately issued financial reports of both CERS and KTRS.

NOTE G – COMMITMENTS

The District has committed $114,347 in the general fund for future payouts for accrued sick leave,

$36,829 for site base carryforward, $77,492 for District Activity Fund and made commitments of

$199,035 for future construction projects.

NOTE H – RESTRICTED FUND BALANCES

Fund

Amount

Purpose

Construction

$ 546,757

Future Construction

Capital Outlay

75,183

School Facilities Construction Commission

FSPK

541,409

School Facilities Construction Commission

Permanent

2,448

Trust Purpose

Day Care

(2,560)

Day Care Operations

Food Service

$ 144,790

Food Service Operations

NOTE I - CONTINGENCIES

The District receives funding from Federal, State and Local governmental agencies and private

contributions. These funds are to be used for designated purposes only. For government agency grants,

if the grantor’s review indicates that the funds have not been used for the intended purpose, the grantors

may request a refund of monies advanced or refuse to reimburse the District for its disbursements. The

amount of such future refunds and un-reimbursed disbursements, if any, is not expected to be

significant. Continuation of the District’s grant programs is predicated upon the grantors’ satisfaction

the funds provided are being spent as intended and the grantors’ intent to continue their program.


44

NOTE J - LITIGATION

The District currently has no pending or threatened litigation involving amounts exceeding $10,000

individually or in the aggregate except materialman lien claims for contract proceeds pursuant to KRS

376.210 in connection with construction of the new high school.

NOTE K – INSURANCE AND RELATED ACTIVITIES

The District is exposed to various forms of loss of assets associated with the risks of fire, personal

liability, theft, vehicular accidents, errors and omissions, fiduciary responsibility, illegal acts, etc. Each

of these risk areas is covered through the purchase of commercial insurance. The District has purchased

certain policies, which are retrospectively rated and includes Workers’ Compensation insurance.

NOTE L – RISK MANAGEMENT

The District is exposed to various risks of loss related to illegal acts, torts, theft/damage/destruction of

assets, errors and omissions, injuries to employees, and natural disasters. To obtain insurance for

workers’ compensation, errors and omission, and general liability coverage, the District purchased

commercial insurance policies.

The District purchases unemployment insurance through the Kentucky School Districts Insurance Trust

Unemployment Compensation Fund; however, risk has not been transferred to such fund. In addition,

the District continues to carry commercial insurance for all other risks of loss. Settled claims resulting

from these risks have not exceeded commercial coverage in any of the past three fiscal years.

NOTE M – DEFICIT FUND AND OPERATING BALANCES

The following fund had an operating deficit at the end of the fiscal year causing a reduction in the fund

balance/net position.

Reduction in

Fund

Fund Balance / Net Position

Construction Fund

$ (1,247,838)

Capital Outlay

(401)

Private Purpose Trust

(1,807)

Day Care Fund

$ (5,702)

NOTE N - COBRA

Under COBRA, employers are mandated to notify terminated employees of available continuing

insurance coverage. Failure to comply with this requirement may put the school district at risk for a

substantial loss (contingency).


45

NOTE O – TRANSFER OF FUNDS

The following transfers were made during the year.

Type

From

To

Amount

Reason

Operating

General Fund

Special Revenue Fund $ 36,149

KETS Matching

Operating

General Fund

Special Revenue Fund 10,625

Grant Matching

Debt Service

Capital Outlay Fund

Debt Service Fund 151,019

Debt Payments

Debt Service

FSPK Fund

Debt Service Fund $ 1,019,595

Debt Payments

NOTE P – ON-BEHALF PAYMENTS

For fiscal year 2015, the Commonwealth of Kentucky contributed estimated payments on behalf of the

District as follows:

Plan/Description

Amount

Kentucky Teachers Retirement System

$

1,091,944

Health/Life Insurance and HRA/Dental/Vision

1,679,001

Administrative Fee

20,284

Federal Reimbursement

(80,809)

Kentucky Education Network Services

49,756

MUNIS Financial Mgt Software and Services

4,214

McAffe Virus Protection Software and Services

1,672

SFCC Debt Service Payments

253,097

Total

$

3,019,158

These amounts are included in the financial statements as state revenue and an expense allocated to the

different functions in the same proportion as full-time employees.

NOTE Q – CHANGE IN ACCOUNTING PRINCIPLE AND RELATED CHANGES TO

CERTAIN BEGINNING BALANCES

GASB 68 required retrospective application. Since the District only presents one year of financial

information, the beginning net pension was adjusted to reflect the retrospective application. The

adjustment resulted in a $2,914,832 reduction in beginning net position on the Statement of Activities

and an increase of $390,168 of deferred outflows of resources – District contributions subsequent to the

measurement date.


46

NOTE R - PRIOR PERIOD ADJUSTMENT

Due to new Redbook Regulations, the District moved School Activity funds to the District Activity

Fund; therefore, fund balance and net position were understated as follows:

Governmental/Business-pe Activities

Net Position July 1, 2014 $17,951,405

Prior Period Adjustment 1 (See Note Q) (2,914,832)

Prior Period Adjustment 2 76,149

Restated Net Position July 1, 2014 $15,112,722

District Activity Fund Balance

Fund Balance July 1, 2014 $ -

Prior Period Adjustment 2 76,149

Restated Fund Balance July 1, 2014 $ 76,149

NOTE S – SUBSEQUENT EVENTS

The District has evaluated subsequent events through November 15, 2015, the date of the audit report.


SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

Reporting Fiscal Year

(Measurement Date)

2015

(2014)

COUNTY EMPLOYEE'S RETIREMENT SYSTEM:

Districts' proportion of the net pension liability 0.0900%

District's proportionate share of the net pension liability 2,921,000$

State's proportionate share of the net pension

liability associated with the District -

Total 2,921,000$

District's covered-employee payroll 2,077,876$

District's proportionate share of the net pension

liability as a percentage of its

covered-employee payroll 140.58%

Plan fiduciary net position as a percentage of the

total pension liability 66.80%

KENTUCKY TEACHER'S RETIREMENT SYSTEM:

Districts' proportion of the net pension liability 0.226%

District's proportionate share of the net pension liability -$

State's proportionate share of the net pension

liability associated with the District 46,336,988

Total 46,336,988$

District's covered-employee payroll -$

District's proportionate share of the net pension

liability as a percentage of its

covered-employee payroll 0.000%

Plan fiduciary net position as a percentage of the

total pension liability 45.59%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be

displayed as they become available.

See the accompanying notes to the required supplementary information.

47


SCHEDULE OF CONTRIBUTIONS

2015 2014

COUNTY EMPLOYEE'S RETIREMENT SYSTEM:

Contractually required contribution 356,545$ 390,143$

Contributions in relation to the contractually

required contribution 356,545 390,143

Contribution deficiency (excess) - -

District's covered-employee payroll 2,017,799$ 2,065,345$

District's proportionate share of the net pension liability

as a percentage of it's covered-employee payroll 17.67% 18.89%

KENTUCKY TEACHER'S RETIREMENT SYSTEM:

Contractually required contribution -$ -$

Contributions in relation to the contractually

required contribution - -

Contribution deficiency (excess) - -

District's covered-employee payroll -$ -$

District's proportionate share of the net pension liability

as a percentage of it's covered-employee payroll 0.00% 0.00%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed

as they become available.

See the accompanying notes to the required supplementary information.

48


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION


49

Changes of benefit terms - None

Changes of assumptions - None


Combining Balance Sheet - Nonmajor Governmental Funds

for the year ended June 30, 2015

Capital District

Outlay FSPK Activity Construction Permanent Total

Assets

Cash and Cash Equivalents $ 75,183 $ 541,409 $ 76,062 $ 546,757 $ 10,355 $ 1,249,765

Accounts receivable

Accounts 1,430 1,430

Total Assets 75,183 541,409 77,492 546,757 10,355 1,251,195

Fund Balances

Nonspendable 7,907 7,907

Restricted 75,183 541,409 546,757 2,448 1,165,796

Committed 77,492 77,492

Total Fund Balances $ 75,183 $ 541,409 $ 77,492 $ 546,757 $ 10,355 $ 1,251,195

Other Governmental Funds


50


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


Capital District

Outlay FSPK Activity Construction Permanent Total

Revenues

From Local Sources

Taxes

Property $ - $ 625,368 $ - $ - $ - $ 625,368

Student activities 62,976 62,976

Earnings from investments 20,561 529 21,090

Other local revenue 12,638 12,638

Intergovernmental - State 150,618 502,760 653,378

Total Revenues 150,618 1,128,128 62,976 33,199 529 1,375,450

Expenditures

Instruction 47,656 47,656

Support Services

Instructional Staff 7,642 7,642

Plant Operations & Maintenance 6,335 6,335

Building Acquistions & Construction 1,281,037 1,281,037

Total Expenditures - - 61,632 1,281,037 - 1,342,669

Excess (Deficit) of Revenues

Over Expenditures 150,618 1,128,128 1,343 (1,247,838) 529 32,780

Other Financing Sources (Uses)

Transfers (Out) (151,019) (1,019,595) (1,170,614)

Total Other Financing Sources (Uses) (151,019) (1,019,595) - - - (1,170,614)

Net change in fund balances (401) 108,533 1,343 (1,247,838) 529 (1,137,833)

Fund Balance Beginning 75,583 432,876 - 1,794,595 9,826 2,312,880

Prior Period Adjustment 76,149 76,149

Restated Fund Balance Beginning 75,583 432,876 76,149 1,794,595 9,826 2,389,028

Fund Balance ending $ 75,183 $ 541,409 $ 77,492 $ 546,757 $ 10,355 $ 1,251,195

Other Governmental Funds


51


Combining Balance Sheet of Fiduciary Funds- School Activity and Private Purpose Trust


WASHINGTON WASHINGTON WASHINGTON WASHINGTON NORTH PRIVATE FIDUCIARY

COUNTY CO HIGH COUNTY COUNTY WASHINGTON PURPOSE FUND

HIGH SCHOOL CHARITABLE GAMING MIDDLE SCHOOL ELEMENTARY ELEMENTARY TRUST TOTALS

ASSETS

Cash and cash equivalents $ 47,970 $ 269 $ 5,541 $ 16,546 $ 12,493 $ 19,895 $ 102,714

Accounts receivable - - - - - - -

Total Assets 47,970 269 5,541 16,546 12,493 19,895 102,714

LIABILITIES

Accounts payable 4,818 - - 296 - 5,114

Total Liabilities 4,818 - - - 296 - 5,114

FUND BALANCE

Scholarships 19,895 19,895

School Activities 43,152 269 5,541 16,546 12,197 77,705

Total Fund Balance 43,152 269 5,541 16,546 12,197 19,895 97,600

TOTAL LIABILITIES AND FUND BALANCE $ 47,970 $ 269 $ 5,541 $ 16,546 $ 12,493 $ 19,895 $ 102,714

SCHOOL ACTIVITY FUNDS


52


Combining Statement of Revenues, Expenses and Changes in Fund Balance-School Activity and Private Purpose Trust


WASHINGTON WASHINGTON WASHINGTON WASHINGTON NORTH PRIVATE FIDUCIARY

COUNTY CO HIGH COUNTY COUNTY WASHINGTON PURPOSE FUND

HIGH SCHOOL CHARITABLE GAMING MIDDLE SCHOOL ELEMENTARY ELEMENTARY TRUST TOTALS

REVENUES

Student revenues $ 175,172 $ 4,471 $ 45,046 $ 9,640 $ 43,504 $ - $ 277,833

Community services - 493 493

Total revenues 175,172 4,471 45,046 9,640 43,504 493 278,326

EXPENDITURES

Student activities 157,384 5,711 43,114 9,570 44,057 - 259,835

Community services 2,300 2,300

Total expenditures 157,384 5,711 43,114 9,570 44,057 2,300 262,135

Excess (Deficit) of Revenues

Over Expenses 17,788 (1,239) 1,932 71 (553) (1,807) 16,191

FUND BALANCE-BEGINNING 77,397 1,508 7,127 26,036 23,787 21,702 157,557

Prior Period Adjustment (52,033) - (3,518) (9,561) (11,037) - (76,149)

RESTATED FUND BALANCE-BEGINNING 25,364 1,508 3,609 16,475 12,750 21,702 81,409

FUND BALANCE-ENDING $ 43,152 $ 269 $ 5,541 $ 16,546 $ 12,197 $ 19,895 $ 97,600

SCHOOL ACTIVITY FUNDS


53


Statement of Revenues, Expenses and Changes in Fund Balance - Washington County High School


FUND FUND

BALANCE BALANCE

BEGINNING REVENUES EXPENSES TRANSFERS ENDING

GENERAL FUND $ 1,573 $ 1,431 $ (120) $ (3,124) $ -

FIELD TRIPS - - 630 800 170

ACADEMIC TEAM 477 - 47 - 430

SENIOR REWARDS TRIP - - - - -

19th DISTRICT VOLLEY - - - - -

AP CLASSES 3,358 7,253 - (10,611) -

STLP 1,367 150 1,048 (100) 369

COMMANDER CUSTOMS (STLP) - 340 600 500 240

FEES/FT/GRADUATION/D 2,661 1,251 - (3,912) -

JOBS 77 - - - 77

TEXTBOOKS FEES 7,701 3,230 20 (10,911) -

LOCKER FEES 12,915 2,060 10 (14,965) -

CONCESSIONS 2,500 7,837 4,634 (5,650) 53

FACULTY 228 1,027 801 - 454

FFA-MCBRIDE MEMORIA 410 - - (410) -

RESOURCE ROOM 159 - - - 159

FRYSC 672 - - (672) -

FCA 157 54 134 - 77

BETA CLUB 619 920 711 - 828

DRAMA CLUB 1,235 200 448 - 987

FFA 1,041 16,862 15,013 220 3,109

FCCLA 937 32,644 31,698 (320) 1,564

FACS - 1,145 - (1,145) -

PEP CLUB 449 - - - 449

PROJECT GRADUATION 817 - 817 - -

SPANISH/WORLD LANGUAGE 917 - - - 917

SPORTMANSCLUB 47 90 - - 137

NHS 110 125 152 - 83

STUDENT COUNCIL 1,456 - 366 - 1,090

GREENHOUSE 4,754 10,123 7,905 - 6,973

ART 408 1,033 - (1,441) -

NATL ART HONOR SOCIETY 218 - - - 218

MCBRIDE ART DONATION 400 - - (400) -

BAND 24 - - - 24

ATHLETIC 4,878 10,900 17,259 2,950 1,469

SOFTBALL 391 2,075 1,910 (200) 356

BOYS GOLF 139 - 138 - 1

BOYS BASKETBALL 1,361 6,735 6,321 (500) 1,276

BOYS BASKETBALL DONATION 200 10 - 500 710

GIRLS BASKETBALL - 1,770 1,700 - 70

BASEBALL 527 3,098 3,354 - 271

CHEERLEADERS 276 12,643 11,535 (80) 1,305

VOLLEYBALL 2,814 10,104 8,704 700 4,914

VOLLEYBALL CONCESSIONS - 4,650 2,694 642 2,598

VOLLEYBALL DONATION 331 - 216 - 115

2014 8TH GRADE TOURNEY 2,465 - 1,823 (642) -

VB TOURNAMENT OFFICIALS - 725 725 - -

FOOTBALL - 223 26 250 447

TRACK 148 780 755 - 173

BASS FISHING 625 1,873 1,523 - 976

SOCCER 458 - - - 458

ARCHERY 356 100 213 - 243

TENNIS - 90 - - 90

PROM 2,284 4,605 5,584 (400) 906

LIBRARY 4,412 6,045 5,608 (4,849) -

YEARBOOK 8,046 5,810 5,587 - 8,268

DISTRICT GENERAL ACT - 2,646 4,950 2,404 100

DISTRICT LIBRARY ACCT - 880 5,729 4,849 -

DISTRICT LOCKER FEES ACT - 70 15,035 14,965 -

DISTRICT PARKING FEES ACT - 870 4,782 3,912 -

DISTRICT TEXTBOOK ACT - 1,005 11,916 10,911 -

DISTRICT AD PLACEMENT - 3,825 14,436 10,611 -

DISTRICT ART ACCT - 1,861 3,302 1,441 -

DISTRICT FACS ACT - 2,143 3,288 1,145 -

DISTRICT ATHLETICS ACT - 1,810 3,360 1,550 -

DISTRICT FRYSC - - 1,172 1,172 -

DISTRICT FFA MCBRIDE - 50 460 410 -

DISTRICT ART MCBRIDE - - 400 400 -

PRIOR PERIOD ADJUSTMENT (52,033) (52,033) -

Totals $ 25,364 $ 175,172 $ 157,384 (0) $ 43,152


54


NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


55

NOTE A - BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards includes the federal grant activity of the

Washington County School District and is presented on the accrual basis of accounting. The

information in this schedule is presented in accordance with the requirements of OMB Circular A-133,

Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts

presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic

financial statements.

NOTE B – SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the schedule are reported on the accrual basis of accounting. Such

expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost

Principles for State and Local Governments, wherein certain types of expenditures are not allowable or

are limited as to reimbursement. Negative amounts shown on the schedule represents adjustments or

credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-

through entity identifying numbers are presented where available.

NOTE C – FOOD DISTRIBUTION

Nonmonetary assistance is reported in the schedule at the fair value of the commodities disbursed. At

June 30, 2015, the District had food commodities totaling $65,541.


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal Grantor/ Federal Pass-Through Program

Pass-Through Grantor/ CFDA Grantor's or Award

Program Title Number Number Amount Expenditures

US Department of Agriculture

Passed Through State Department of Education:

School Breakfast Program 10.553

Fiscal Year 14 7760005 14 $ N/A $ 32,691

Fiscal Year 15 7760005 15 N/A 109,928

National School Lunch Program 10.555

Fiscal Year 14 7750002 14 N/A 110,084

Fiscal Year 15 7750002 15 N/A 363,337

Summer Food Program 10.559

Fiscal Year 14 7740023 14 N/A 15,079

Fiscal Year 14 7690024 14 N/A 1,569

Child Nutrition Cluster Subtotal 632,689

Passed Through State Department of Agriculture:

Food Donation-Commodities 10.565

Fiscal Year 15 510.4950 N/A 65,541

Total US Department of Agriculture 698,230

US Department of Education

Passed Through State Department of Education

Title I Grants to Local Educational Agencies 84.010A

Fiscal Year 13 3100002 13 449,123 1,208

Fiscal Year 14 3100002 14 434,606 166,420

Fiscal Year 14M 3100002 14 1,639 1,639

Fiscal Year 15 3100002 15 426,311 308,723

Fiscal Year 15M 3100002 15 1,616 831

478,822

Migrant Education 84.011AFiscal Year 14 3110002 14 35,000 7,088 Fiscal Year 15 3110002 15 38,000 31,380

38,469

* Special Education Grants to States 84.027A

Fiscal Year 13 3810002 13 386,001 80,895

Fiscal Year 13P 3810002 13 17,244 3

Fiscal Year 14 3810002 14 364,345 364,345

Fiscal Year 14P 3810002 14 9,076 6,959

Fiscal Year 15 3810002 15 376,550 34,721

* Special Education Preschool 84.173A

Fiscal Year 13 3800002 13 38,608 8,152

Fiscal Year 14 3800002 14 37,686 37,617

Fiscal Year 14P 3800002 14 673 673

Fiscal Year 15 3800002 15 37,786 3,498

Special Education Cluster Subtotal 536,863

Rural Education 84.358B

Fiscal Year 14 3140002 14 30,451 28,560

Fiscal Year 15 3140002 15 35,033 31,767

60,327

Title III Limited English Proficiency 84.365A

Fiscal Year 14 3300002 14 8,042 1,365

Fiscal Year 15 3300002 15 9,392 8,780

10,146

Vocation Education-Basic Grants to States 84.048

Fiscal Year 13A 4621332 13 824 64

Fiscal Year 14 3710002 14 15,787 497

Fiscal Year 14A 3710002 14 630 630

Fiscal Year 15 3710002 15 18,346 17,651

Fiscal Year 15S 3710002 15 2,220 313

19,155

Title II Teacher Quality 84.367A

Fiscal Year 13 3230002 13 99,095 3,046

Fiscal Year 14 3230002 14 94,763 18,126

Fiscal Year 15 3230002 15 94,063 51,395

72,566

Twenty-First Century Community Learning Centers 84.287

Fiscal Year 13N 3400002 13 60,000 2,824

Fiscal Year 13U 3400002 13 30,000 27,474

Fiscal Year 13W 3400002 13 60,000 3,570

Fiscal Year 13Z 3400002 13 16,917 16,917

50,784

Race to the Top 84.413A

Fiscal Year 11 3960002 11 18,291 7,500

Passed Through Commonwealth of Kentucky

See the accomapnying notes to the Schedule of Expenditures of Federal Awards.

56


SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS


Federal Grantor/ Federal Pass-Through Program

Pass-Through Grantor/ CFDA Grantor's or Award

Program Title Number Number Amount Expenditures

Adult Education-Community Based Work Transition 84.002

Fiscal Year 15 371A 28,125 38,105

Total US Department of Education 1,312,735

Total Expenditure of Federal Awards $ 2,010,965

* Major Programs

See the accomapnying notes to the Schedule of Expenditures of Federal Awards.

57


58

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS




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, and the audit requirements prescribed by the

Kentucky State Committee for School District Audits in the Auditor Responsibilities and State

Compliance Requirements sections contained in the Kentucky Public School Districts’ Audit Contract and

Requirements, the financial statements of the governmental activities, the business-type activities, each

major fund, and the aggregate remaining fund information of Washington County School District, as of

and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively

comprise Washington County School District’s basic financial statements, and have issued our report

thereon dated November 15, 2015.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Washington County

School 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 Washington

County School District’s internal control. Accordingly, we do not express an opinion on the effectiveness

of Washington County School 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 entity’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. Given these limitations, during our audit we did not identify any

deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses

may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Washington County School District’s financial

statements are free from material misstatement, we performed tests of its compliance with certain

59

provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a

direct and material effect on the determination of financial statement amounts. However, providing an

opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do

not express such an opinion. The results of our tests disclosed no instances of noncompliance or other

matters that are required to be reported under Government Auditing Standards.

We noted certain matters that we reported to management of the Washington County School District, in a

separate letter dated November 15, 2015.

In addition, the results of our tests disclosed no material deficiencies as it relates to specific state statutes

or regulations identified in the audit requirements prescribed by the Kentucky State Committee for School

District Audits included in the Kentucky Public School District’s Audit Contract and Requirements or

appendices.

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 entity’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.


November 15, 2015


60

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED

BY OMB CIRCULAR A-133




Report on Compliance for Each Major Federal Program

We have audited Washington County School District’s compliance with the types of compliance

requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and

material effect on each of Washington County School District’s major federal programs for the year

ended June 30, 2015. Washington County School 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 the requirements of laws, regulations, contracts, and

grants applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Washington County School

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 OMB Circular A-133,

Audits of States, Local Governments, and Non-Profit Organizations, and the audit requirements

prescribed by the Kentucky State Committee for School District Audits in the Auditor Responsibilities

and State Compliance Requirements sections contained in the Kentucky Public School Districts’ Audit

Contract and Requirements. Those standards and OMB Circular A-133 require that we plan and perform

the audit to obtain reasonable assurance about whether noncompliance with the types of compliance

requirements referred to above that could have a direct and material effect on a major federal program

occurred. An audit includes examining, on a test basis, evidence about Washington County School

District’s compliance with those requirements and performing such other procedures as we considered

necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major

federal program. However, our audit does not provide a legal determination of Washington County

School District’s compliance.

Opinion on Each Major Federal Program

In our opinion, Washington County School District, complied, in all material respects, with the types of

compliance requirements referred to above that could have a direct and material effect on each of its

major federal programs for the year ended June 30, 2015.

61

Report on Internal Control Over Compliance

Management of Washington County School 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 Washington County School 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 OMB Circular A-133, but

not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.

Accordingly, we do not express an opinion on the effectiveness of Washington County School District’s

internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over

compliance does not allow management or employees, in 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 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

OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.


November 15, 2015


SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Year Ended June 30, 2015

62

SUMMARY OF AUDITOR’S RESULTS

What type of report was issued for the financial statements? Unmodified

Were there significant deficiencies in internal control disclosed? None Reported

If so, was any significant deficiencies material (GAGAS)?

Was any material noncompliance reported (GAGAS)? No

Were there material weaknesses in internal control disclosed

For major programs? No

Were there any significant deficiencies in internal control disclosed

that were not considered to be material weaknesses? None Reported

What type of report was issued on compliance for major programs? Unmodified

Did the audit disclose findings as it relates to major programs that

Is required to be reported as described in Section 510(a) of OMB

A-133? No

Major Programs Special Education Cluster [84.027A, 84.173A]

Dollar threshold of Type A and B programs $300,000

Low risk auditee? Yes

FINDINGS - FINANCIAL STATEMENT AUDIT

No findings at the financial statement level.

FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT

No major federal award findings.


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


63

FINDINGS - FINANCIAL STATEMENT AUDIT

There were no prior year findings.

FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT

There were no prior year findings.

APPENDIX C


Series of 2016

Continuing Disclosure Agreement

(C-1)

CONTINUING DISCLOSURE UNDERTAKING AGREEMENT

This Continuing Disclosure Undertaking Agreement ("Agreement") made and entered into as of the 1stday of July, 2016 by and between the Board of Education of Washington County School District ("Board"); theWashington County School District Finance Corporation, an agency and instrumentality of the Board("Corporation") and the Registered and Beneficial Owners of the Bonds hereinafter identified as third partybeneficiaries to this Agreement. For the purposes of this Agreement "Beneficial Owner" means the person orentity treated as the owner of the Bonds for federal income tax purposes and "Registered Owner" means the personor entity named on the registration books of the bond registrar.

W I T N E S S E T H:

WHEREAS, the Corporation has acted as issuing agency for the Board pursuant to the provisions ofSection 162.385 of the Kentucky Revised Statutes ("KRS") and the Corporation's Bond Resolution in connectionwith the authorization, sale and delivery of $1,885,000 of the Corporation's School Building Revenue Bonds,Series of 2016, dated July 1, 2016 ("Bonds"), which Bonds were offered for sale under the terms and conditionsof a Final Official Statement ("FOS") prepared Ross, Sinclaire & Associates, LLC, Lexington, Kentucky("Financial Advisor") and approved by the authorized representatives of the Board and the Corporation, and

WHEREAS, the Securities and Exchange Commission ("SEC"), pursuant to the Securities and ExchangeAct of 1934, has amended the provisions of SEC Rule 15c2-12 relating to financial disclosures by the issuers ofmunicipal securities under certain circumstances ("Rule"), and

WHEREAS, it is intended by the parties to this Agreement that all terms utilized herein shall have thesame meanings as defined by the Rule, and

WHEREAS, the Board is an "obligated person" as defined by the Rule and subject to the provisions ofsaid Rule, and

WHEREAS, failure by the Board and the Corporation to observe the requirements of the Rule will inhibitthe subsequent negotiation, transfer and exchange of the Bonds with a resulting diminution in the market valuethereof to the detriment of the Registered and Beneficial Owners of said Bonds and the Board;

NOW, THEREFORE, in order to comply with the provisions of the Rule and in consideration of thepurchase of the Bonds by the Registered and Beneficial Owners, the parties hereto agree as follows:

1. ANNUAL FINANCIAL INFORMATION

The Board agrees to provide the annual financial information contemplated by Rule 15c2-12(b)(5)(i)relating to the Board for its fiscal years ending June 30 of each year to (a) the Municipal Securities RulemakingBoard ("MSRB"), or any successor thereto for purposes of its Rule, through the continuing disclosure serviceportal provided by the MSRB's Electronic Municipal Market Access ("EMMA") system as described in 1934 ActRelease No. 59062, or any similar system that is acceptable to the Securities and Exchange Commission and (b)the State Information Depository ("SID"), if any (the Commonwealth of Kentucky has not established a SID asof the date of this Agreement) within nine (9) months of the close of each fiscal year.

For the purposes of the Rule "annual financial information" means financial information and operatingdata provided annually, of the type included in the FOS with respect to the Board in accordance with guidelinesestablished by the National Federation of Municipal Analysts, and shall include annual audited financial statementsfor the Board in order that the recipients will be provided with ongoing information regarding revenues andoperating expenses of the Board and the information provided in the FOS under the headings "OUTSTANDINGBONDS", "BOND DEBT SERVICE", "DISTRICT STUDENT POPULATION", "LOCAL SUPPORT - LocalTax Rates, Property Assessment and Revenue Collections and SEEK Allotment". If audited financial statementsare not available when the annual financial information is filed, unaudited financial statements shall be included,to be followed by audited financial statements when available.

(C-2)

The audited financial statements shall be prepared in accordance with Generally Accepted AccountingPrinciples, Generally Accepted Auditing Standards or in accordance with the appropriate sections of KRS orKentucky Administrative Regulations.

The parties hereto agree that this Agreement is entered into among them for the benefit of those whobecome Registered and Beneficial Owners of the Bonds as third party beneficiaries to said Agreement.

2. MATERIAL EVENTS NOTICES

Under the Rule, Section 15c2-12(b)(5)(i)(C), the following fifteen (15) events must be disclosed withinten (10) business days following the occurrence of said event to MSRB via EMMA and the SID, if any:

(1) Principal/interest payment delinquency;

(2) Nonpayment related default, if material;

(3) Unscheduled draw on debt service reserve reflecting financial difficulties;

(4) Unscheduled draw on credit enhancement reflecting financial difficulties;

(5) Substitution of credit or liquidity provider, or its failure to perform;

(6) Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability,Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations withrespect to the tax status of the securities, or other material events affecting the tax status of thesecurity;

(7) Modifications to rights of security holders, if material;

(8) Bond call, if material;

(9) Defeasance;

(10) Tender offers;

(11) Release, substitution or sale of property securing the repayment of the security, if material;

(12) Rating change;

(13) Merger, consolidation, acquisition or sale of all or substantially all assets of an obligated person,other than in the ordinary course of business, and the entry into a definitive agreement toundertake such action or the termination of a definitive agreement relating to such action, otherthan pursuant to its terms, if material;

(14) Bankruptcy, insolvency, receivership or similar event; and

(15) Successor, additional or change in trustee, if material.

Notice of said material events shall be given to the entities identified in this Section by the Board on atimely basis (within ten (10) business days of the occurrence). Notwithstanding the foregoing, the provisions ofthe documents under which the Bonds are authorized and issued do not provide for a debt service reserve, creditenhancements or credit or liquidity providers.

In accordance with Rule Section 15c2-12(b)(5)(i)(D), the Board agrees that in the event of a failure toprovide the Annual Financial Information required under Section 1 of this Agreement, it will notify MSRB viaEMMA of such failure in a timely manner as required above.

(C-3)

The Finance Officer of the Board shall be the responsible person for filing the annual financial informationand/or notices of the events set forth above within the time prescribed in this Agreement. The Board shall causethe Finance Officer to institute an internal tickler system as a reminder of the obligations set forth herein. ByDecember 1 of each fiscal year and each 30 days thereafter the Finance Officer will contact the auditor for theBoard to determine when the audited financial statements will be finalized. The Finance Officer will impress uponthe auditor the necessity of having such audited financial report on or before March 15. Within 5 days of receiptof such audited financial report the finance officer will cause the annual financial information to be filed asrequired by this Agreement.

3. SPECIAL REQUESTS FOR INFORMATION

Upon the request of any Registered or Beneficial Owner of the Bonds or the original purchaser of theBonds or any subsequent broker-dealer buying or selling said Bonds on the secondary market ("Underwriters"),the Board shall cause financial information or operating data regarding the conduct of the affairs of the Board tobe made available on a timely basis following such request.

4. DISCLAIMER OF LIABILITY

The Board and the Corporation hereby disclaim any liability for monetary damages for any breach of thecommitments set forth in this Agreement and remedies for any breach of the Board's continuing disclosureundertaking shall be limited to an action for specific performance or mandamus in a court of competent jurisdictionin Kentucky following notice and an opportunity to cure such a breach.

5. FINAL OFFICIAL STATEMENT

That the Final Official Statement prepared by the Financial Advisor and approved by the authorizedrepresentatives of the Board and the Corporation is hereby incorporated in this Agreement as fully as if copiedherein and the "annual financial information" required under Section 1 hereof shall in summary form update thespecific information set forth in said FOS.

6. DURATION OF THE AGREEMENT

This Agreement shall be in effect so long as any of the Bonds remain outstanding and unpaid; provided,however, that the right is reserved in the Board to delegate its responsibilities under the Agreement to a competentagent or trustee, or to adjust the format of the presentation of annual financial information so long as the intent andpurpose of the Rule to present adequate and accurate financial information regarding the Board is served.

7. AMENDMENT; WAIVER

Notwithstanding any other provision of this Agreement, the Board may amend this Agreement, and anyprovision of this Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Section 1, it may only be made in connectionwith a change in circumstances that arises from a change in legal requirements, change in law, or change in theidentity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationallyrecognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance ofthe Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change incircumstances; and

(c) The amendment or waiver either (i) is approved by the holders of the Bonds in the same manner asprovided in the Bond Resolution for amendments to the Bond Resolution with the consent of holders, or (ii) doesnot, in the opinion of nationally recognized bond counsel, materially impair the interests of the Registered Ownersor Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Agreement, the Board shall describe suchamendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the

(C-4)

reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles,on the presentation) of financial information or operating data being presented by the Board. In addition, if theamendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of suchchange shall be given in the same manner as for a material event under Section 15c2-12(b)(5)(i)(C) of the Rule,and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative formand also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the newaccounting principles and those prepared on the basis of the former accounting principles.

8. DEFAULT

In the event of a failure of the Board to comply with any provision of this Agreement, the Corporation mayand, at the request of any Underwriter or any Registered Owner or Beneficial Owner of Bonds, shall take suchactions as may be necessary and appropriate, including seeking mandamus or specific performance by court order,to cause the Board to comply with its obligations under this Agreement. A default under this Agreement shall notbe deemed an event of default under the Bond Resolution, and the sole remedy under this Agreement in the eventof any failure of the Board to comply with this Agreement shall be an action to compel performance.

In witness whereof the parties hereto have executed this Agreement as of the date first above written.

BOARD OF EDUCATION OF WASHINGTON COUNTY, KENTUCKY

Chairman

Attest:

Secretary

WASHINGTON COUNTY (KENTUCKY) SCHOOLDISTRICT FINANCE CORPORATION

President

Attest:

Secretary

APPENDIX D


Series of 2016

Official Terms and Conditions of Bond Sale

(D-1)

OFFICIALTERMS AND CONDITIONS OF BOND SALE

$1,885,000*Washington County School District Finance Corporation

School Building Revenue Bonds, Series of 2016Dated July 1, 2016

SALE: June 22, 2016 AT 11:00 A.M., E.D.S.T.

As advertised in The Courier Journal, published in Louisville, Kentucky, the Washington County School DistrictFinance Corporation ("Corporation") will until June 22, 2016, at the hour of 11:00 A.M., E.D.S.T., in the office of theExecutive Director of the Kentucky School Facilities Construction Commission, 229 West Main Street, Suite 102,Frankfort, Kentucky 40601-1879, receive competitive bids for the revenue bonds herein described. To be considered,bids must be submitted on an Official Bid Form and must be delivered to the Corporation at the address indicated on thedate of sale no later than the hour indicated. Bids may be submitted manually or by facsimile or electronically viaPARITY. Bids will be considered by the Corporation and may be accepted without further action by the Corporation'sBoard of Directors.

Subject to a Permitted Adjustment* increasing or decreasing the issue by up to $375,000.

WASHINGTON COUNTY SCHOOL DISTRICT FINANCE CORPORATION

The Corporation has been formed in accordance with the provisions of Sections 162.120 through 162.300 andSection 162.385 of the Kentucky Revised Statutes ("KRS"), and KRS Chapter 273 and KRS 58.180, as a non profit, nonstock corporation for the purpose of financing necessary school building facilities for and on behalf of the Board ofEducation of the Washington County School District (the "Board"). Under the provisions of existing Kentucky law, theCorporation is permitted to act as an agency and instrumentality of the Board for financing purposes and the legality ofthe financing plan to be implemented by the Bonds herein referred to has been upheld by the Kentucky Court of Appeals(Supreme Court) in the case of White v. City of Middlesboro, Ky. 414 S.W.2d 569.

STATUTORY AUTHORITY, PURPOSE OF ISSUE AND SECURITY

These Bonds are authorized pursuant to KRS 162.120 through 162.300, 162.385, and KRS 58.180 and are issuedin accordance with a Resolution of the Corporation's Board of Directors. Said Bonds are revenue bonds and constitutea limited indebtedness of the Corporation payable from rental revenues derived by the Corporation from the Board underthe Lease identified below. Said Bonds are being issued to finance improvements at Washington County ElementarySchool (the "Project") and are secured by a lien upon and a pledge of the revenues from the rental of the school buildingto the Board under the Lease on a year to year basis; the first rental period ending June 30, 2017; provided, however, thatsuch lien and pledge are inferior and subordinate to similar liens and pledges securing the Corporation's School BuildingRevenue Bonds previously issued to refinance the Project (the "Prior Lien Bonds").

Should the Board default in its obligations under the Lease or fail to renew the Lease, the Registered Ownersof Bonds have the right to have a receiver appointed to administer the Project but foreclosure and sale are not availableas remedies.

The rental of the Project from the Corporation to the Board is to be effected under a certain Lease Agreementby and between the Corporation and the Board (the "Lease"), whereunder the Project is leased to the Board for the initialperiod ending June 30, 2017, with an option in the Board to renew the Lease each year at rentals sufficient to providefor the principal and interest requirements on the Bonds as they become due, plus the costs of insurance, maintenance,depreciation, and bond issuance and administration expenses; the Board being legally obligated only for the initial rentalperiod and for one year at a time thereafter each time the Lease is renewed.

Under the terms of the Lease and any renewal thereof, so long as the Bonds remain outstanding and inconformance with the intent and purpose of KRS 157.627(5) and KRS 160.160(5), in the event of a failure by the Boardto pay the rentals due under the Lease, and unless sufficient funds have been transmitted to the Paying Agent, or will beso transmitted, for paying said rentals when due, the Board has granted under the terms of the Lease and Participation

(D-2)

Agreement to the Corporation and the Commission the right to notify and request the Kentucky Department of Educationto withhold from the Board a sufficient portion of any undisbursed funds then held, set aside, or allocated to the Boardand to request said Department or Commissioner of Education to transfer the required amount thereof to the Paying Agentfor the payment of such rentals.

Although the Board is obligated to pay the Corporation annual rentals in the full amount of the principal andinterest requirements for the Bonds for each year in which the Lease is renewed, the Board has entered into the Leasein reliance upon a certain Participation Agreement by and between the Board and the Kentucky School FacilitiesConstruction Commission (the "Commission"). Under the terms of the Participation Agreement, the Commission hasagreed to pay annually directly to the Paying Agent for the Bonds a stated Agreed Participation equal to approximately$31,499 to be applied to the annual debt service requirements for the Bonds herein identified until their retirement,subject to the constitutional restrictions limiting the commitment to the biennium; said annual amount is to be appliedonly to the principal and interest requirements of the Bonds so long as the Board renews the Lease. Under the Lease,the Board has pledged and assigned all of its rights under the Participation Agreement in and to the Agreed Participationto the Corporation in order to secure the Bonds and has agreed to pay that portion of the rentals in excess of said AgreedParticipation for each year in which the Lease is renewed.

KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION

The Commission is an independent corporate agency and instrumentality of the Commonwealth of Kentuckyestablished pursuant to the provisions of Sections 157.611 through 157.640 of the Kentucky Revised Statutes, asrepealed, amended, and reenacted (the "Act") for the purpose of assisting local school districts in meeting the schoolconstruction needs of the Commonwealth in a manner which will ensure an equitable distribution of funds based uponunmet need.

Pursuant to the provisions of the Act, the Regulations of the Kentucky Board of Education and the Commission,the Commission has determined that the Board is eligible for participation from the Commission in meeting the costs ofconstruction of the Projects and has entered into a Participation Agreement with the Board whereunder the Commissionagrees to pay an annual Agreed Participation equal to approximately $31,499 to be applied to the annual debt servicerequirements for the Bonds herein identified each year until their retirement; provided, however, that the contractualcommitment of the Commission to pay the annual Agreed Participation is limited to the biennial budget period of theCommonwealth, with the first such biennial period terminating on June 30, 2018; the right is reserved in the Commissionto terminate its commitment to pay the Agreed Participation after the initial biennial period and every two yearsthereafter. The obligation of the Commission to make payments of the Agreed Participation shall be automaticallyrenewed each two years for a period of two years unless the Commission shall give notice of its intention not toparticipate not less than sixty days prior to the end of the biennium; however, by the execution of the ParticipationAgreement, the Commission has expressed its present intention to continue to pay the Agreed Participation in eachsuccessive biennial budget period until the retirement of all of the Bonds, but such execution does not obligate theCommission to do so.

The Regular Session of the General Assembly of the Commonwealth adopted the State's Budget for the bienniumending June 30, 2018. Inter alia, the Budget provides $99,334,000 in FY 2014-15 and $108,270,000 in FY 2015-16 topay debt service on existing and future bond issues; $100,000,000 of the Commission's previous Offers of Assistancemade during the last biennium; and authorizes $100,000,000 in additional Offers of Assistance for the current bienniumto be funded in the Budget for the biennium ending June 30, 2018.

ADDITIONAL PARITY BONDS FOR COMPLETION OF PROJECT

The Corporation has reserved the right and privilege of issuing additional bonds from time to time payable fromthe income and revenues of said lands and school building Project and secured by the same statutory mortgage lien andpledge of revenues, but only if and to the extent the issuance of such additional parity bonds may be necessary to pay thecosts, for which funds are not otherwise available, of completing the construction of said school building Project inaccordance with the plans and specifications of the architect in charge of said Project, which plans have been completed,approved by the Board, Commissioner of Education, and filed in the office of the Secretary of the Corporation.

(D-3)

BOND MATURITIES, PRIOR REDEMPTION PROVISIONS AND PAYING AGENT

All such Bonds shall be in denominations in multiples of $5,000 within the same maturity, bear interest fromJuly 1, 2016, payable on February 1, 2017, and semi annually thereafter and shall mature as to principal on August 1 ineach of the years as follows:

Year Amount* Year Amount*

2017 $70,000 2027 $ 70,0002018 70,000 2028 65,0002019 70,000 2029 70,0002020 70,000 2030 70,0002021 65,000 2031 75,0002022 70,000 2032 65,0002023 75,000 2033 190,0002024 60,000 2034 195,0002025 65,000 2035 200,0002026 70,000 2036 200,000

*Subject to a Permitted Adjustment of the amount of Bonds awarded of up to $375,000 which may be appliedin any or all maturities.

The Bonds maturing on or after August 1, 2027 are subject to redemption at the option of the Corporation priorto their stated maturities on any date falling on or after August 1, 2026, in any order of maturities (less than all of a singlematurity to be selected by lot), in whole or in part, upon notice of such prior redemption being given by the Paying Agentin accordance with DTC requirements not less than thirty (30) days prior to the date of redemption, upon terms of theface amount, plus accrued interest, but without redemption premium.

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

The Bonds are to be issued in fully registered form (both principal and interest). The Huntington National Bank,Cincinnati, Ohio has been designated as the Bond Registrar and Paying Agent, shall remit interest on each semiannualdue date to Cede & Co. Principal and interest will be payable through the Book-Entry-Only-System administered by TheDepository Trust Company: Please see "BOOK-ENTRY-ONLY-SYSTEM" below. Interest on the Bonds will be paidat rates to be established upon the basis of competitive bidding as hereinafter set forth, such interest to be payable onFebruary 1 and August 1 of each year, beginning February 1, 2017 (Record Date is the 15th day of month precedinginterest due date).

BIDDING CONDITIONS AND RESTRICTIONS

(A) Bids must be made on Official Bid Form, contained in Information for Bidders available from theundersigned or Ross, Sinclaire & Associates, LLC, Lexington, Kentucky, by visiting www.rsamuni.com submittedmanually, by facsimile or electronically via PARITY®.

(B) Electronic bids for the Bonds must be submitted through PARITY® and no other provider of electronicbidding services will be accepted. Subscription to the PARITY® Competitive Bidding System is required in order tosubmit an electronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of anyprospective bidders to subscribe. For the purposes of the bidding process, the time as maintained by PARITY® shallconstitute the official time with respect to all bids whether in electronic or written form. To the extent any instructionsor directions set forth in PARITY® conflict with the terms of the Official Terms and Conditions of Bond Sale, thisOfficial Terms and Conditions of Sale of Bonds shall prevail. Electronic bids made through the facilities of PARITY®shall be deemed an offer to purchase in response to the Notice of Bond Sale and shall be binding upon the bidders as ifmade by signed, sealed written bids delivered to the Corporation. The Corporation shall not be responsible for anymalfunction or mistake made by or as a result of the use of the electronic bidding facilities provided and maintained byPARITY®. The use of PARITY® facilities are at the sole risk of the prospective bidders. For further information

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regarding PARITY®, potential bidders may contact PARITY®, telephone (212) 404-8102. Notwithstanding theforegoing, non-electronic bids may be submitted via facsimile or by hand delivery utilizing the Official Bid Form.

(C) The minimum bid shall be not less than $1,847,300 (98% of par) plus accrued interest. Interest rates shallbe in multiples of 1/8 or 1/20 of 1% or both. Only one interest rate shall be permitted per Bond, and all Bonds of the samematurity shall bear the same rate. Interest rates must be on an ascending scale, in that the interest rate stipulated in anyyear may not be less than that stipulated for any preceding maturity. There is no limit on the number of different interestrates.

(D) The maximum permissible net interest cost for the Bonds shall not exceed "The Bond Buyer's" Index of 20Municipal Bonds as established on the Thursday immediately preceding the sale of said Bonds plus 1.50%.

(E) The determination of the best purchase bid for said Refunding Bonds shall be made on the basis of all bidssubmitted for exactly $1,885,000 principal amount of Refunding Bonds offered for sale under the terms and conditionsherein specified, but the Corporation may adjust the principal amount of Bonds upward or downward by $375,000 (the"Permitted Adjustment") which may be awarded to such best bidder may be a minimum of $1,510,000 or a maximumof $2,260,000. In the event of such Permitted Adjustment, no rebidding or recalculation of a submitted bid will berequired or permitted and the Underwriter's Discount on the Bonds as submitted by the successful bidder shall be heldconstant. The Underwriter's Discount shall be defined as the difference between the purchase price of the Bondssubmitted by the bidder and the price at which the Bonds will be issued to the public, calculated from informationprovided by the bidder, divided by the par amount of the Bonds bid. The price of which such adjusted principal amountof Bonds will be sold will be the same price per $5,000 of Bonds as the price per $5,000 for the $1,885,000 of Bondsbid.

(F) The successful bidder may elect to notify the Financial Advisor within twenty-four (24) hours of the awardof the Bonds that certain serial maturities as awarded may be combined with immediately succeeding serial maturitiesas one or more Term Bonds; provided, however, (a) bids must be submitted to permit only a single interest rate for eachterm bond specified, and (b) Term Bonds will be subject to mandatory redemption by lot on August 1 in accordance withthe maturity schedule setting the actual size of the issue.

(G) CUSIP identification numbers will be printed on the Bonds at the expense of the Corporation. Thepurchaser shall pay the CUSIP Service Bureau Charge. Improper imprintation or the failure to imprint CUSIP numbersshall not constitute cause for a failure or refusal by the purchaser to accept delivery of and pay for said Bonds inaccordance with the terms of any accepted proposal for the purchase of said Bonds.

(H) The Corporation will provide to the successful purchaser a Final Official Statement in accordance with SECRule 15c2-12. A Final Official Statement will be provided in Electronic Form to the successful bidder, in sufficient timeto meet the delivery requirements of the successful bidder under SEC and Municipal Securities Rulemaking BoardDelivery Requirements. The successful bidder will be required to pay for the printing of Final Official Statements.

(I) Bids need not be accompanied by a certified or bank cashier's good faith check, BUT the successful bidderwill be required to wire transfer an amount equal to 2% of the amount of the principal amount of Bonds awarded to theorder of the Corporation by the close of business on the day following the award. Said good faith amount which will beforfeited as liquidated damages in the event of a failure of the successful bidder to take delivery of such Bonds whenready. The good faith amount (without interest) will be applied to the purchase price upon delivery of the Bonds. Thesuccessful bidder shall not be required to take up and pay for said Bonds unless delivery is made within 45 days fromthe date the bid is accepted.

(J) Delivery will be made utilizing the DTC Book-Entry-Only-System.

(K) The Corporation reserves the right to reject any and all bids or to waive any informality in any bid. TheBonds are offered for sale subject to the principal and interest not being subject to Federal or Kentucky income taxationor Kentucky ad valorem taxation on the date of their delivery to the successful bidder, in accordance with the FinalApproving Legal Opinion of Steptoe & Johnson PLLC, Bond Counsel, Louisville, Kentucky, which Opinion will bequalified in accordance with the section hereof on TAX EXEMPTION.

(L) The Corporation and the Board agree to cooperate with the successful bidder in the event said purchaserdesires to purchase municipal bond insurance regarding the Refunding Bonds; provided, however, that any and all

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expenses incurred in obtaining said insurance shall be solely the obligation of the successful bidder should the successfulbidder so elect to purchase such insurance.

STATE SUPPORT OF EDUCATION

The 1990 Regular Session of the General Assembly of the Commonwealth enacted a comprehensive legislativepackage known as the Kentucky Education Reform Act ("KERA") designed to comply with the mandate of the KentuckySupreme Court that the General Assembly provide for as efficient and equitable system of schools throughout the State.

KERA became fully effective on July 13, 1990. Elementary and Secondary Education in the Commonwealthis supervised by the Commissioner of Education as the Chief Executive Officer of the State Department of Education("DOE"), an appointee of the reconstituted State Board for Elementary and Secondary Education (the "State Board").Some salient features of KERA are as follows:

KRS 157.330 establishes the fund to Support Education Excellence in Kentucky ("SEEK") funded from biennialappropriations from the General Assembly for distribution to school districts. The base funding guaranteed to eachschool district by SEEK for operating and capital expenditures is determined in each fiscal year by dividing the totalannual SEEK appropriation by the state-wide total of pupils in average daily attendance ("ADA") in the preceding fiscalyear; the ADA for each district is subject to adjustment to reflect the number of at risk students (approved for free lunchprograms under state and federal guidelines), number and types of exceptional children, and transportation costs.

KRS 157.420 establishes a formula which results in the allocation of funds for capital expenditures in schooldistricts at $100 per ADA pupil which is included in the SEEK allotment ($3,911) for the current biennium which isrequired to be segregated into a Capital Outlay Allotment Fund which may be used only for (1) direct payment ofconstruction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support of bond issues; (4)reduction of deficits resulting from over expenditures for emergency capital construction; and (5) a reserve for each ofthe categories enumerated in 1 through 4 above.

KRS 160.470(12)(a) requires that effective for fiscal years beginning July 1, 1990 each school district shall levya minimum equivalent tax rate of $.30 for general school purposes. The equivalent tax rate is defined as the rate whichresults when the income collected during the prior year from all taxes levied by the district (including utilities grossreceipts license and special voted) for school purposes is divided by the total assessed value of property, plus theassessment for motor vehicles certified by the Revenue Cabinet of the Commonwealth. Any school district board ofeducation which fails to comply with the minimum equivalent tax rate levy shall be subject to removal from office.

KRS 160.470(12)(2) provides that for fiscal years beginning July 1, 1990 each school district may levy anequivalent tax rate which will produce up to 15% of those revenues guaranteed by the SEEK program. Any increasebeyond the 4% annual limitation imposed by KRS 132.017 is not subject to the recall provisions of that Section. Revenuegenerated by the 15% levy is to be equalized at 150% of the state-wide average per pupil equalized assessment.

KRS 157.440(2) permits school districts to levy up to 30% of the revenue guaranteed by the SEEK program, plusthe revenue produced by the 15% levy, but said additional tax will not be equalized with state funds and will be subjectto recall by a simple majority of those voting on the question.

KRS 157.620(1) also provides that in order to be eligible for participation from the Kentucky School FacilitiesConstruction Commission for debt service on bond issues the district must levy a tax which will produce revenuesequivalent to $.05 per $100 of the total assessed value of all property in the district (including tangible and intangibleproperty and motor vehicles) in addition to the minimum $.30 levy required by KRS 160.470(12). A district having aspecial voted tax which is equal to or higher than the required $.05 tax, must commit and segregate for capital purposesat least an amount equal to the required $.05 tax. Those districts which levy the additional $.05 tax are also eligible forparticipation in the Kentucky Facilities Support ("KFS") program for which funds are appropriated separately from SEEKfunds and are distributed to districts in accordance with a formula taking into account outstanding debt and fundsavailable for payment from both local and state sources under KRS 157.440(1)(b).

KRS 160.460 provides that as of July 1, 1994 all real property located in the Commonwealth subject to localtaxation shall be assessed at 100% of fair cash value.

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BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2018

The Kentucky General Assembly, during its Regular Session, adopted a budget for the biennium ending June30, 2018 which was approved and signed by the Governor. Such budget is effective beginning July 1, 2016.

POTENTIAL LEGISLATION

No assurance can be given that any future legislation, including amendments to the Code, if enacted into law,or changes in interpretation of the Code, will not cause interest on the Bonds to be subject, directly or indirectly, tofederal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the taxexemption of such interest. In addition, current and future legislative proposals, if enacted into law, may cause intereston state or local government bonds (whether issued before, on the date of, or after enactment of such legislation) to besubject, directly or indirectly, to federal income taxation by, for example, changing the current exclusion or deductionrules to limit the amount of interest on such bonds that may currently be treated as tax exempt by certain individuals. Prospective purchasers of the Bonds should consult their own tax advisers regarding any pending or proposed federaltax legislation.

Further, no assurance can be given that the introduction or enactment of any such future legislation, or any actionof the IRS, including but not limited to regulation, ruling, or selection of the Bonds for audit examination, or the courseor result of any IRS examination of the Bonds or obligations which present similar tax issues, will not affect the marketprice for the Bonds.

CONTINUING DISCLOSURE

As a result of the Board and issuing agencies acting on behalf of the Board having outstanding at the time theBonds referred to herein are offered for public sale municipal securities in excess of $1,000,000, the Corporation andthe Board will enter into a written agreement for the benefit of all parties who may become Registered or BeneficialOwners of the Bonds whereunder said Corporation and Board will agree to comply with the provisions of the MunicipalSecurities Disclosure Rules set forth in Securities and Exchange Commission Rule 15c2-12 by filing annual financialstatements and material events notices with the Electronic Municipal Market Access (EMMA) System maintained bythe Municipal Securities Rule Making Board.

Financial information regarding the Board may be obtained from Superintendent, Washington County SchoolDistrict Board of Education, 120 Mackville Hill Road, Springfield, Kentucky 40069, Telephone 859-336-5470.

TAX EXEMPTION; BANK QUALIFIED

Bond Counsel is of the opinion that the Bonds are "qualified tax-exempt obligations" within the meaning of theInternal Revenue Code of 1986, as amended, and therefore advises as follows:

(A) The Bonds and the interest thereon are exempt from income and ad valorem taxation by the Commonwealthof Kentucky and all of its political subdivisions.

(B) The interest income from the Bonds is excludable from the gross income of the recipient thereof for Federalincome tax purposes under existing law; provided, that the corporate entities noted below are advised of certain taxconsequences as follows:

(1) In the computation of the corporate alternative minimum tax, earnings and profits may includeotherwise tax-exempt interest on the Bonds; this provision applies to corporations only.

(2) Property and casualty insurance companies may be denied certain loss reserve deductions to theextent of otherwise tax-exempt interest on the Bonds.

(C) As a result of certifications by the Board and the Corporation, indicating the issuance of less than$10,000,000 of tax-exempt obligations during the calendar year ending December 31, 2016, the Bonds may be treatedby financial institutions as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code.

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(D) The interest income from the Bonds is excludable from the gross income of the recipient thereof for Federalincome tax purposes under existing law for individuals; however, said income must be included in the calculation of"modified adjusted gross income" in the determination of whether and to what extent Social Security benefits are subjectto Federal income taxation.


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

DTC will act as securities depository for the Bonds. The Bonds initially will be issued as fully-registeredsecurities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond Certificate willbe issued, in the aggregate principal amount of the Bonds, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization"within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation"within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to theprovisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, suchas transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants'accounts, thereby eliminating the need for physical movement of securities certificates. "Direct Participants" includesecurities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC isowned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange,Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others suchas securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship witha Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and itsparticipants are on file with the Securities and Exchange Commission.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receivea credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("BeneficialOwner") is in turn to be recorded on the Direct and Indirect Participant's records. Beneficial Owners will not receivewritten confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmationsproviding details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participantthrough which the beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds("Beneficial Ownership Interest") are to be accomplished by entries made on the books of Participants acting on behalfof Beneficial Owners. Beneficial Owners will not receive certificates representing their Beneficial Ownership interestsin Bonds, except in the event that use of the book-entry system for the Securities is discontinued. Transfers of ownershipinterest in the Securities are to be accomplished by entries made on the books of Participants acting on behalf ofBeneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities,except in the event that use of the book-entry system for the Securities is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede &Co., effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings onbehalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants toIndirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners, will be governed byarrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to Cede & Co. If less than all of the Bonds are being redeemed, DTC's practiceis to determine by lot the amount of the interest of each Direct Participant in the Bonds to be redeemed.

Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, DTC mailsan Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'sconsenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy).

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Principal and interest payments of the Bonds will be made to DTC. DTC's practice is to credit Direct Participants'account on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reasonto believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will begoverned by standing instructions and customary practices, as is the case with securities held for the accounts ofcustomers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC,the Issuer, or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of principal and interest to DTC is the responsibility of the Issuer or the Trustee, disbursements of suchpayments to Direct Participants shall be the responsibility of DTC, and disbursements of such payment to the BeneficialOwners shall be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Beneficial Ownership Interests purchased or tendered,through its Participant, to the Trustee, and shall effect delivery of such Beneficial Ownership Interests by causing theDirect Participant to transfer the Participant's interest in the Beneficial Ownership Interests, on DTC's records, to thepurchaser or the Trustee, as appropriate. The requirements for physical delivery of Bonds in connection with a demandfor purchase or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferredby Direct Participants on DTC's records.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time bygiving reasonable notice to the Issuer or the Bond Registrar. Under such circumstances, in the event that a successorsecurities depository is not obtained, Bond certificates are required to be printed and delivered by the Bond Registrar.

NEITHER THE ISSUER, THE BOARD NOR THE BOND REGISTRAR/PAYING AGENT WILL HAVEANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT ORANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OFTHE BOND REGISTRAR/PAYING AGENT AS BEING AN OWNER WITH RESPECT TO: (1) THE BONDS; (2)THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECTPARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANTOF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PURCHASE PRICE OFTENDERED BONDS OR THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4)THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANYBENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BONDRESOLUTION TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TORECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANYCONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER.

WASHINGTON COUNTY (KENTUCKY)SCHOOL DISTRICT FINANCE CORPORATION

by s/ Dr. Robin Cochran Secretary

APPENDIX E


Series of 2016

Official Bid Form

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OFFICIAL BID FORM(Bond Purchase Agreement)

The Washington County School District Finance Corporation ("Corporation" or "Issuer"), will until 11:00 A.M., E.D.S.T.,on June 22, 2016, receive in the office of the Executive Director of the Kentucky School Facilities Construction Commission,Suite 102, 229 W. Main Street, Frankfort, Kentucky 40601, (telephone 502-564-5582; fax 888-979-6152) competitive bids forits $1,885,000 School Building Revenue Bonds, Series of 2016, dated July 1, 2016; maturing August 1, 2017 through 2036("Bonds").

We hereby bid for said $1,885,000* principal amount of Bonds, the total sum of $_______________ (not less than$1,847,300) plus accrued interest from July 1, 2016 payable February 1, 2017 and semiannually thereafter at the followingannual rates, (rates on ascending scale in multiples of 1/8 or 1/20 of 1%; number of interest rates unlimited) and maturing asto principal on August 1 in the years as follows:

Year Amount* Rate Year Amount* Rate

2017 $ 70,000 _________% 2027 $ 70,000 _________%2018 70,000 _________% 2028 65,000 _________%2019 70,000 _________% 2029 70,000 _________%2020 70,000 _________% 2030 70,000 _________%2021 65,000 _________% 2031 75,000 _________%2022 70,000 _________% 2032 65,000 _________%2023 75,000 _________% 2033 190,000 _________%2024 60,000 _________% 2034 195,000 _________%2025 65,000 _________% 2035 200,000 _________%2026 70,000 _________% 2036 200,000 _________%

* Subject to Permitted Adjustment

We understand this bid may be accepted for as much as $2,260,000 of Bonds or as little as $1,510,000 of Bonds, at thesame price per $5,000 Bond, with the variation in such amount occurring in any maturity or all maturities, which will bedetermined at the time of acceptance of the best bid.

Electronic bids for the Bonds must be submitted through PARITY® and no other provider of electronic bidding serviceswill be accepted. Subscription to the PARITY® Competitive Bidding System is required in order to submit an electronic bid.The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidders to subscribe.For the purposes of the bidding process, the time as maintained by PARITY® shall constitute the official time with respect toall bids whether in electronic or written form. To the extent any instructions or directions set forth in PARITY® conflict withthe terms of the Official Terms and Conditions of Sale of Bonds, this Official Terms and Conditions of Sale of Bonds shallprevail. Electronic bids made through the facilities of PARITY® shall be deemed an offer to purchase in response to the Noticeof Bond Sale and shall be binding upon the bidders as if made by signed, sealed written bids delivered to the Corporation. TheCorporation shall not be responsible for any malfunction or mistake made by or as a result of the use of the electronic biddingfacilities provided and maintained by PARITY®. The use of PARITY® facilities are at the sole risk of the prospective bidders.For further information regarding PARITY®, potential bidders may contact PARITY®, telephone (212) 404-8102.Notwithstanding the foregoing, non-electronic bids may be submitted via facsimile or by hand delivery utilizing the OfficialBid Form.

The successful bidder may elect to notify the Financial Advisor within twenty-four (24) hours of the award of the Bondsthat certain serial maturities as awarded may be combined with immediately succeeding serial maturities as one or more TermBonds; provided, however, (a) bids must be submitted to permit only a single interest rate for each Term Bond specified, and(b) Term Bonds will be subject to mandatory redemption on August 1 in accordance with the maturity schedule setting the actualsize of the issue.

The DTC Book-Entry-Only-System will be utilized on delivery of this issue.

It is understood that the Corporation will furnish the final approving Legal Opinion of Steptoe & Johnson PLLC BondCounsel, Louisville, Kentucky.

No certified or bank cashier's check will be required to accompany a bid, but the successful bidder shall be required to wiretransfer an amount equal to 2% of the principal amount of Bonds awarded by the close of business on the date following theaward. Said good faith amount will be applied (without interest) to the purchase price on delivery. Wire transfer proceduresshould be arranged through The Huntington National Bank, Cincinnati, Ohio, Attn: Ms. Cheri Scott-Geraci (513-366-3073).

Bids must be submitted only on this form and must be fully executed.

If we are the successful bidder, we agree to accept and make payment for the Bonds in Federal Funds within forty-five (45)days of the award and upon acceptance by the Issuer's Financial Advisor this Official Bid Form shall become the Bond PurchaseAgreement.

Respectfully submitted,

__________________________________Bidder

By ________________________________Authorized Officer

___________________________________Address

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Total interest cost from July 1, 2016 to final maturity $_______________

Plus discount or less any premium $_______________

Net interest cost (Total interest cost plus discount) $_______________

Average interest rate or cost ________________%

The above computation of net interest cost and of average interest rate or cost is submitted for information only and is nota part of this Bid.

Accepted by Ross, Sinclaire & Associates, LLC, as Financial Advisor and Agent for the Washington County School DistrictFinance Corporation for $_________________ amount of Bonds at a price of $______________ as follows:

Year Amount Rate Year Amount Rate

2017 _______,000 ________% 2027 _______,000 ________%2018 _______,000 ________ 2028 _______,000 ________2019 _______,000 ________ 2029 _______,000 ________2020 _______,000 ________ 2030 _______,000 ________2021 _______,000 ________ 2031 _______,000 ________2022 _______,000 ________ 2032 _______,000 ________2023 _______,000 ________ 2033 _______,000 ________2024 _______,000 ________ 2034 _______,000 ________2025 _______,000 ________ 2035 _______,000 ________2026 _______,000 ________ 2036 _______,000 ________

Dated: June 22, 2016________________________________ROSS, SINCLAIRE & ASSOCIATES, LLC,as Agent for the Washington CountySchool District Finance Corporation

dated june 15, 2016 new issue rating electronic bidding via … · 2018. 7. 6. · dated june 15,...

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