freeport union free school district · freeport union free school district nassau county, new york...

NEW ISSUE: SERIAL BONDS S&P RATING: AA BOOK-ENTRY-ONLY See “Rating” herein FEDERALLY TAXABLE In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, (i) interest on the Bonds is included in gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the Bonds is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. See “Tax Matters” herein.

FREEPORT UNION FREE SCHOOL DISTRICT

NASSAU COUNTY, NEW YORK

GENERAL OBLIGATIONS

$5,000,000 QUALIFIED SCHOOL CONSTRUCTION BONDS - 2012 (FEDERALLY TAXABLE – DIRECT PAY BONDS)

(the “Bonds”)

Dated: Date of Delivery Due: As Shown on Inside Cover The Bonds are general obligations of the Freeport Union Free School District, Nassau County, New York (the “District”). The District has pledged its faith and credit for the payment of the principal of and interest on the Bonds and, unless paid from other sources, the Bonds are payable from ad valorem taxes which may be levied upon all the taxable real property within the District without limitation as to rate or amount. The District has designated the Bonds as Qualified School Construction Bonds (“QSCBs”) as defined in section 54F of the Internal Revenue Code of 1986, as amended (the “Code”) and will irrevocably elect under Section 6431(f)(2) of the Code to receive a direct payment from the United States Treasury equal to the lesser of the amount of interest payable on the Bonds or the amount of interest which would have been payable on the Bonds if interest were determined at the applicable credit rate determined under Section 54A(b)(3) of the Code. (See – “THE BONDS – Designation of the Bonds as Qualified School Construction Bonds” herein.) The Bonds will be issued as registered Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, which will act as Securities Depository for the Bonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or integral multiples thereof. Purchasers, as the Beneficial Owners, will not receive certificates representing their ownership interest in the Bonds. Interest on the Bonds will be payable on December 15, 2012, and semi-annually thereafter on June 15 and December 15 in each year until maturity. The record date for the Bonds will be the last day of the month preceding each interest payment date. The Bonds will be subject to extraordinary redemption prior to maturity. (See “Redemption Prior to Maturity” herein.) Principal of and interest on the Bonds will be paid by the District to the Securities Depository, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Purchasers of the Bonds, as described herein. The Bonds are offered subject to the final approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the Underwriter by its counsel Orrick, Herrington & Sutcliffe LLP New York, New York. It is expected that delivery of the Bonds in definitive form will be made on or about September 19, 2012.

ROOSEVELT & CROSS INCORPORATED September 7, 2012

$5,000,000 QUALIFIED SCHOOL CONSTRUCTION BONDS - 2012 (Federally Taxable – Direct Pay Bonds)

Interest Price or Interest Price or Maturity Amount Rate Yield CUSIP Maturity Amount Rate Yield CUSIP June 15, 2013 $320,000 0.80% 0.80% 356766KE4 June 15, 2020 $320,000 3.20% 3.20% 356766KM6 June 15, 2014 285,000 1.20 1.20 356766KF1 June 15, 2021 330,000 3.35 3.35 356766KN4 June 15, 2015 290,000 1.60 1.60 356766KG9 June 15, 2022 340,000 3.45 3.45 356766KP9 June 15, 2016 290,000 1.90 1.90 356766KH7 June 15, 2023 355,000 3.60 3.60 356766KQ7 June 15, 2017 300,000 2.20 2.20 356766KJ3 June 15, 2024 365,000 3.70 3.70 356766KR5 June 15, 2018 305,000 2.60 2.60 356766KK0 June 15, 2025 380,000 3.80 3.80 356766KS3 June 15, 2019 315,000 2.80 2.80 356766KL8 June 15, 2026 395,000 3.90 3.90 356766KT1 June 15, 2027 410,000 4.00 4.00 356766KU8 Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements generally are identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The District does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur. Hawkins Delafield & Wood LLP and Orrick, Herrington & Sutcliffe LLP have not participated in the preparation of the demographic, financial or statistical data contained in this Official Statement, nor verified the accuracy, completeness or fairness thereof, and, accordingly, neither firm expresses any opinion with respect thereto. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. No dealer, broker, salesman or other person has been authorized by the District to give any information or to make any representations not contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any inference that there has been no change in the affairs of the District. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

BOARD OF EDUCATION President Vice President DEBRA MULÉ VILMA LANCASTER

Board Members: RONALD J. ELLERBE MICHAEL POMERICO

(VACANCY)

Superintendent of Schools DR. KISHORE KUNCHAM

Executive Director for Business JAMES ROBINSON

Assistant Business Administrator SUSAN MADDI

District Treasurer DEBRA FERRUGIA

District Clerk MARY R. BEDIAKO

* * *

Bond Counsel HAWKINS DELAFIELD & WOOD LLP

New York, New York

PREPARED WITH THE ASSISTANCE OF

NEW YORK MUNIC IPAL ADVISORS CORPORATION2 Roosevelt Ave - Ste 201Syosset, New York 11791

(516) 364-6363 Fax (516) 364-9501

N Y M A C

TABLE OF CONTENTS

Page THE BONDS .......................................................................................................................................................................................................... 1

Description of the Bonds........................................................................................................................................................................ 1 Nature of Obligation............................................................................................................................................................................... 1 Designation of the Bonds as Qualified School Construction Bonds....................................................................................................... 2 Redemption Prior to Maturity................................................................................................................................................................. 2 Book-Entry-Only System....................................................................................................................................................................... 3 Authority For and Purpose of the Bond Issue......................................................................................................................................... 5

SOURCES AND USES OF FUNDS ...................................................................................................................................................................... 5 DESCRIPTION OF THE DISTRICT ..................................................................................................................................................................... 5

General Information ............................................................................................................................................................................... 5 District Organization .............................................................................................................................................................................. 6 Financial Organization ........................................................................................................................................................................... 6 Unemployment Rate Statistics................................................................................................................................................................ 6 Larger Taxpayers1,.................................................................................................................................................................................. 6 District Facilities .................................................................................................................................................................................... 7 Population Characteristics ...................................................................................................................................................................... 7 Enrollment History and Projections........................................................................................................................................................ 7

DISTRICT INDEBTEDNESS ................................................................................................................................................................................ 7 Constitutional and Statutory Requirements ............................................................................................................................................ 7 Statutory Procedure ................................................................................................................................................................................ 8 Computation of Debt Limit and Debt Contracting Margin..................................................................................................................... 9 Remedies Upon Default ......................................................................................................................................................................... 9 Debt Ratios............................................................................................................................................................................................. 10 Long Term Debt Service Schedule......................................................................................................................................................... 11 Installment Purchase Debt...................................................................................................................................................................... 11 Revenue and Tax Anticipation Notes ..................................................................................................................................................... 11 Outstanding Long-Term Bond Indebtedness.......................................................................................................................................... 11 Capital Project Plans .............................................................................................................................................................................. 12 Bond Anticipation Notes ........................................................................................................................................................................ 12 Estimated Overlapping Indebtedness...................................................................................................................................................... 12

FINANCIAL FACTORS ........................................................................................................................................................................................ 12 Real Property Tax................................................................................................................................................................................... 12 Valuations, Tax Levy, Rates and Uncollected Taxes ............................................................................................................................. 12 Real Estate Property Tax Collection Procedure...................................................................................................................................... 13 STAR - School Tax Exemption.............................................................................................................................................................. 13 Tax Limit................................................................................................................................................................................................ 13 The Tax Levy Limit Law ....................................................................................................................................................................... 13 State Aid................................................................................................................................................................................................. 14 Events Affecting State Aid to New York School Districts ..................................................................................................................... 14 Other Revenues ...................................................................................................................................................................................... 15

BUDGETARY PROCEDURES ............................................................................................................................................................................. 15 FINANCIAL STATEMENTS AND ACCOUNTING PROCEDURES ................................................................................................................. 15 INVESTMENT POLICY........................................................................................................................................................................................ 15 GENERAL FUND OPERATIONS......................................................................................................................................................................... 16 EMPLOYEES......................................................................................................................................................................................................... 16 EMPLOYEE PENSION BENEFITS ...................................................................................................................................................................... 16 OTHER POST EMPLOYMENT BENEFITS......................................................................................................................................................... 17 MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND SCHOOL DISTRICTS OF THE STATE........................................................................................................................................................... 18 LITIGATION.......................................................................................................................................................................................................... 18 TAX MATTERS..................................................................................................................................................................................................... 18 LEGAL MATTERS................................................................................................................................................................................................ 20 DISCLOSURE UNDERTAKING .......................................................................................................................................................................... 20 UNDERWRITING.................................................................................................................................................................................................. 22 RATING ................................................................................................................................................................................................................. 22 ADDITIONAL INFORMATION ........................................................................................................................................................................... 22 FINANCIAL INFORMATION ........................................................................................................................................................... APPENDIX A AUDITED FINANCIAL STATEMENT – JUNE 30, 2011................................................................................................................. APPENDIX B

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OFFICIAL STATEMENT

$5,000,000 Qualified School Construction Bonds - 2012 (Federally Taxable – Direct Pay Bonds)

This Official Statement including the cover page, inside cover page and appendices hereto has been prepared by the District and presents certain information relating to the $5,000,000 Qualified School Construction Bonds - 2012 (Federally Taxable – Direct Pay Bonds) (the "Bonds"). All quotations from and summaries and explanations of provisions of the Constitution and laws of the State of New York (the "State") and acts and proceedings of the District contained herein do not purport to be complete and are qualified in their entirety by reference to the official compilations thereof and all references to the Bonds and the proceedings of the District relating thereto are qualified in their entirety by reference to the definitive forms of the Bonds and such proceedings.

THE BONDS Description of the Bonds The Bonds are general obligations of the District. The District has pledged its faith and credit for the payment of the principal of and interest on the Bonds and, unless paid from other sources, the Bonds are payable from ad valorem taxes which may be levied upon all the taxable real property within the District without limitation as to rate or amount. Under the Constitution of the State, the District is required to pledge its faith and credit for the payment of the principal of and interest on the Bonds, and the State is specifically precluded from restricting the power of the District to levy taxes on real estate therefore. On June 24, 2011, the Governor signed into law Chapter 97 of the Laws of 2011 (the “Tax Levy Limit Law”), imposing a limitation on the power of local governments and school districts, including the District, to increase their annual tax levy above a certain specified amount. However, the Tax Levy Limit Law expressly provides an exclusion from the annual tax levy limitation for any taxes levied to pay the local share of debt service on bonds or notes issued to finance voter approved capital expenditures or the refinancing or refunding of such bonds or notes. As the Bonds are being issued to fund voter approved capital expenditures, the Bonds qualify for such exclusion to the annual tax levy limitation. (See the “Tax levy Limit Law,” herein.) The Bonds are dated the date of delivery and mature, as set forth on the inside cover page. Interest on the Bonds will be payable on December 15, 2012, and semi-annually thereafter on June 15 and December 15 in each year until maturity. The record date for the Bonds will be the last day of the month preceding each interest payment date. Principal and interest will be paid by the District to the Securities Depository, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Purchasers, as the Beneficial Owners of the Bonds, as described herein. The Bonds may be transferred in the manner described on the Bonds and as referenced in certain proceedings of the District referred to therein. The Bonds will be subject to redemption prior to maturity as more fully described herein. The Bonds will be issued in book-entry form and when issued will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). See “Book-Entry Only System” herein. DTC will act as Securities Depository for the Bonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds. Nature of Obligation Each Bond when duly issued and paid for will constitute a contract between the District and the holder thereof. The Bonds will be general obligations of the District and will contain a pledge of the faith and credit of the District for the payment of the principal thereof and the interest thereon. For the payment of such principal and interest the District has power and statutory authorization to levy ad valorem taxes on all taxable real property in the District without limitation as to rate or amount. Under the Constitution of the State, the District is required to pledge its faith and credit for the payment of the principal of and interest on the Bonds, and the State is specifically precluded from restricting the power of the District to levy taxes on real estate therefore. The Tax Levy Limit Law, imposes a limitation on the power of local governments and school districts, including the District, to increase their annual tax levy. However, the Tax Levy Limit Law expressly provides an exclusion

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from the annual tax levy limitation for any taxes levied to pay the local share of debt service on bonds or notes issued to finance voter approved capital expenditures, or the refinancing or refunding of such bonds or notes. As the Bonds are being issued to fund voter approved capital expenditures, the Bonds qualify for such exclusion to the annual tax levy limitation. (See the “Tax Levy Limit Law,” herein.)

Designation of the Bonds as Qualified School Construction Bonds

The District has designated the Bonds as Qualified School Construction Bonds (“QSCBs”) as defined in section 54F of the Internal Revenue Code of 1986, as amended (the “Code”) and will irrevocably elect under Section 6431(f)(2) of the Code to receive a direct payment from the United States Treasury equal to the lesser of the amount of interest payable on the Bonds or the amount of interest which would have been payable on the Bonds if interest were determined at the applicable credit rate determined under Section 54A(b)(3) of the Code. To receive the direct subsidy payment, the District is required to make certain filings (currently Form 8038-CP) with the Internal Revenue Service not less than 45 days nor more than 90 days before each interest payment date that the District expects to receive the direct subsidy payment. The District is obligated to make all payments of principal of and interest on the Bonds whether or not such direct subsidy payments are received. On April 26, 2010, the Internal Revenue Service issued Notice 2010-35 regarding the manner in which the direct subsidy payments will be made to the District for each interest payment, information reporting, payment procedures and certain interim guidance.

The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) amended the Code, authorizing QSCBs to provide financing for the construction, rehabilitation or repair of public school facilities, or the acquisition of land on which such facilities are to be constructed with the proceeds of such bonds, or for expenditures for costs of acquisition of equipment to be used in such portion or portions of the public school facility that is being constructed, rehabilitated or repaired with the proceeds of such bonds. Section 54F of the code provides a national bond limitation authorization for QSCBs of $11 billion for each of the calendar years 2009 and 2010 (which may be carried forward). Pursuant to Notice 2010-17 issued by the Internal Revenue Service, the State of New York was allocated $178,782,000 of the 2010 national bond limitation for QSCBs. The State Education Department has assigned a portion of New York’s 2010 QSCB allocation to the District in the amount of $5,000,000 for purposes of issuing the Bonds as QSCBs.

Payment of the subsidy may be offset against amounts that may be owed to the United States or its agencies by the District. Also, it is possible that the subsidy payments could be reduced or discontinued or that the timing of their receipt could be changed as a result of changes in the federal law.

The owners of the Bonds are not entitled to receive a credit against tax imposed by the Code with respect to the Bonds. The subsidy payments, payable directly to the District, are also not pledged to the owners of the Bonds as security or support therefor. Redemption Prior to Maturity Optional Redemption The Bonds will not be subject to optional redemption prior to maturity except as described below. Extraordinary Mandatory Redemption from Unexpended Proceeds of the Bonds The Bonds or portion of the Bonds, in multiples of $5,000, are subject to extraordinary mandatory redemption within 90 days after the later of: (a) the third anniversary of the delivery date of the Bonds or (b) the Extension Period Date (as defined below), at par, plus accrued interest to the date of redemption, in a total amount equal to the unexpended Available Project Proceeds (as defined below) of the Bonds, plus such amount as shall be necessary to permit the Bonds to be redeemed in multiples of $5,000 within a single maturity, but only to the extent available proceeds of the Bonds are not expended by the later of (i) the third anniversary of the delivery date of the Bonds or (ii) the Extension Period Expiration Date. The term “Extension Period Expiration Date” means the last day of any extension of time negotiated with the Internal Revenue Service (the “IRS”), as evidenced in writing from the IRS, that extends the date by which the proceeds of the Bonds must be expended. “Available Project Proceeds” means the sum of (i) the excess of the proceeds of sale of the Bonds over costs of issuance paid out of such proceeds (to the extent such costs do not exceed 2 percent of such proceeds), and (ii) any investment earnings on such excess.

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Extraordinary Optional Redemption The Bonds are subject to redemption prior to maturity, in whole or in part, at the option of the District, on any day, at the redemption price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, in the event that an Extraordinary Event occurs. An “Extraordinary Event” means the occurrence of either of the following: (a) Section 6431 of the Internal Revenue Code of 1986, as amended (the “Code”), or any related Code provision is repealed, amended or modified in a manner which results in a reduction or elimination of the cash subsidy payment from the United States Treasury to the District or (b) the United States Treasury fails to make a cash subsidy payment to which the District is entitled and such failure is not caused by any action or inaction by the District. Selection of Bonds for Redemption If less than all the Bonds are called for redemption, the portions of Bonds of a given maturity to be redeemed shall be determined by the paying agent on a pro rata basis; provided that, so long as the bonds are held in book-entry form the selection for redemption of such bonds shall be made in accordance with the operational arrangements of the Depository Trust Company (“DTC”) then in effect on the basis of a “Pro Rata Pass-Through Distribution of Principal,” and, if the DTC operational arrangements do not allow for redemption on such basis, the Bonds shall be selected for redemption, in accordance with DTC procedures, by lot. If the paying agent does not provide the necessary information and identify the redemption as on a Pro Rata Pass-Through Distribution of Principal basis, the bonds shall be selected for redemption by lot in accordance with DTC procedures. If the Bonds are not registered in book-entry only form, any redemption of less than all of a maturity of the Bonds shall be allocated among the registered owners of such bonds on a pro-rata basis, subject to authorized denominations. Notice of Redemption The District shall give notice of such prior redemption to the Bondholders in writing by registered or certified mail, return receipt requested, at least thirty days prior to the date for redemption. Notice of redemption having been given as aforesaid, the bonds so called for redemption shall, on the date of redemption, set forth in such call for redemption, become due and payable. The District’s obligation to the holders of Bonds so called for redemption shall be limited to the par amount of the Bonds to be redeemed plus interest accrued and unpaid. In no event shall the District be obligated to pay any other amounts to the holders of the Bonds. Book-Entry-Only System The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the securities (the “Bonds”). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the Bonds and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s Money Market Instruments Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. Source: The Depository Trust and Clearing Company

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Authority For and Purpose of the Bond Issue The Bonds are issued pursuant to the Constitution, the laws of the State, including, among others, the Local Finance Law and Education Law, and a bond resolution duly adopted by the Board of Education on October 25, 2011, following the approval of a proposition at a special election held on September 20, 2011 to provide $5,000,000 for the construction of various improvements to District school buildings and sites. Proceeds of the Bonds represent the initial financing for the above mentioned project. (See “Capital Project Plans” herein).

SOURCES AND USES OF FUNDS The proceeds of the Bonds are expected to be applied as follows: Sources: Par Amount of the Bonds ............................................................................ $5,000,000 Net Original Issue Premium/Discount ........................................................ 0 Total ................................................................................................... $5,000,000 Uses: Net Proceeds ................................................................................................. $4,974,900 Underwriter’s Discount................................................................................ 25,100 Total ................................................................................................... $5,000,000

DESCRIPTION OF THE DISTRICT General Information The District was established in 1896 and was known as Union Free School District No. 9 of the Town of Hempstead until 1973, when the District adopted its present legal name, the Freeport Union Free School District. The District encompasses approximately 8.6 square miles on the south shore of Nassau County within the Town of Hempstead and is about 7 miles east of the Queens County (New York City) border. It includes most of the Village of Freeport and a minor portion of the unincorporated community of Roosevelt. The character of the District is primarily suburban residential. The majority of the homes within the District are single-family residences; however, there are several apartment complexes. Recently, there has been cooperative and condominium development. The District includes several industrial parks, and a portion of the District has been zoned for industrial development and expansion. Commercial activity is centered in the Atlantic Mall, Elks Mall, Freeport Mall, and several commercially zoned areas. The proximity of the District to the Great South Bay and Atlantic Ocean, the southern boundary of the District, has led to substantial development of waterfront activity including commercial fishing and pleasure boating. There is a large commercial fishing fleet supporting both retail and wholesale fish sales. Many marinas and yacht areas cater to recreational boaters. The western end of Jones Beach State Park is within the boundaries of the District. Transportation is provided to and from the District by the Metropolitan Suburban Bus Authority and a network of highways. The District is served by the Meadowbrook State Parkway, Southern State Parkway, Atlantic Avenue, Merrick Road, and Sunrise Highway. Rail passenger service is provided by the Long Island Railroad. Major airline service is provided at John F. Kennedy International Airport, LaGuardia Airport, and L.I. MacArthur Airport.

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District Organization

Subject to the provisions of the State Constitution, the District operates pursuant to the Education Law, the Local Finance Law, other laws generally applicable to the District, and any special laws applicable to the District. Under such laws, there is no authority for the District to have a charter or adopt local laws.

The legislative power of the District is vested in the Board of Education. Under current law, an election is held within the District boundaries on the third Tuesday of May each year to elect members of the Board of Education. They are generally elected for staggered terms of three years.

In early of July of each year, the Board of Education meets for the purpose of reorganization. At that time, the Board elects a President and Vice President, and appoints a District Clerk and District Treasurer.

The major administrative officers of the District, whose duty it is to implement the policies of the Board and who are appointed by the Board, include the following: Superintendent of Schools, Executive Director for Business, District Treasurer and District Clerk.

Financial Organization

Pursuant to the Local Finance Law, the President of the Board of Education is the chief fiscal officer of the District. However, certain of the financial functions of the District are the responsibility of the Superintendent of Schools and the Executive Director for Business.

Unemployment Rate Statistics

Unemployment statistics are not available for the District as such. The information set forth below with respect to the County of Nassau is included for information purposes only. It should not be implied from the inclusion of such data in this Official Statement that the County is necessarily representative of the District, or vice versa.

Year Average

2007 2008 2009 2010 2011 Nassau County 3.7% 4.7% 7.0% 7.1% 6.7% New York State 4.6% 5.4% 8.3% 8.6% 8.2%

2012 Monthly Figures

Jan Feb Mar Apr May Jun Jul Aug Sep Nassau County 7.3% 7.2% 6.7% 6.7% 7.2% 7.5% 7.6% N/A N/A New York State 9.1% 9.2% 8.7% 8.1% 8.6% 9.1% 9.1% N/A N/A ______________ Source: State of New York, Department of Labor. (Note: Figures not seasonally adjusted).

Larger Taxpayers1, 2011-12 Assessed Name Type Value__ KeySpan Utility $301,292 KIOP Meadowbrook LP Shopping Center 266,877 Verizon Utility 215,592 Freeport VF LLC Retail Outlet 211,061 Henkind Engel Meadowbrook Ltd. Office Building 176,617 Anchorage Freeport Owners Corp. Apartments 126,636 ATM Three LLC Commercial 123,096 Towns Harbor Owners Corporation Apartments 110,147 Natick NY Freeport Realty Corp Retail Outlet 105,447 Bajan Corporation Commercial 83,570 ______________ Source: County Assessment Rolls. 1Includes applicable franchise assessments for utilities.

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District Facilities The District operates 8 schools; statistics relating to each are shown below: Name Year Built Type Capacity Columbus Avenue School 1914, 1931 Pre K-K 800 Archer Street School 1929, 1969, 2001 1-4 750 Bayview Avenue School 1952, 2003 1-4 750 Leo F. Giblyn School 1961, 1988, 2001 1-4 750 New Visions 2003 1-4 500 Caroline G. Atkinson School 1949, 1964, 1998, 2002 5-6 1,200 J.W. Dodd Middle School 1976 7-8 1,300 Freeport High School 1960, 1969, 2002 9-12 2,400 Population Characteristics The District estimates its population to be approximately 39,967. The following table shows the population trends of the Village, Town, County and State in which the District is situated. The information below is not necessarily representative of the District. Town of County of State of Year Village Hempstead Nassau New York 1970 40,374 801,592 1,428,838 18,241,266 1980 38,272 738,517 1,321,582 17,558,165 1990 39,894 725,639 1,287,348 17,990,455 2000 43,783 755,924 1,334,544 18,976,457 2010 44,008 759,757 1,339,532 19,378,102 Source: New York State Department of Commerce; New York State Department of Economic Development. Enrollment History and Projections Actual Projected School Year Enrollment School Year Enrollment 2007-2008 6,608 2012-13 6,627 2008-2009 6,478 2013-14 6,572 2009-2010 6,532 2010-2011 6,587 2011-2012 6,663 ______________ Source: District records and estimates.

DISTRICT INDEBTEDNESS Constitutional and Statutory Requirements The New York State Constitution and Local Finance Law limit the power of the District (and other municipalities and school districts of the State) to issue obligations and to contract indebtedness. Such constitutional and statutory limitations include the following, in summary form, and are generally applicable to the District and the Bonds: Purpose and Pledge. The District shall not give or loan any money or property to or in aid of any individual, or private corporation or private undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation.

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The District may contract indebtedness only for a District purpose and shall pledge its faith and credit for the payment of principal of and interest thereon. Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the date such indebtedness shall have been contracted and ending no later than the period of probable usefulness of the object or purpose determined by statute; no installment may be more than fifty per centum in excess of the smallest prior installment, unless the District has authorized the issuance of indebtedness having substantially level or declining annual debt service. The District is required to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts required in such year for amortization and redemption of its serial bonds, bond anticipation notes and capital notes. General. The District is further subject to constitutional limitation by the general constitutionally imposed duty on the State Legislature to restrict the power of taxation and contracting indebtedness to prevent abuses in the exercise of such power; however, as has been noted under "Nature of Obligation," the State Legislature is prohibited by a specific constitutional provision from restricting the power of the District to levy taxes on real estate for the payment of interest on or principal of indebtedness theretofore contracted. Statutory Procedure In general, the State Legislature has, by the enactment of the Local Finance Law, authorized the powers and procedure for the District to borrow and incur indebtedness subject, of course, to the constitutional provisions set forth above. The power to spend money, however, generally derives from other law, including the Education Law. The District is generally required by such laws to submit propositions for the expenditure of money for capital purposes to the qualified electors of the District. Upon approval thereby, the Board of Education may adopt a bond resolution authorizing the issuance of bonds and notes in anticipation of the bonds. With respect to certain school building construction projects, the District is not permitted to spend in excess of $100,000 until the plans and specifications of such project have been approved by the Commissioner of Education of the State. The Local Finance Law also provides a twenty-day statute of limitations after publication of a bond resolution, together with a statutory form of notice which, in effect, estops legal challenges to the validity of obligations authorized by such bond resolution except for alleged constitutional violations. The District has complied with such procedure with respect to the Bonds. The Board of Education, as the finance board of the District, also has the power to authorize the sale and issuance of bonds and notes, including the Bonds. However, such finance board may delegate the power to sell the Bonds, to the President of the Board of Education, the chief fiscal officer of the District, pursuant to the Local Finance Law. Debt Limit. Pursuant to the Local Finance Law, the District has the power to contract indebtedness for any school district purpose authorized by the Legislature of the State of New York provided the aggregate principal amount thereof shall not exceed ten per centum of the full valuation of the taxable real estate of the District and subject to certain enumerated deductions such as State aid for building purposes. The constitutional and statutory method for determining full valuation consists of taking the assessed valuation of taxable real estate for the last completed assessment roll and applying thereto the ratio (equalization rate) which such assessed valuation bears to the full valuation; such ratio is determined by the State Office of Real Property Services. The Legislature also is required to prescribe the manner by which such ratio shall be determined by such State Board.

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The table forth shows the computation of the debt limit of the District and its debt contracting margin. Computation of Debt Limit and Debt Contracting Margin

As of August 31, 2012 Full Valuation of Taxable Real Property .......................................................................... $4,347,317,575 Debt Limit (10% of Full Valuation) .................................................................................. 434,731,757 Outstanding Indebtednessa (Principal only): Bonds ............................................................................................. $36,590,000 Principal of this Issue.................................................................... 5,000,000 Total Indebtednessa ............................................................................................................. 41,590,000 Debt Contracting Margin ................................................................................................... $393,141,757 Percentage of Debt Contracting Power Exhausted ........................................................... 9.6%

______________ aThe School District currently receives State Aid on existing indebtedness contracted for school building purposes. The School District may exclude from gross indebtedness estimated State Aid for school building purposes. However, because the School District has not applied for a Building Aid Estimate from the Commissioner of Education, no exclusions for such aid is listed in the Computation of Debt Limit. Under current law State Building aid is, however, estimated by the School District to be approximately 70% of eligible capital indebtedness. Remedies Upon Default Section 99-b of the State Finance Law ("SFL") provides for a covenant between the State of New York (the "State") and the purchasers and the holders and owners from time to time of the bonds and notes issued by school districts in the State for school purposes that it will not repeal, revoke or rescind the provisions of Section 99-b of the SFL, or amend or modify the same so as to limit, impair or impede the rights and remedies granted thereby. Said section provides that in the event a holder or owner of any bond or note issued by a school district for school purposes shall file with the State Comptroller a verified statement describing such bond or note and alleging default in the payment thereof or the interest thereon or both, it shall be the duty of the State Comptroller to immediately investigate the circumstances of the alleged default and prepare and file in his office a certificate setting forth his determinations with respect thereto and to serve a copy thereof by registered mail upon the chief fiscal officer of the school district which issued the bond or note. Such investigation by the State Comptroller shall cover the current status with respect to the payment of principal of and interest on all outstanding bonds and notes of such school district issued for school purposes and the statement prepared and filed by the State Comptroller shall set forth a description of all such bonds and notes of the school district found to be in default and the amount of principal and interest thereon past due. Upon the filing of such a certificate in the office of the State Comptroller, he shall thereafter deduct and withhold from the next succeeding allotment, apportionment or payment of such State Aid or assistance due to such school district such amount thereof as may be required to pay (a) the school district's contribution to the State teachers retirement system, and (b) the principal of and interest on such bonds and notes of such school district then in default. In the event such State Aid or assistance initially so withheld shall be insufficient to pay said amounts in full, the State Comptroller shall similarly deduct and withhold from each succeeding allotment, apportionment or payment of such State Aid or assistance due such school district such amount or amounts thereof as may be required to cure such default. Allotments, apportionments and payments of such State Aid so deducted or withheld by the State Comptroller for the payment of principal and interest on bonds and notes shall be forwarded promptly to the paying agent or agents for the bonds and notes in default of such school district for the sole purpose of the payment of defaulted principal of and interest on such bonds or notes. If any of such successive

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allotments, apportionments or payments of such State Aid deducted or withheld shall be less than the amount of all principal and interest on the bonds and notes in default with respect to which the same was so deducted or withheld then the State Comptroller shall promptly forward to each paying agent an amount in the proportion that the amount of such bonds and notes in default payable to such paying agent bears to the total amount of the principal and interest then in default on such bonds and notes of such school district. The State Comptroller shall promptly notify the chief fiscal officer of such school district of any payment or payments made to any paying agent or agents of defaulted bonds or notes pursuant to said section of SFL. Under current law, provision is made for contract creditors (including the Bondholders) of the District to enforce payments upon such contracts, if necessary, through court action, although the present statute limits interest on the amount adjudged due to creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been judicially subjected to execution or attachment to satisfy a judgment, although judicial mandates have been issued to officials to appropriate and pay judgments out of current funds or the proceeds of a tax levy. Remedies for enforcement of payment are not expressly included in the District's contract with holders of its bonds and notes, although any permanent repeal by statute or constitutional amendment of a Bondholder's remedial right to judicial enforcement of the contract should, in the opinion of Bond Counsel, be held unconstitutional. In recent times, certain events and legislation affecting remedies on default have resulted in litigation. While courts of final jurisdiction have upheld and sustained the rights of bondholders, such courts might hold that future events including financial crises as they may occur in the State and in municipalities of the State require the exercise by the State of its emergency and police powers to assure the continuation of essential public services. No principal or interest payment on District indebtedness is past due. The District has never defaulted in the payment of the principal of or interest on any indebtedness. Debt Ratios The following table sets forth certain ratios relating to the District's indebtedness, inclusive of the Bonds, as of August 31, 2012. Percentage Per of Amount Capita1 Full Value2 Total Indebtedness (see Computation of Debt Limit) $41,590,000 $1,040.61 0.96% 1The 2010 U.S. Census estimated population of the District is 39,967. 2The District's full value of taxable real estate for 2011-2012 is $4,347,317,575.

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Long Term Debt Service Schedule The following table sets forth all principal and interest payments presently required on all outstanding long-term bond indebtedness of the District.

Installment Purchase Debt

The following is a summary of the District’s installment debt obligations.

Principal Amount Issue Final Interest Outstanding at Description of Issue Year Maturity Rate August 1, 2012

Energy Performance Contract 2008 2023 1.83% $7,515,794 Operating Leases N/A 2015 N/A ___841,492 Total $8,357,286

Revenue and Tax Anticipation Notes

The District has not found it necessary to borrow in anticipation of revenues or taxes during the last five years.

Outstanding Long-Term Bond Indebtedness

The following table sets forth the total long-term bond indebtedness outstanding at the last five fiscal years of the District.

Year Total Bonded Debt 2008......................................................................................... $31,385,000 2009......................................................................................... 42,035,000 2010......................................................................................... 40,725,000 2011......................................................................................... 38,705,000 2012......................................................................................... 36,590,000

FiscalYear Total

Ending PrincipalJune 30th Principal Interest and Interest

2013 $2,520,000 $1,550,701 $4,070,7012014 2,575,000 1,504,825 4,079,8252015 2,690,000 1,414,681 4,104,6812016 2,775,000 1,319,576 4,094,5762017 2,890,000 1,219,131 4,109,1312018 3,000,000 1,111,316 4,111,3162019 3,120,000 998,199 4,118,1992020 3,245,000 874,933 4,119,9332021 3,380,000 739,022 4,119,0222022 3,520,000 595,855 4,115,8552023 2,805,000 463,211 3,268,2112024 2,035,000 364,906 2,399,9062025 1,005,000 283,336 1,288,3362026 1,045,000 242,356 1,287,3562027 1,095,000 198,744 1,293,7442028 715,000 152,594 867,5942029 740,000 121,675 861,6752030 775,000 89,288 864,2882031 810,000 54,906 864,9062032 850,000 18,594 868,594

Total $41,590,000 $13,317,849 $54,907,849

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Capital Project Plans On September 20, 2011 voters of the District approved a referendum for the construction of various improvements to District school buildings and sites at an estimated cost of $5,000,000. The issuance of the Bonds will fund this project. Bond Anticipation Notes At June 30, 2011, the District did not have any bond anticipation notes outstanding. Estimated Overlapping Indebtedness In addition to the District, the following political subdivisions have the power to issue debt and to levy taxes or cause taxes to be levied on taxable real property in the District. Total Outstanding Applicable Total Unit Indebtedness District’s Share Indebtedness County of Nassau $4,128,527,122 2.0% $82,570,542 Town of Hempstead 312,322,025 4.3% 13,429,847 Village of Freeport 150,273,008 100% 150,273,008

______________ Source: New York State Comptroller's Special Report on Municipal Affairs for Local Fiscal Year Ending in 2010.

FINANCIAL FACTORS

District finances are operated primarily through its General Fund. All taxes and most other revenues are paid into this fund and all current operating expenditures are made from it. (A statement of such revenues and expenditures for the five year period ending June 30, 2011 is contained in the Appendices). As reflected in the Appendices, the District derives the bulk of its annual revenues from a tax on real property and from State aid. Capital improvements are generally financed by the issuance of bonds and bond anticipation notes.

Real Property Tax

The District derives its revenue from a tax on real property and from State aid. A summary of such revenues for the last five fiscal years is included in Appendix A. The Tax Levy Limit Law imposes a tax levy limitation upon the municipalities, school districts and fire districts in the State, including the District. (See the “Tax levy Limit Law,” herein.) The following table sets forth the assessed and full valuation of taxable real property, the District's real property tax levy, (exclusive of any library tax), and uncollected taxes for the five most recent fiscal years.

Valuations, Tax Levy, Rates and Uncollected Taxes

2007-08 2008-09 2009-10 2010-11 2011-12 Assessed Valuation $14,498,205 $15,678,356 $16,514,016 $15,874,240 $14,346,148

Equalization Rate 0.30% 0.32% 0.33 0.36 0.33

Full Valuation $4,832,735,000 $4,899,486,250 $5,004,247,272 $4,409,511,111 $4,347,317,575

Tax Levy:1 75,876,154 74,884,702 74,817,119 78,891,812 81,949,497

Tax Rates per $1,000 Assessed: 5,233.56 4,776,31 4,530.53 4,969.87 5,712.30

Uncollected Taxes None None None None None ______________ 1 General Fund.

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Real Estate Property Tax Collection Procedure Property taxes for school districts in Nassau County are levied by the County, and are collected by the town tax receivers. Such taxes are due and payable in equal installments on October 1 and April 1, but may be paid without penalty by November 10 and May 10, respectively. The town tax receiver pays to each school district the amounts collected therefor on the first day of each month from October 1 to June 1. Penalties on unpaid taxes are 1% per month from the date such taxes are due and payable. A l% discount for prepayment of second half taxes is given if received by November 10. Any such discount is a town charge. On or before June 1, the town tax receiver files a report of any uncollected school district taxes with the County. The County thereafter on or before June 30 pays to each school district the amount of its uncollected taxes. Thus, each school district receives its full levy prior to the end of its fiscal year. Under existing law, the County assumes liability for all tax certiorari refund payments, including any portion of the refund attributable to the reduction in the amount of taxes raised to support school district operations. The County does not currently seek reimbursement from the affected school district following the payment of a refund to a taxpayer. However, commencing in 2013, the County plans to end this longstanding practice of paying tax certiorari settlements on behalf of local taxing districts, including schools districts. Such law is currently the subject of litigation. The trial court has ruled in favor of the County in the matter. If the decision is not overturned on appeal, the District will be required to pay tax certiorari refunds attributable to a reduction in its school tax levy. Under applicable law, the District is permitted to use available funds, establish reserve funds and/or issue bonds for the purpose of paying any tax certiorari judgments decided against the District. STAR - School Tax Exemption The STAR (School Tax Relief) program provides State-funded exemptions from school property taxes to homeowners for their primary residences. School districts are reimbursed by the State for real property taxes exempted pursuant to the STAR Program. Based on information furnished to the District, it is anticipated that approximately 12% of the District’s estimated 2012-2013 school tax levy will be exempted by the STAR program. The District expects to receive full reimbursement of such exempt taxes from the State during the District’s 2012-2013 fiscal year. Tax Limit The Constitution does not limit the amount that may be raised by the District-wide tax levy on real estate in any fiscal year. However, Chapter 97 of the Laws of 2011 imposes a statutory limit on the amount of real property taxes that a school district may levy. (See “ The Tax Levy Limit Law” herein.) The Tax Levy Limit Law On June 24, 2011, Chapter 97 of the Laws of 2011 (herein referred to as the “Tax Levy Limit Law” or “Law”) was signed by Governor Cuomo. The Tax Levy Limit Law modifies current law by imposing a limit on the amount of real property taxes that a school district may levy. The Law is effective for the District’s current fiscal year. Prior to the enactment of the Law, there was no statutory limitation on the amount of real property taxes that a school district could levy if its budget had been approved by a simple majority of its voters. In the event the budget had been defeated by the voters, the school district was required to adopt a contingency budget. Under a contingency budget, school budget increases were limited to the lesser of four percent (4%) of the prior year’s budget or one hundred twenty percent (120%) of the consumer price index ("CPI"). The Tax Levy Limit Law imposes a limitation on the amount of tax levy growth from one fiscal year to the next. Such limitation is the lesser of (i) 2% or (ii) the annual percentage increase in the consumer price index, as described in the Law.

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A budget with a tax levy that does not exceed such limit will require approval by at least 50% of the voters. Approval by at least 60% of the voters will be required for a budget with a tax levy increase in excess of the limit. In the event the voters reject the budget, or a subsequent resubmitted budget, the tax levy for the school district’s budget for the ensuing fiscal year may not exceed the amount of the tax levy for the prior fiscal year. The Law sets forth several exclusions to the tax levy limit for school districts. These include taxes to pay debt service on bonds or notes issued to finance voter approved capital expenditures, and the refinancing or refunding of such bonds or notes, including the Bonds, certain pension cost increases, and other items enumerated in the Law. School districts will be permitted to carry forward a certain portion of their unused tax levy limitation from a prior year. The Law provides an express exclusion from the limitation for those taxes to be levied to pay debt service on bonds or notes issued to finance voter approved capital expenditures or the refinancing or refunding of such bonds or notes. As the Bonds are being issued to fund voter approved expenditures, the Bonds qualify for such exclusions provided for in the Law. However, such exception would not apply to taxes to be levied commencing in the 2012-13 fiscal year of a school district to pay debt service on tax anticipation notes, revenue anticipation notes, budget notes and deficiency notes; and any obligations issued to finance deficits and certain judgments, including tax certiorari payments.

State Aid The District receives State aid for operating and other purposes at various times throughout its fiscal year, pursuant to formulas and payment schedules set forth by statute. In its adopted 2012-13 General Fund Budget, the District expects to receive approximately 34.5% of its operating revenues in the form of State aid. (See “Events Affecting State Aid to New York School Districts” below.) In addition to the amount of State Aid budgeted by the District in its 2012-13 fiscal year, the State is expected to make payments of STAR aid representing tax savings provided by school districts to their taxpayers under the STAR Program in the 2012-13 fiscal year. (See “STAR-School Tax Exemption”, herein) There can be no assurance that the State appropriation for State aid to school districts will be continued in future years, either pursuant to existing formulas or in any form whatsoever. State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefor. The availability of such monies and the timeliness of such payment could be affected by a delay in the adoption of the State budget or State fiscal stress. In any event, State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefor. Should the District fail to receive State aid expected from the State in the amounts and at the times expected, occasioned by a delay in the payment of such monies and not by a reduction in State aid, the District is authorized by the Local Finance Law to provide operating funds by borrowing in anticipation of the receipt of uncollected State aid. Events Affecting State Aid to New York School Districts State aid to school districts in the State has declined in some recent years. School district fiscal year (2009-10): Total State aid for the 2009-10 fiscal year was maintained at the 2008-09 levels in part due to the use of Federal aid made available as part of the American Reinvestment and Recovery Act of 2009 (“ARRA”). During said fiscal year, the District’s receipt of State aid was delayed as a result of several initiatives adopted by then Governor Paterson in response to the State’s ongoing and worsening fiscal crisis. Despite such delays, the District did receive all of the State aid due to it for the fiscal year ended June 30, 2010. School district fiscal year (2010-11): The total reduction in State aid for the 2010-11 fiscal year was approximately $2.1 billion; however, this amount was partially offset by $726,000,000 in Federal aid for education, including funding from ARRA and other federal initiatives. As a result, the net State aid reduction totaled approximately $1.4 billion. School district fiscal year (2011-12): The total reduction in State aid for the 2011-12 fiscal year was $1.3 billion or 6.1 percent from the previous year, and all aid is expected to be received on time.

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School district fiscal year (2012-13): The State Legislature adopted the State budget on March 30, 2012. The budget includes an increase of $751 million in State aid for school districts. The District cannot predict at this time whether there will be any reductions in and/or delays in the receipt of State aid during the District’s 2012-13 fiscal year. The District believes that it would mitigate the impact of any delays or the reduction in State aid by reducing expenditures, increasing revenues, appropriating other available funds on hand, and/or by any combination of the foregoing. (See also “Market Factors Affecting Financing of the State and School Districts of the State” herein). Other Revenues In addition to property taxes and State Aid, the District receives other revenues from miscellaneous sources as shown in Appendix A.

BUDGETARY PROCEDURES The District's fiscal year begins on July 1 and ends on June 30. Starting in the fall or winter of each year, the District's financial plan and enrollment projection are reviewed and updated and the first draft of the next year's proposed budget is developed by the central office staff. During the winter and early spring the budget is developed and refined in conjunction with school building principals and department supervisors. Under current law, the budget is submitted to voter referendum on the third Tuesday of May each year. The District’s budget for fiscal year 2012-13 and thereafter will be subject to the provisions of The Tax Levy Limit Law which imposes a limitation on the amount of real property taxes that a school district may levy in a given year. (See “Tax Levy Limit Law,” herein.) The 2012-2013 budget was approved by District voters on May 15, 2012 and a summary is included in Appendix A-1.

FINANCIAL STATEMENTS AND ACCOUNTING PROCEDURES The financial accounts of the District are maintained in accordance with the New York State Uniform System of Accounting for school districts. Such accounts are audited annually by independent auditors, and are available for public inspection upon request.

INVESTMENT POLICY Pursuant to State law, including Sections 10 and 11 of the General Municipal Law (the “GML”), the District is generally permitted to deposit moneys in banks or trust companies located and authorized to do business in the State. All such deposits, including special time deposit accounts and certificates of deposit, in excess of the amount insured under the Federal Deposit Insurance Act, are required to be secured in accordance with the provisions of and subject to the limitations of Section 10 of the GML. The District may also temporarily invest moneys in: (1) obligations of the United States of America; (2) obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America; (3) obligations of the State of New York; (4) with the approval of the New York State Comptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality, school district, or district corporation, other than those notes issued by the District; (5) certificates of participation issued in connection with installment purchase contracts entered into by political subdivisions of the State pursuant to Section 109-b(10) of the GML; (6) obligations of a New York public benefit corporation which are made lawful investments for municipalities pursuant to the enabling statute of such public benefit corporation; or (7) in the case of moneys held in certain reserve funds established by the District pursuant to law, in obligations of the District. All of the foregoing instruments and investments are required to be payable or redeemable at the option of the owner within such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of instruments or investments purchased with the proceeds of bonds or notes, shall be payable or redeemable in

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any event, at the option of the owner, within two years of the date of purchase. Unless registered or inscribed in the name of the District, such instruments and investments must be purchased through, delivered to and held in the custody of a bank or trust company in the State pursuant to a written custodial agreement as provided in Section 10 of the GML. The Board of Education of the District has adopted an investment policy and such policy conforms with applicable laws of the State governing the deposit and investment of public moneys. All deposits and investments of the District are made in accordance with such policy.

GENERAL FUND OPERATIONS Appendix A sets forth the General Fund operations for the last five fiscal years which are derived from the Audited Financial Statements on file in the Superintendent's office.

EMPLOYEES The number of persons employed by the District, the collective bargaining agents, if any, which represent them and the dates of expirations of the various collective bargaining agreements are as follows: Contract No. of Expiration Employees Unit Date_____ 562 Freeport Teachers Association 6/30/13 28 Administrative Association 6/30/14 79 Freeport UFSD Educational Office Staff Association 6/30/14 76 Civil Service Employees Association, Custodians 6/30/101 50 Civil Service Employees Association, Cafeteria 6/30/121 234 Freeport Teachers Assistants 6/30/14 1Contract in negotiation.

EMPLOYEE PENSION BENEFITS New York State Certified (teachers and administrators) are members of the New York State Teachers Retirement System (“TRS”). Payments to the TRS are generally deducted from State aid payments. All non-certified employees of the District eligible for pension or retirement benefits under the Retirement and Social Security Law of the State of New York are members of the New York State and Local Employee's Retirement System (“ERS”). Both the TRS and ERS (the “State Retirement System” or “SRS”) are noncontributory with respect to members hired prior to July 1, 1976. All members of the respective systems that were hired on or after July 1, 1976 and before December 31, 2009, with less than 10 year’s full-time service, contribute 3% of their gross annual salary toward the cost of retirement programs. On December 10, 2009, then Governor Paterson signed into law a new Tier 5. The law is effective for new ERS and TRS employees hired after January 1, 2010. New ERS employees will now contribute 3% of their salaries and new TRS employees will contribute 3.5% of their salaries. There is no provision for these contributions to cease after a certain period of service. On March 16, 2012, Governor Cuomo signed into law the new Tier 6 pension program, effective for new ERS and TRS employees hired after April 1, 2012. The Tier 6 legislation provides for increased employee contribution rates of between 3% and 6%, an increase in the retirement age from 62 years to 63 years, a readjustment of the pension multiplier, and a change in the time period for final average salary calculation from 3 years to 5 years. Tier 6 employees will vest in the system after ten years of employment and will continue to make employee contributions throughout employment. Pension reform legislation enacted in 2003 and 2004 changed the cycle of ERS billing to match budget cycles of the District. Under the previous method, the District was unsure of how much it paid to the system until after its budget was implemented. Under the current method the contribution for a given fiscal year will be based on the value of the pension

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fund on the prior April 1 instead of the following April 1 so that the District will be able to more accurately include the cost of the contribution into its budget. The reform legislation also (i) required the District to make a minimum contribution of 4.5% of payroll every year, including years in which the investment performance of the fund would make a lower contribution possible and (ii) moved the annual payment date for contributions from December 15th to February 1st, effective December 15, 2004. Due to poor performance of the investment portfolio of the State Retirement System, New York State Comptroller Thomas DiNapoli has announced that the employer contribution rates for required pension contributions to the SRS will continue to increase. To help mitigate the impact of their ERS increases, legislation has been enacted that permits local governments and school district to amortize a portion of such contributions. Under such legislation, local governments and school district that choose to amortize a portion of their ERS contributions will be required to set aside and reserve funds with the SRS for certain future rate increases.

OTHER POST EMPLOYMENT BENEFITS The District provides post-retirement healthcare benefits to various categories of former employees. These costs may be expected to rise substantially in the future. School Districts and Boards of Cooperative Education Services, unlike other municipal units of government in the State, have been prohibited from reducing retiree health benefits or increasing health care contributions received or paid by retirees below the level of benefits or contributions afforded to or required from active employees. This protection from unilateral reduction of benefits had been extended annually by the New York State Legislature until recently when legislation was enacted to make permanent these health insurance benefit protections for retirees. Legislative attempts to provide similar protection to retirees of other local units of government in the State have not succeeded as of the date hereof. Nevertheless, many such retirees of all varieties of municipal units in the State do presently receive such benefits. GASB Statement No. 45 (“GASB 45”) of the Governmental Accounting Standards Board (“GASB”), requires state and local governments to account for and report their costs associated with post-retirement healthcare benefits and other non-pension benefits (“OPEB”). GASB 45 generally requires that employers account for and report the annual cost of the OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner as they currently do for pensions. Under previous rules, these benefits have generally been administered on a pay-as-you-go basis and have not been reported as a liability on governmental financial statements. Only current payments to existing retirees were recorded as an expense. GASB 45 requires that state and local governments adopt the actuarial methodologies to determine annual OPEB costs. Annual OPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. Under GASB 45, based on actuarial valuation, an annual required contribution (“ARC”) will be determined for each state or local government. The ARC is the sum of (a) the normal cost for the year (the present value of future benefits being earned by current employees) plus (b) amortization of the unfunded accrued liability (benefits already earned by current and former employees but not yet provided for), using an amortization period of not more than 30 years. If a municipality contributes an amount less than the ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial statements. GASB 45 does not require that the unfunded liabilities actually be funded, only that the District account for its unfunded accrued liability and compliance in meeting its ARC. Actuarial valuation will be required every 2 years for the District. The District is in compliance with the requirements of GASB 45. The District has determined that its actuarial accrued liability (“AAL”) for OPEB as of June 30, 2011 was $147,837,842. For the year ended June 30, 2011, the District's ARC was $16,079,194. Should the District be required to fund its unfunded actuarial accrued OPEB liability, it could have a material adverse impact upon the District’s finances and could force the District to reduce services, raise taxes or both. At the present time, however, there is no current or planned requirement for the District to partially fund its actuarial accrued OPEB liability. At this time, New York State has not developed guidelines for the creation and use of irrevocable trusts for the funding of OPEB. As a result, the District has decided to continue funding the expenditure on a pay-as-you-go basis.

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MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND SCHOOL DISTRICTS OF THE STATE

The financial condition of the District as well as the market for the Bonds could be affected by a variety of factors, some of which are beyond the District's control. There can be no assurance that adverse events in the State, including, for example, the seeking by a municipality or large taxable property owner of remedies pursuant to the Federal Bankruptcy Act or otherwise, will not occur which might affect the market price of and the market for the Bonds. If a significant default or other financial crisis should occur in the affairs of the State or at any of its agencies or political subdivisions thereby further impairing the acceptability of obligations issued by borrowers within the State, both the ability of the District to arrange for additional borrowing and the market for and market value of the outstanding debt obligations, including the Bonds, could be adversely affected. The financial condition of the District is dependent in part on financial assistance from the State in the form of State aid that has been and is expected to be received from the State in the future. However, the State is not constitutionally obligated to maintain or continue State aid to municipalities and school districts in the state, including the District and, as a result, no assurance can be given that present State aid levels will be maintained in the future, particularly if the State should experience financial difficulty of its own. In some recent years, the District’s receipt of State aid was delayed as a result of the State’s delay in adopting its budget and appropriating State aid to municipalities and school districts and other circumstances, including State fiscal stress. Should the District fail to receive State aid expected from the State in the amounts and at the times expected, occasioned by a delay in the payment of such monies or by a reduction in State aid, the District may be adversely affected by such a delay. However, if the District anticipates a delay in the payment of such State aid, it is authorized by the Local Finance Law to provide operating funds by borrowing on account of such uncollected State aid. There can be no assurance that in such event, the District will have market access for any such borrowing on a cost effective basis. The elimination of or any substantial reduction in State aid would likely have a materially adverse effect upon the District requiring either a counterbalancing increase in revenues from other sources to the extent available or a curtailment of expenditures. (See also “State Aid” and “Events Affecting State Aid to New York School Districts”, herein.) The enactment of the Tax Levy Limit Law which imposes a tax levy limitation upon municipalities, school districts and fire district in the State, including the District, could have an impact upon the market price for the Bonds. (See the “Tax Levy Limit Law” herein.)

LITIGATION

In common with other school districts, the District from time to time receives notices of claim and is party to litigation. In the opinion of the Attorney for the District, unless otherwise set forth herein and apart from matters provided for by applicable insurance coverage, there are no claims or actions pending which, if determined against the District, would have an adverse material effect on the financial condition of the District.

TAX MATTERS Opinion of Bond Counsel In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, interest on the Bonds is included in gross income for Federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the Bonds is exempt from the State of New York income tax imposed on individuals.

The Bonds are expected to be designated as “qualified school construction bonds” by the District pursuant to applicable provisions of the Code; the District will elect to receive cash subsidy payments equal to the lesser of: (i) 100% of the interest at the tax credit rate in effect at the time of pricing of the Bonds; or (ii) 100% of the amount of interest payable on the Bonds. As a result of such election, holders of the Bonds are not entitled to receive the tax credit otherwise permitted under Section 54A of the Code. The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Bonds in order for the District to continue to receive said subsidy payments. These requirements include, but are not limited to, requirements relating to use and expenditure of the available project proceeds of the Bonds, yield and

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other restrictions on investments of available project proceeds and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. Noncompliance may cause the Bonds to fail to qualify for the receipt of the interest subsidy payments. The District has covenanted to comply with certain applicable requirements of the Code to assure the receipt of the interest subsidy payments in respect of the Bonds.

The following discussion is a brief summary of the principal United States Federal income tax consequences of the acquisition, ownership and disposition of the Bonds by original purchasers of the Bonds who are “U.S. Holders,” as defined herein. This summary (i) is based on certain relevant provisions of the Code under existing law and is subject to change at any time, possibly with retroactive effect; (ii) assumes that the Bonds will be held as “capital assets”; and (iii) does not discuss all of the United States Federal income tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax-exempt organizations, dealers in securities or foreign currencies, persons holding the Bonds as a position in a “hedge” or “straddle,” or holders whose functional currency (as defined in Section 985 of the Code) is not the United States dollar, or holders who acquire Bonds in the secondary market.

Holders of the Bonds should consult with their own tax advisors concerning the United States Federal income tax and other consequences with respect to the acquisition, ownership and disposition of the Bonds as well as any tax consequences that may arise under the laws of any state, local or foreign tax jurisdiction.

Original Issue Discount

In general, if Original Issue Discount (“OID”) is greater than a statutorily defined de minimis amount, a holder of a Bond having a maturity of more than one year from its date of issue must include in Federal gross income (for each day of the taxable year, or portion of the taxable year, in which such holder holds such Bond) the daily portion of OID, as it accrues (generally on a constant yield method) and regardless of the holder’s method of accounting. “OID” is the excess of (i) the “stated redemption price at maturity” over (ii) the “issue price”. For purposes of the foregoing: “issue price” means the first price at which a substantial amount of the Bonds are sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers); “stated redemption price at maturity” means the sum of all payments, other than “qualified stated interest”, provided by such Bond; “qualified stated interest” is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a single fixed rate; and “de minimis amount” is an amount equal to 0.25 percent of the Bond’s stated redemption price at maturity multiplied by the number of complete years to its maturity. A holder may irrevocably elect to include in gross income all interest that accrues on a Bond using the constant-yield method, subject to certain modifications.

Bond Premium

In general, if a Bond is originally issued for an issue price (excluding accrued interest) that reflects a premium over the sum of all amounts payable on the Bond other than “qualified stated interest” (a “Taxable Premium Bond”), that Taxable Premium Bond will be subject to Section 171 of the Code, relating to bond premium. In general, if the holder of a Taxable Premium Bond elects to amortize the premium as “amortizable bond premium” over the remaining term of the Taxable Premium Bond, determined based on constant yield principles (in certain cases involving a Taxable Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the highest yield on such bond), the amortizable premium is treated as an offset to interest income, and the holder will make a corresponding adjustment to the holder’s basis in the Taxable Premium Bond. Any such election is generally irrevocable and applies to all debt instruments of the holder (other than tax- exempt bonds) held at the beginning of the first taxable year to which the election applies and to all such debt instruments thereafter acquired. Under certain circumstances, the holder of a Taxable Premium Bond may realize a taxable gain upon disposition of the Taxable Premium Bond even though it is sold or redeemed for an amount less than or equal to the holder’s original acquisition cost.

Disposition and Defeasance

Generally, upon the sale, exchange, redemption, or other disposition (which would include a legal defeasance) of a Bond, a holder generally will recognize taxable gain or loss in an amount equal to the difference between the amount realized (other than amounts attributable to accrued interest not previously includable in income) and such holder’s adjusted tax basis in the Bond.

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The District may cause the deposit of moneys or securities in escrow in such amount and manner as to cause the Bonds to be deemed to be no longer outstanding under the Resolutions (a “defeasance”). For Federal income tax purposes, such defeasance could result in a deemed exchange under Section 1001 of the Code and a recognition by such owner of taxable income or loss, without any corresponding receipt of moneys. In addition, the character and timing of receipt of payments on the Bonds subsequent to any such defeasance could also be affected.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to non-corporate holders with respect to payments of principal and payments of interest on a Bond and the proceeds of the sale of a Bond before maturity within the United States. Backup withholding may apply to holders of Bonds under Section 3406 of the Code. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner, and which constitutes over-withholding, would be allowed as a refund or a credit against such beneficial owner’s United States Federal income tax provided the required information is furnished to the Internal Revenue Service.

U.S. Holders

The term “U.S. Holder” means a beneficial owner of a Bond that is: (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States Federal income taxation regardless of its source, or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust.

IRS Circular 230 Disclosure

The advice under this caption “TAX MATTERS” concerning certain income tax consequences of the acquisition, ownership and disposition of the Bonds was written to support the marketing of the Bonds. To ensure compliance with requirements imposed by the Internal Revenue Service, Bond Counsel to the District informs each investor that (i) any federal tax advice contained in this Official Statement (including any attachments) or in writings furnished by Bond Counsel to the District is not intended to be used, and cannot be used by any Bondholder, for the purpose of avoiding penalties that may be imposed on the Bondholder under the Code, and (ii) the Bondholder should seek advice based on the Bondholder’s particular circumstances from an independent tax advisor.

LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the Bonds will be subject to the final approving opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, New York, New York. Certain legal matters will be passed on for the Underwriter by its counsel Orrick, Herrington & Sutcliffe LLP, New York, New York.

DISCLOSURE UNDERTAKING At the time of the delivery of the Bonds, the District will provide an executed copy of its “Undertaking to Provide Continuing Disclosure” (the “Undertaking”). Said Undertaking will constitute a written agreement or contract of the District for the benefit of holders of and owners of beneficial interests in the Bonds, to electronically file, or cause to be electronically filed with the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access (“EMMA”) System, or any successor thereto or to the functions of such Board contemplated by the Undertaking: (1) (i) certain annual financial information, in a form generally consistent with the information contained or cross-

referenced in this Official Statement under the headings “Description of the District”, “District Indebtedness,” “Financial Factors,” “Budgetary Procedures,” and “Litigation” and in Appendix A, on or prior to the 180th day following the end of each fiscal year, commencing with the fiscal year ending June 30, 2012 and (ii) the audited financial statement, if any, of the District for each fiscal year commencing with the fiscal year ending June 30, 2012 unless such audited financial statement, if any, shall not then be available in which case the unaudited financial statement shall be electronically filed with the MSRB and an audited financial statement shall be electronically filed

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with the MSRB within 30 days after it becomes available and in no event later than 360 days after the end of each fiscal year;

(2) in a timely manner, not in excess of ten (10) business days after occurrence, notice of the following events:

(i) principal and interest payment delinquencies; (ii) non-payment related defaults, if material; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices of determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (vii) modifications to rights of Bondholders, if material; (viii) Bond calls, if material, and tender offers; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds, if material; (xi) rating changes; (xii) bankruptcy, insolvency, receivership or similar event of the District1; (xiii) the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material.

The District may electronically file with the MSRB notice of the occurrence of certain other events, in addition to those listed above, if it determines that any such other event is material with respect to the Bonds; but the District does not undertake to commit to electronically file such notice of the occurrence of any event except those events listed above; and (3) in a timely manner, not in excess of ten (10) business days after occurrence, notice of a failure to provide the annual

financial information by the date specified. 1 For the purposes of the event identified in clause (2)(xii) above, the event is considered to occur upon: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or government authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. The District’s Undertaking shall remain in full force and effect until such time as the principal of, redemption premiums, if any, and interest on the Bonds shall have been paid in full or in the event that those portions of the Rule which require the Undertaking, or such provision, as the case may be, do not or no longer apply to the Bonds. The sole and exclusive remedy for breach or default under the Undertaking is an action to compel specific performance of the undertakings of the District, and no person or entity, including a Holder of the Bonds, shall be entitled to recover monetary damages thereunder under any circumstances. Any failure by the District to comply with the Undertaking will not constitute a default with respect to the Bonds. The District reserves the right to amend or modify the Undertaking under certain circumstances set forth therein; provided that any such amendment or modification will be done in a manner consistent with Rule 15c2-12, as amended. The District is in compliance in all material respects with all previous undertakings made pursuant to the Rule 15c2-12.

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UNDERWRITING Roosevelt & Cross Incorporated (the “Underwriter”) will be performing underwriting services in connection with the Bonds. The Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the District. The Underwriter's obligations are subject to certain conditions precedent, and the Underwriter will be obligated to purchase all the Bonds if any of the Bonds are delivered at a price of $4,974,900 being the par amount of the Bonds less an underwriting discount of $25,100. The Bonds may be offered and sold to certain dealers at prices lower than the public offering prices as set forth on the cover page hereof. The initial public offering prices may be changed from time to time by the Underwriter.

RATING

Standard & Poor’s (S&P) has assigned a rating of AA to the Bonds. Such rating reflects only the view of S&P and an explanation of the significance of such rating may be obtained from Standard & Poor’s Ratings Services, 55 Water Street – 38th Floor, New York, New York 10041. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by S&P, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of any such rating may have an effect on the market price of the Bonds.

ADDITIONAL INFORMATION Periodic public reports relating to the financial condition of the District, its operations and the balances, receipts and disbursements of the various Funds of the District are available for public inspection at the business office of the District. Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be realized. This Official Statement is not to be construed as a contract or agreement between the District and the Underwriters or holders of any of the Bonds. Additional information may be obtained upon request from the District’s financial advisor, New York Municipal Advisors Corporation (NYMAC) 516-364-6363 or from the District's Executive Director for Business 516-867-5212 FREEPORT UNION FREE SCHOOL DISTRICT Dated: September 7, 2012 By: DEBRA MULÉ President Board of Education & Chief Fiscal Officer

Freeport Union Free School District APPENDIX A

Revenues, Expenditures and Fund Balance - General Fund

Year Ended June 30: 2007 2008 2009 2010 2011

REVENUESReal Property Taxes $64,928,291 $66,177,310 $66,121,577 $67,112,912 $69,083,765Other Tax Items1 10,558,602 824,075 885,419 766,823 714,055School Tax Relief Reimbursement 0 9,781,184 8,797,821 7,720,685 9,708,319Charges for Services 748,005 625,193 690,808 1,175,630 613,179Use of Money and Property 1,538,107 1,109,720 728,775 358,046 212,278Sale of Property and Compensation for Loss 139 15,608 14,380 15,556 84,075Miscellaneous 533,945 757,308 176,781 1,169,978 1,392,212Interfund Revenues 101,789 149,622 129,663 146,275 109,685State Sources 46,861,902 50,623,135 56,957,478 53,988,458 52,602,558Federal Aid 0 0 0 4,745,922 2,331,808Medicaid Reimbursement 306,138 145,527 114,862 0 0 Total Revenues 125,576,918 130,208,682 134,617,564 137,200,285 136,851,934

EXPENDITURESGeneral Support 11,146,459 11,016,206 11,325,634 11,418,639 12,180,692Instruction 74,989,678 80,193,283 84,200,189 84,823,844 87,031,088Pupil Transportation 6,437,747 6,828,914 6,999,396 6,698,700 6,662,618Employee Benefits 21,654,623 22,533,970 22,253,510 21,974,213 25,446,040Debt Service 2,516,536 0 0 0 0 Total Expenditures 116,745,043 120,572,373 124,778,729 124,915,396 131,320,438

Excess Revenues (Expenditures) 8,831,875 9,636,309 9,838,835 12,284,889 5,531,496

OTHER SOURCES AND USESOperating Transfers In 0 0 0 0 0Operating Transfers (Out) (2,078,756) (4,455,350) (4,278,330) (5,024,912) (6,474,801) Total Other Sources (Uses) (2,078,756) (4,455,350) (4,278,330) (5,024,912) (6,474,801)

Excess (Deficiency) of Revenues and OtherSources over Expenditures and Other Uses 6,753,119 5,180,959 5,560,505 7,259,977 (943,305)

Other Changes in Fund Equity 2,009,627 0 0 0 0

Fund Equity - Beginning of Year 28,092,762 36,855,508 42,036,467 47,596,972 54,856,949

Fund Equity - End of Year $36,855,508 $42,036,467 $47,596,972 $54,856,949 $53,913,644

1 Includes STAR payments (See "STAR-School Tax Exemption" herein).

Source: Information for the appendix has been extracted from the audited financial statements of the Freeport Union FreeSchool District. This summary itself has not been audited. Reference should be made to the complete audit reportson file at the District Office.

General Fund Budgets APPENDIX A-1

2011-2012 2012-2013Adopted Adopted

Budget (1) Budget (2)

REVENUESReal Property Taxes $81,949,497 $83,891,932State Sources 50,320,071 52,119,322Other Revenue 5,097,979 2,891,000Transfers from Reserves 3,110,000 3,110,000Appropriated Fund Balance 9,000,000 9,000,000

Total Revenues $149,477,547 $151,012,254

EXPENDITURESGeneral Support $12,872,871 $12,739,088Instruction 92,075,413 92,787,737Pupil Transportation 7,729,580 7,912,863Employee Benefits 31,802,794 32,614,406Transfer to Debt Service 4,465,889 4,808,160Interfund Transfer 531,000 150,000

Total Expenditures $149,477,547 $151,012,254

[1] The budget for the 2011-2012 fiscal year was approved by voters of the District on May 17, 2011.[2] The budget for the 2012-2013 fiscal year was approved by voters of the District on May 15, 2012.

Source: Annual budgets of the Freeport Union Free School District.

Freeport Union Free School District APPENDIX A-2

Balance Sheets - General Fund

As of June 30: 2010 2011ASSETSUnrestricted Cash and Cash Equivalents $45,918,094 $48,212,782Restricted Cash 0 146,000Due from Other Governments 10,869,400 10,191,400Due from Other Funds 6,525,749 6,995,803Accounts Receivable 307,562 325,652

TOTAL ASSETS $63,620,805 $65,871,637

LIABILITIESAccounts Payable $2,220,059 $2,170,547Accrued Liabilities 53,117 345,817Due to Other Governments 45,467 0Due to Other Funds 693,740 1,938,001Due to Teacher's Retirement System 4,825,105 6,395,089Due to Employees' Retirement System 368,746 512,919Deferred Revenues 77,194 77,194Compensated Absences 480,428 518,426TOTAL LIABILITIES 8,763,856 11,957,993

FUND BALANCERestricted N/A 34,158,554Assigned N/A 9,253,710Unassigned N/A 10,501,380Reserved For Encumbrances 572,744 N/A Special Reserves 31,706,300 N/AUnreserved Designated 9,860,000 N/A Undesignated 12,717,905 N/A

TOTAL FUND EQUITY 54,856,949 53,913,644TOTAL LIABILITIES AND FUND EQUITY $63,620,805 $65,871,637

Source: Information for the appendix has been extracted from the audited financial statements of the Freeport UnionFree School District. This summary itself has not been audited. Reference should be made to the complete auditreports on file at the District Office.

APPENDIX B

FINANCIAL STATEMENTS

“Such Financial Statements and opinion were prepared as of the date thereof and have notbeen reviewed and/or updated in connection with the preparation and dissemination of

this Official Statement

F?RE PORT P-UB ~. C SCHDD ~ S

FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES WfTH

INDEPENDENT AUDITOR'S REPORTS

June 30, 2011

Independent Auditor's Report

Management's Discussion and Analysis (MD&A)

Financial Statements:

Statement of Net Assets

Statement of Activities

Balance Sheet - Governmental Funds

SCHOOL DISTRICT CONTENTS

Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets

Statement of Revenues, Expenditures and in Fund Balances Governmental Funds

Reconciliation of the Governmental Funds Statement and in Fund Balances to the Statement of Activities

Statement of Fiduciary Net Assets - Fiduciary Funds

Statement of Changes in Fiduciary Net Assets

Notes to Financial Statements

Required Supplementary Information other than MD&A:

Schedule of Revenues, Expenditures and

Funds

Changes in Fund Balance - Budget and Actual General Fund

Schedule of Funding Progress - Other Postemployment Benefits

Other Supplementary Information:

Schedules of Change from Adopted Budget to Final and Use of Assigned: Appropriated and Unassigned Fund Balance - General Fund

Schedule of Project Expenditures - Capital Projects Fund

Schedule of Certain Revenues and Expenditures

Investment in Capital Assets, Net of Related Debt

",,,",,",,,,,..,.,, to ST-3 Data

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

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3

13

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43

47

48

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o CULLEN & DANOWSKI, LLP

CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Education Freeport Union Free School District Freeport, New York

INDEPENDENT AUDITOR'S REPORT

VINCENT D. CULLEN, CPA JAMES E. DANOWSKI. CPA PETER F. RODRIGUEZ. CPA

JILL S. SANDERS, CPA DONALD j. HOFFMANN, CPA CHRlSTOPHER V R.UNO, CPA

ALAN yu, CPA

We have audited the accompanying financial statements of the governmental activities, each major fund and the fiduciary funds of the Freeport Union Free School District (District), as of and for the year ended June 30, 2011, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on the financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we express no such opinion An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly in all material respects, the respective financial position of the governmental activities, each major fund and the fiduciary funds of the Freeport Union Free School District, as of June 30, 2011, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As described in "Fund Financial Statements" note on page 26 of the notes to the financial statements, the District has adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as ofJune 30, 2011.

In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2011, on our consideration of the Freeport Union Free School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

1650 ROUTE 112, PORT JEFfERSON STATION, NEW YORK 11776-3060 o 0

PHONE: 631-473-3400 . FAX: 631-473-4863 . WWW.CDLLP.NET

discussion postempioyment

the basic financial is required by the

.... ,~ .. ,_ ..... reporting for placing the context. We have applied with auditing standards malna:gernellt about the methods of ",,,,rnn'''''',ntT the information for consistency with management's responses to our inquiries, the basic financial statenlen and other knowledge we during our audit of the statements. We do not or provide any assurance on because the limited procedures do not provide us with evidence to express an opinion or any assurance.

Our audit was conducted for the purpose of Union Free School

42 through 48 is Ull,:>ll,,1(>1 statements but is

supplementary ntclrrrlation statements and,

~~~ September

opinions on the financial statements that collectively basic financial statements. supplementary

purposes of additional analysis and is not a required part of required by New Education

not been subjected to applied in

2

FREEPORT UNION FREE SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended June 30,2011

The Freeport Union Free School District's discussion and analysis of financial perfonnance provides an overall review of the District's financial activities for the fiscal years ended June 30, 2011 and 2010. The intent of this discussion and analysis is to look at the District's fmancial perfonnance as a whole. This should be read in conjunction with the financial statements, which immediately follow this section.

1. FINANCIAL mGHLIGHTS

Key financial highlights for fiscal year 2011, are as follows:

• The District's total net assets, as reflected in the District-wide financial statements, decreased by $12,827,450. • The District's expenses for the year, as reflected in the District-wide fmancial statements, totaled $161,197,202.

Of this amount, $1,357,362 was offset by program charges for services and $13,173,846 in grants and contributions. General revenues of$133,838,544 amount to 90.2% of total revenues.

• The general fund's total fund balance, as reflected in the fund financial statements on pages 15 and 17, decreased by $943,305 to $53 ,913,644. This was due to a deficit of revenues under expenditures based on the modified accrual basis of accounting.

• Based upon a consistently strong and stable financial profile, low direct debt, and highly rated fiscal management, Freeport Public Schools continues to enjoy a bond rating of AA. The rating puts Freeport among the top few districts out of more than 300 in the state rated by Standard and Poor's.

• Both the Energy Perfonnance Contract and the Excel Bond are at virtually no cost to the taxpayer. Under these two programs, the District has recently completed $25.6 million in capital improvement projects at no cost to the taxpayer which will result in accelerated savings in energy costs for the District.

• The District received operating grants of $13,173,846 to support instructional and food service programs. Included in the District's operating grants is $2,320,177 of monies received from the American Recovery and Reinvestment Act of2009 (ARRA).

• State and federal revenue decreased by $1,615,061 to $52,603,073 in 2011 from $54,218,134 in 2010. • The District is one of the lowest school districts in Nassau County (44th out of 56 districts) in per pupil spending.

2. OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report consists of four parts - Management's Discussion and Analysis (MD&A), the basic financial statements, required supplementary infonnation, and other supplementary infonnation. The basic financial statements consist of district-wide financial statements, fund fmancial statements, and notes to the fmancial statements. A graphic display of the relationship of these statements follows:

r"- " -"-"- " - " -"- " - " - " - " - " -"-"-" -"-' " . . . . I I

I

I I i

Management's Basic Required Other Discussion Financial Supplementary Supplementary & Analysis Statements Information Information

I I District-Wide Fund Notes to

Financial Financial Financial Statements Statements Statements

3


For the Year Ended June 30, 2011

A. District-wide Financial Statements

(Continued)

The District-wide financial statements present the governmental activities of the District and are organized to provide an understanding of the fiscal performance of the District as a whole in a manner similar to a private sector business. There are two District-wide financial statements - the Statement of Net Assets and the Statement of Activities. These statements provide both an aggregate and long-term view of the District's fmances.

These statements utilize the accrual basis of accounting. This basis of accounting recognizes the fmancial effects of events when they occur, without regard to the timing of cash flows related to the events.

The Statement of Net Assets

The Statement of Net Assets presents information on aU of the District's assets and liabilities, with the difference between the two reported as net assets. Increases or decreases in net assets may serve as a useful indicator of whether the financial position ofthe District is improving or deteriorating, respectively.

The Statement of Activities

The Statement of Activities presents information showing the change in net assets during the fiscal year. All changes in net assets are recorded at the time the underlying financial event occurs. Therefore, revenues and expenses are reported in the statement for some items that will result in cash flow in future fiscal periods.

B. Fund Financial Statements

The fund financial statements provide more detailed information about the District's funds, not the District as a whole. 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. The District also uses fund accounting to ensure compliance with fmance-related legal requirements. The funds of the District are reported in the governmental funds and the fiduciary funds.

These statements utilize the modified accrual basis of accounting. This basis of accounting recognizes revenues in the period that they become measurable and available. It recognizes expenditures in the period that they become measurable, funded through available resources and payable within a current period.

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the District-wide fmancial statements. However, the governmental fund financial statements focus on shorter term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year for spending in future years. Consequently, the governmental fund statements provide a detailed short-term view of the District's operations and the services it provides.

Because the focus of governmental funds is narrower than that of District-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the District-wide financial statements. By doing so, you may better understand the long-term impact of the District's near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The District maintains five individual governmental funds, general fund, school lunch fund, special aid fund, debt service fund, and capital projects fund, each of which is considered to be a major fund and is presented separately in the fund fmancial statements.

4

Fiduciary Funds


For the Year Ended June 30, 2011 (Continued)

Fiduciary funds are used to account for assets held by the District in its capacity as agent or trustee. AU of the District's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. The fiduciary activities have been excluded from the District's district-wide financial statements because the District cannot use these assets to finance its operations.

3. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE

A. Net Assets

The District's total net assets increased $12,827,450 between fiscal year 2010 and 2011. A summary of the District's Statement of Net Assets for June 30, 2011 and 2010, is as follows:

Increase Percentage 2011 2010 (Decrease) Change

Current and Other Assets $ 70,567,328 $ 73,568,257 $ (3,000,929) (4.08)% Capital Assets (Net of Depreciation) 76,445,098 71,532,260 4,912,838 6.87 %

Total Assets 147,012,426 145,100,517 1,911,909 1.32%

Current and Other Liabilities 11,436,637 9,092,882 2,343,755 25.78 % Long-Term Liabilities 110,659,470 98,263,866 12,395,604 12.61 %

Total Liabilities 122,096,107 107,356,748 14,739,359 13.73 %

Net Assets Invested in Capital Assets,

Net of Related Debt 31,013,826 26,537,312 4,476,514 16.87 % Restricted 38,535,238 40,301,319 (1,766,081) (4.38)% Unrestricted (Deficit) (44,632,745) (29,094,862) (15,537,883) 53.40 %

Total Net Assets $ 24,916,319 $ 37,743,769 $(12,827,450) (33.99)%

Current and other assets decreased by $3,000,929, as compared to the prior year. The decrease is primarily due to a decrease in the District's cash balances and a decrease in due from other governments.

Capital assets (net of depreciation) increased by $4,912,838, as compared to the prior year. This increase is due to amounts expended for capital additions exceeding depreciation. Note 7 to the Financial Statements provides additional information.

Current and other liabilities increased by $2,343,755 as compared to the prior year. This increase is primarily the result of increases in accounts payables, accrued liabilities, and increases in retirement liabilities due to an increase in required contribution rates in 2011.

Long-term liabilities increased by $12,395,604, as compared to the prior year. This increase is primarily the result of the District increasing its liability for other postemployment benefits by $13,351,024 offset by repayments of bond principal.

The net assets invested in capital assets (net of related debt) is calculated by subtracting the amount of outstanding debt used for construction from the total cost of all asset acquisitions, net of accumulated depreciation. The total cost of these acquisitions includes expenditures to purchase land, construct and improve buildings and purchase vehicles, equipment and furniture to support District operations.

5



The restricted net assets at June 30, 2011, of $38,535,238 is comprised of a amounts with constraints placed on the use either externally imposed by creditors, grantors, contributors or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. See Note 1 to the Notes to the Basic Financial Statements for further descriptions and detailed balances.

The unrestricted net assets (deficit) at June 30, 2011, is $44,632,745, which represents the amount by which the District's liabilities exceeded assets (excluding capital assets and related debt and restricted net assets).

B. Changes in Net Assets

The results of this year's operations as a whole are reported in the Statement of Activities in a programmatic format in the accompanying financial statements. A summary ofthis statement for the years ended June 30,2011 and 2010 is as follows:

Increase Percentage 2011 2010 (Decrease)

Rewnues Program Revenues

Charges for Services $ 1,357,362 $ 1,820,147 $ (462,785) -25.4% Operating Grants 13,173,846 14,681,601 (1,507,755) -10.3% Capital Grants 4,014,186 (4,014,186) -100.0%

General Revenues Property Taxes, STAR & Other Tax Items 79,506,139 74,833,596 4,672,543 6.2% State and Federal Sources 52,603,073 54,218,134 (1,615,061) -3.0% Other 1,729,332 2,369,615 (640,283) -27.0%

Total Revenues 148,369,752 151,937,279 (3,567,527) -2.3%

Expenses General Support 16,481,652 15,548,832 932,820 6.0% Instruction 133,013,497 124,120,657 8,892,840 7.2% Pupil Transportation 6,735,828 6,744,016 (8,188) -0.1% Debt Service - Interest 2,024,550 2,088,980 (64,430) -3.1% Food Service Program 2,941,675 2,827,483 114,192 4.0%

Total Expenses 161,197,202 151,329,968 9,867,234 6.5%

Total Change in Net Assets $(12,827,450) $ 607,311 $(13,434,761)

The District's revenues decreased by $3,567,527 in 2011 or 2.3%. The major factors that contributed to the decrease were:

.. Operating Grants decreased by $1,507,755. A majority of this decrease was a result of the District receiving less ARRA monies in 2011 than 2010.

.. Capital grants decreased by $4,014,186. Capital grants are comprised of EXCEL Aid received from New York State. The District received this grant in 2010 but not in 2011.

.. The District's also had a decrease in state and federal aid of$1,615,061.

The District's expenditures for the year increased by $9,867,234 or 6.5%. This was the result of overall budgetary increases and additional increases to certain benefits-related long-term liabilities over the prior year.

6



A graphic display of the distribution of revenues for the two years follows:


Charges for Services

State and Federal

Items 53.6%


Other

Slate and federal

Property Taxes, STAR & Other TIL"

Hems 49.3%

(Continued)



A graphic display of the distribution of expenses for the two years follows:


Debt Serv ice - Food Interest

Pupil 1.3% Transportal ion

4.2%

Instruction 82.5%


Pupil

Debt Serv ice -Interest I

Food Service Program

1.9%

Transportation __ o:... .......

4.5%

Instruction 82.0%

(Continued)



4. FINANCIAL ANALYSIS OF THE DISTRICT'S FUND BALANCES

At June 30, 2011, the funds reported a combined fund balance of of $5,281 ,599 from A summary of the change in fund balance by fund is as

2011 2010 Genera] Fund

Restricted Workers' $ Unemployment Insurance

Benefit Accrued Uability Retirement Contribution

Total Restricted

General 89,427 177,451 Instruction 163,580 381,872 Pupil 703 Employee Benefits 8,000

for Yeats 9,000,000 Total Assigned 9,253,710

Unassigned 10,501,380 Total General Fund 53,913,644

School Lunch Fund Nonspendable 74,417 Assigned 154,063

228,480

Debt Sen-ice Fund Restricted

Capita] Fund Restricted

Total Fund Balance $ $ 63,800,407

(Continued)

Increase

(88,024) (2

(4,718) (8,000)

Beginning with fiscal year ended June 2011, the School District implemented GASB Statement No. 54, "Fund JJaJL<'U',,,,

Reporting and Governmental Fund " This Statement provides more clearly balance categories to make the nature and extent of the constraints placed on a government's fund balances more A complete description of fund balance can be in the notes to the financial statements. 2010 balances have been restated to new classifications as provided by GASB 54. The 2010 for assigned fund expenditures and unassigned fund balance were restated to reclassify $2,610,000 of budgeted reserves that was previously included in fund balance. For financial statements purposes, amounts appropriated from reserves for budget purposes will not be displayed on the balance sheet as or but will remain in restricted fund balances as defined GASB 54 until they are actually "'CUIL.,.,Y.

The general fund's restricted fund balances increased by .v.<.. .• ""T.J ....... J-r as a result of Board autnOl[,]z~X1 transters and ""'V>M'"

earnings, net of expenditures reserves. Assigned fund balance includes encumbrances and an amount designated for the 20 I fund balance increased the increased the amount while outstanding en()mUbI'anlces decreased by $319,034.

9



The general fund's unassigned fund balance decreased by $4,826,525 to $10,501,380. This is the result of the District's conscious effort to reduce the unassigned fund balance, while ensuring there will be available fund balance to help the District face the fiscal challenges in future budgets.

Fund balance of the school lunch fund decreased because operating expenditures exceeded revenues.

Capital projects fund fund baLance decreased by $4,224,870 as capital construction continued for projects whose fundings were realized in a prior year.

5. GENERAL FUND BUDGETARY IDGHLIGHTS

A. 2010-2011 Budget

The District's general fund adopted budget for the year ended June 30, 2011, was $146,286,027. This is an increase of $2,698,097 over the prior year's adopted budget. The budget was funded through a combination of revenues and appropriated reserves and fund balance. The majority of this funding source was $79,450,812 in estimated property taxes, other real property taxes and STAR and State Aid in the amount of $51 ,923,038.

B. Change in General Fund's Unassigned Fund Balance (Budget to Actual)

The general fund's unassigned fund balance is the component of total fund balance that is the residual of prior years' excess revenues over expenditures, net of transfers to reserves and designations to fund the subsequent year's budget. It is thjs balance that is commonly referred to as the "fund balance". The change in this balance demonstrated through a comparison of the actual revenues and expenditures for the year compared to budget follows:

Opening, Unassigned Fund Balance Budgeted Restricted Funds Unassigned from the June 30,2011 Budget Transfer to Capital Reserves Revenues Over Budget Expenditures and Encumbrances Under Budget Net Increase to Restricted Funds Appropriated for June 30, 2012 Budget Closing, Unassigned Fund Balance

Opening, Unassigned Fund Balance

$ 15,327,905 (1,982,988) (1,500,000)

425,907 10,309,822 (3,079,266) (9,000,000)

$ 10,501,380

The $15,327,905 shown in the table is the portion of the District's June 30,2010, fund balance that was retained as unassigned. As discussed earlier, this amount was restated to include $2,610,000 of appropriated reserves applied to the 2010-11 budget that was previously included in unreserved, designated fund balance.

Budgeted Restricted Funds Unassigned from the June 30,2011 Budget

In the 2010-11 budget, $2,610,000 of the reserves were appropriated to help fund the budget and reduce tax levy. As actual expenditures for some of the appropriations were lower than budgeted, only $627,012 of the reserves was needed to fund expenditures. The unused amount of $1,982,988 has the efTect of reducing the increase to unassigned fund balance resulting from expenditures and encumbrances under budget.

Transfer to Capital Reserves

During the year ended June 30, 2011, the District transferred $1,500,000 to the capital reserves, which was authorized by the voters.

10

Revenues Over Budget


For the Year Ended June 30,2011 (Continued)

The 2010-2011 budget for revenues was $136,126,027. The actual revenues received for the year were $136,851,934. The actual revenues and transfers from other funds over estimated or budgeted revenue was $425,907. This variance contributes directly to the change to the unassigned portion of the general fund fund balance from June 30, 2010 to June 30, 2011.

Expenditures and Encumbrances Under Budget

The 2010-2011 final budget for expenditures was $148,358,771. The actual expenditures and encumbrances were $138,048,949. The final budget was under expended by $10,309,822. This under expenditure contributes to the change to the unassigned portion of the general fund fund balance from June 30, 2010 to June 30, 2011.

Net Increase to Restricted Funds

Combined increases of $3,079,266 to the general fund restricted fund balances during the year ended June 30, 2011, includes transfers to the unemployment insurance reserve of $750,000, workers' compensation reserve of $500,000 and reserve for retirement contributions of $1,750,000 as approved by the Board of Education and interest earnings of$79,266 on existing balances.

~ropriated for June 30,2012 Budget

The District has assigned $9,000,000 of its available June 30, 2011, fund balance to partially fund its 2011-2012 approved operating budget.

Closing, Unassigned Fund Balance

Based upon the summary changes shown in the above table, the District will begin the 2011-2012 fiscal year with an unassigned fund balance of $10,501,380. This is a decrease of $4,826,525 over the unassigned fund balance from the prior year.

6. CAPITAL ASSET AND DEBT ADMINISTRATION

A. Capital Assets

At June 30, 2011, the District had invested in a broad range of capital assets, including land, construction in progress, buildings, and vehicles, furniture, and equipment. The net increase in capital assets is due to capital additions less depreciation recorded for the year ended June 30, 2011. A summary of the District's capital assets, net of depreciation at June 30, 2011 and 2010, is as follows:

Increase 2011 2010

Land $ 800,000 $ 800,000 $ Construction in progress 6,080,870 12,839,675 (6,758,805) Buildings and improvements 66,833,057 55,011,95] 11,821,106 Site improvements 332,655 362,330 (29,675) Furniture, equipment and vehicles 2,398,516 2518.304 (119,788)

Capital assets, net $ 76,445,098 $ 71,532,260 $ 4,912,838

11

7.

8.

FREEPORT UNION FREE SCHOOL DISTRICT l\'lANAGEMENT'S DISCUSSION AND At"lALYSIS

For the Year Ended June 2011

B. Debt Administration

At June 30, 2011, the District had total contract of $7,890,747. A summary

Issue Interest Date Rate

Serial Bonds: 2006 3.5-4.375% 2009 3.75%

Energy Perfonnance Contract: 2009

201 2010

$

(Continued)

_._._ •••• J from an energy performance 2010, is as follows:

Increase

$ (1,360,000) (660,000)

The District assigned $9,000,000 of its June 30, 2011 to 2011-2012 voter approved budget of $149,477,547. This assignment represents an increase of $1,750,000 over previous year. The District was

a $5 million Qualified School Construction Bond, by the State Department Education in May 2011. The voters of Freeport passed on September 20, 2011 by a 4 to 1

margin affinning the community's support for

November 2010, the Nassau County Legislature approved an amlenl]mem financial responsibility for tax certiorari from

joined a class action suit challenging this statute in March 2011. .... l1'''rpm?> Court.

In June, 2011, the New York State Legislature pU'''''''''',

to formulas defmed in the legislation. increase more than the tax cap will be required to

to address the challenges that are likely to

1mam;lal report is designed to provide the School District's "",,,'c ...... ,.,

with a overview of the School District's finances for the money it receives. If you have questions

information, contact:

Dr. Kishore Kuncham Superintendent of Schools

Freeport Union Free School District 235 North Ocean Avenue

Freeport, NY 11520

12

county charter that would transfer The District

the Nassau County

a cap on local property tax, an amount a levy

voting. The District is wen revenues and the

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF NET ASSETS

Assets Unrestricted Cash and Cash Equivalents

Restricted Cash and Cash Equivalents Receivables

Other Governments Due from Fiduciary Funds Other Receivables

Inventory

Deferred Bond Issuance Costs Capital Assets Not Being Depreciated

June 30, 2011

Capital Assets Being Depreciated, Net of Accumulated Depreciation

Total Assets

Liabilities Accounts Payable

Accrued Liabilities Due To

Other Governments Teachers' Retirement System Employees' Retirement System

Compensated Absences

Bond Interest Payable Long-term Liabilities

Due Within One Year Bonds Payable Energy Performance Contract Compensated Absences

Due in More Than One Year Bonds Payable Energy Performance Contract Other Postemployment Benefits Workers' Compensation Liability Compensated Absences

Total Liabilities

Net Assets (Deficit) Investment in Capital Assets (Net of Related Debt) Restricted Unrestricted (Deficit)

Total Net Assets

Total Liabilities and Net Assets

See Notes to Financial Statements 13

$

$

$

$

52,226,480 146,000

16,660,565 225,284 342,632

74,417

891,950

6,880,870 69,564,228

147,012.426

3,052,323

600,136

483 6,395,089

512,919 518,426 357,261

2,115,000 483,134

600,000

36,590,000 7,407,613

50,370,087 4,082,320 9,011,316

122,096,1 07

31,013,826 38,535,238

(44,632,745)

24,916.319

147,012426

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF ACTIVITIES


Program Revenues

Functions/Programs

General Support Instruction Pupil Transportation Debt Service - Unallocated Interest

Food Service Program Total FunctionslPrograms

<;eneralRevenues Real Property Taxes School Tax Relief Reimbursement Other Real Property Tax Items Use of Money and Property

$

$

Charges for EXEenses Services

16,481,652 $ 133,013,497 613,179

6,735,828 2,024,550

2,941,675 744,183 161,] 27,2Q2 $ 1,351.362

Sales of Property and Compensation for Loss State and Federal Sources Miscellaneous

Total General Revenues

Change in Net Assets

Net Assets, Beginning of Year

Net Assets, End of Year


Operating Grants and

Contributions

$ 11,314,754

1,859,092 $ 13,113,846

Net (Expense)

Revenue and Changes in Net Assets

$ (16,481,652) (121,085,564)

(6,735,828) (2,024,550)

(338,400) 046,665,994 )

69,083,765 9,708,319

714,055 218,813

84,075 52,603,073

1,426,444 133,838,544

{l2,827,450)

37,743,769

$ 24,216,312

Assets Unrestricted Cash and Cash Equivalents Restricted Cash and Cash Equivalents Receivables

Due from Other Governrnents Due from Other Funds Other Receivables

Inventory

Total Assets

Liabilities Payables

Accounts Payable Accrued Liabilities Due To

Other Governrnents Other Funds Teachers' Retirement System Employees' Retirement System

Compensated Absences Deferred Revenue

Total Liabilities

Fund Balance Nonspendable Restricted Assigned Unassigned

Total Fund Balance

Total Liabilities and Fund Balance

FREEPORT UNION FREE SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2011

$

$

$

$

School Special General Lunch Aid

48,212,782 $ 108,429 $ 90,956 146,000

10,191 ,400 127,281 6,341,884 6,995,803 383,413

325,652 16,980 74,417

65,871,637 $ 327,1 07 $ 6,81 6 .. 253

2,170,547 $ 19,479 $ 173,206 345,817 3,665 6,564

483 1,938,001 75,000 6,636,483 6,395,089

512,919 518,426

77,194 11,957,993 98,627 6,816,253

74,417 34,158,554

9,253,7\0 154,063 10,501,380 53,913,644 228.480

65,8 71 ,63 7 $ 327,107 $ 6,8 16,253

See Notes to Financial Statements

15

Debt Service

$ 407,554

_$ __ 407,554

$

407,554

407,554

~ 407,554

CaEital Total

$ 3,406,759 $ 52,226,480 146,000

16,660,565 1,500,000 8,879,216

342,632 74,417

$ 4,906,752 $ 78,329310

$ 689,091 $ 3,052,323 244,090 600,136

483 4,448 8,653,932

6,395,089 512,919 518,426

77,194 937,629 \9,810.502

74,417

3,969,130 38,535,238 9,407,773

10,501 ,380 3.969,130 58.518,808

$ 4,906,759 $ 78,329,310


RECONCILIA nON OF THE GOVERNMENTAL FUND BALANCES TO THE DISTRICT-WIDE NET ASSETS

June 30, 2011

Total Governmental Fund Balances

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Deferred bond issuance costs - not available to pay current period expenditures

The cost of building and acquiring capital assets (land, buildings, equipment) financed from the governmental funds are reported as expenditures in the year they are incurred, and the assets do not appear on the balance sheet. However, the Statement of Net Assets includes those capital assets among the assets of the School District as a whole, and their original costs are expensed annually over their useful lives.

Original Cost of Capital Assets Accumulated Depreciation

Deferred revenue reported in the governmental funds but not the statement of net assets

Long-tenn liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-tenn liabilities at year end consist of:

112,761,300 (36.316.202)

(38,705,000) (357,261 )

(7,890,747) (50,370,087)

(4,082,320)

$ 58,518,808

891,950

76,445,098

77,194

Bonds Payable Accrued Interest on Bonds Payable

Energy Perfonnance Contract Other Postemployment Benefits

Workers' Compensation Liabilities Compensated Absences Payable (9,611,316) (111.016,731)

Total Net Assets


$ 24916.319

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUNDS

Revenues Rea I Property Taxes Other Real Property Tax Items School Tax Relief Reimbursement Charges for Services Use of Money and Property Sale of Property and Compensation for Loss Miscellaneous Interfund Revenues State Aid Medicaid Reimbursements Federal Aid School Lunch Sales

Total Revenues

Expenditures General Support Instruction Pupil Transportation Food Service Program Employee Benefits Capital Outlay Debt Service - Principal Debt Sen'ice - Interest

Total Expenditures

Excess (Deficit) Revenues Over Expenditures

Other Financing Sources (Uses) Transfers from Olher Funds Transfers to Other Funds

Total Other Financing Sources (Uses)

Excess (Deficit) Revenues Over Expenditures and Other Financing Sources

Fund Baloncc, Beginning or Yeor

Fund Balance, End of Year


School Special General Lunch Aid

$ 69,083,765 $ $

714,055 9,708,319

613,179 212,278

84,075 1,391,697 34,747

109,685 52,602,558 62,187 2,572,578

515 2,331,808 1,796,905 6,410,368

744,183 136,851 ,934 2.638022 8,982,246

12,180,692 87,031,088 9,158,086

6,662,618 2,757,981

25,446,040

131,320438 2 757,981 2, t sj l.086

5d 531 496 (119959) OJ _,140)

175,140 (6 ,474 ,8..9l.l

~474,801) 175,140

~

(943,305) (119,959)

~~ B56 2~2 348 43 2

~Jm!i::l;l $ "B ~§Q


Debt Capital Service Proiects

$ $

6,535

6535

6,080,870 2,482,196 1,961,465 4,443,661 6.080 870

(4,437.126) (6,080,870J

4,443,661 1,856,000

4443,661 1,856,000

6,535 (4,224,870)

40 l .Ql2 B.194.000

$ ~IIZ ~~~ ~ J 2!i2 lJQ

Total

$ 69,083,765 714,055

9,708,319 613,179 218,813

84,075 1,426,444

109,685 55,237,323

515 10,539,081

744,183 148479,43,(

12,180,692 96,189,174

6,662,618 2,757,981

25,446,040 6,080,870 2,482,196 1.961 ,4g5

153,761,036

(5281 599)

6,474,801 (6.474,8Q I)

(5,281,599)

238QQ,4ll1

L-2ll..2 lJ..J!2.6.

FREEPORT UNION FREE SCHOOL DISTRICT RECONCILIATION OIl' THE STATEMENT OF REVENUES AND EXPENDITURES

OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2011

Net Changes in Fund Balance - Total Governmental Funds Capital Outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are capitalized and shown in the Statement of Net Assets and allocated over their useful lives as annual depreciation expenses in the Statement of Activities. This is the amount by which capital outlays exceeded depreciation in the period.

Depreciation Expense Capital Outlays

Bond and other debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets Repayments of bond and other debt principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets This is the amount of debt repayment'l during the year.

Energy Performance Contract Repayment Bond Principal

Certain expenses in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.

Amortized Deferred Bond Issuance Costs Change in Accrued Interest Liability

Change in Other Postemployment Benefits Liability Change in Workers' Compensation Liability Change in Compensated Absences Liability

Change in Net Assets Governmental Activities


(1,753,5l3) 6,666,351

462,196 2,020,000

(80,045) 16,960

(13,351,024) (196,140)

(l,330,636)

$ (5,281,599)

4,912,838

2,482,196

(14.940.885)

$ (12.827 450)

Assets

Cash and Cash Equivalents

Due from Other FlUlds

TotaJ Assets

LiB bilities

Due to Other Funds

Agency Liabilities

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS

June 30, 2011

Private Purpose

Trusts

$ 285,620

$ 285.620

Extraclassroom Activity Balances

Total Liabilities

Net Assets

Restricted for Scholarships

Total Net Assets

Total Liabilities and Net Assets

$

$

See Notes to Financial Statements

19

285.620

285,620

285,62Q

Agencz::

$ 847,908

54.588

$ 902.496

$ 279,872

519,272

103.352

$ 902496

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS


Private Purpose

Additions Investmenl Income Gifts and Contributions

Total Additions

Deductions Scholarships and Awards

Change in Net Assets

Net Assets, Beginning of Year

Net Assets, End of Year


Trusts

$ 588 50,915 51,503

46,415

5,088

280,532

$ 285.62Q

FREEPORT UNION FREE SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Freeport Union Free School District (District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for establishing governmental accounting and financial reporting principles. Significant accounting principles and policies used by the District are as follows:

Reporting Entity

The District is governed by the laws of New York State. The District is an independent entity governed by an elected Board of Education. The President of the Board serves as the chief fiscal officer and the Superintendent is the chief executive officer. The Board is responsible for, and controls all activities related to public school education within the District. Board members have authority to make decisions, power to appoint management, and primary accountability for all fiscal matters.

The financial reporting entity is based on criteria set forth by GASB Statement No. 14, The Financial Reporting Entity and No. 39. Determining Whether Certain Organizations are Component Units. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.

The accompanying financial statements present the activities of the District. The District is not a component unit of another reporting entity. The decision to include a potential component unit in the District's reporting entity is based on several criteria including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is included in the District's financial statements.

(a) Extraclassroom Activity Funds

The extrac1assroom activity funds of the District represent funds of the students of the District. The Board of Education exercises general oversight of these funds. The extraclassroom activity funds are independent of the District with respect to its financial transactions and the designation of student management. The District reports these assets held by it as agent for the extraclassroom organizations in the Statement of Fiduciary Net Assets -Fiduciary Fund. Separate audited financial statements of the extraclassroom activity funds can be found at the District's business office.

Joint Venture

The District is one of 56 component school districts in the Board of Cooperative Educational Services of Nassau, (BOCES). A BOCES is a voluntary, cooperative association of school districts in a geographic area that share planning, services, and programs which provide educational and support activities. BOCES are organized under Section § 1950 of the Education Law. A BOCES Board is considered a corporate body. Members of a BOCES Board are nominated and elected by their component member boards in accordance with provisions of Section § 1950 of the Education Law. All BOCES property is held by the BOCES Board as a corporation under Section § 1950(6). In addition, BOCES Boards also are considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under Section § 119-n(a) of the General Municipal Law. A BOCES budget is comprised of separate budgets for administrative, program, and capital costs. Each component district's share of administrative and capital cost is determined by resident public school district enroHment as defined in Education Law, Section §1950(4)(b)(7). There is no authority or process by which a school district can terminate its status as a BOCES component. In addition, component school districts pay tuition or a service fee for programs in which its students participate.

21

Basis of Presentation

FREEPORT UNION FREE SCHOOL DISTRICT NOTES TO FINANCIAl, STATEMENTS

For the Year Ended .June 30, 2011

(a) District-Wide Financial Statements

(Continued)

The Statement of Net Assets and the Statement of Activities present infonnation about the overall financial activities of the Dh;trict, except for fiduciary activities. Eliminations have been made to minimize the double counting of interfund transactions. Governmental activities generally are financed through real property taxes, state aid, intergovernmental revenues, and other exchange and nonexchange transactions. Operating grants include operating-specific and discretionary (either operating or capital) grants.

The Statement of Net Assets presents the financial position of the District at fiscal year end. The Statement of Activities presents a comparison between program expenses and revenues for each function of the District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses, principally employee benefits, are allocated to functional areas in proportion to the payroll expended for those areas. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants, contributions, and other revenues that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including real property taxes and state aid, are presented as general revenues.

(b) Fund Financial Statements

The Fund Financial Statements provide infonnation about the District's funds, including fiduciary funds. Separate statements for each fund category, governmental and fiduciary, are presented. The emphasis of fund financial statements is on major governmental funds as defmed by GASB, each displayed in a separate column. All of the funds of the District are displayed as major funds. The District reports the following govenunental funds:

Governmental Funds:

General Fund - This is the District's primary operating fund used to account for and report all financial resources not accounted for in another fund.

Special Aid Fund - This fund accounts for and reports the proceeds of specific revenue sources such as federal and state grants that are legally restricted to expenditures for specified purposes. These legal restrictions may be imposed by either govenunents that provide the funds or outside third parties.

School Lunch Fund - This fund is used to account for and reports transactions of the District's lunch and breakfast programs.

Debt Service Fund - accounts for and reports financial resources and that are restricted to expenditure for principal and interest on long-tenn general obligation debt. Debt service funds should be used to report resources if legally mandated.

Capital Projects Fund - is used to account for and report fmancial resources that are restricted or assigned to expenditure for capital outlays, including the acquisition, construction or major repair of capital facilities and other capital assets.

22



(Continued)

(c) Fiduciary Funds - are used to account for and report activities in which the District acts as trustee or agent for resources that belong to others. These activities are not included in the district-wide fmancial statements, because their resources do not belong to the District, and are not available to be used. There are two classes of fiduciary funds:

Private Purpose Trust Funds - These funds are used to account for trust arrangements in which principal and income benefits annual third party awards and scholarships for students. Established criteria govern the use of the funds and members of the District or representatives of the donors may serve on committees to determine who benefits.

Agency Funds - These funds are strictly custodial in nature and do not involve the measurement of results of operations. Assets are held by the District as agent for various student groups or extraclassroom activity funds and for payroll or employee withholding.

Basis of Accounting and Measurement Focus

The district-wide and fiduciary fund fmancial statements are reported on the accrual basis of accounting using the economic resources measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Nonexchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include real property taxes, grants and donations. On an accrual basis, revenue from real property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied and the related expenditures are incurred.

The fund statements are reported on the modified accrual basis of accounting using the current financial resources measurement focus. Revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within 180 days after the end of the fiscal year, except for real property taxes, which are considered to be available if they are collected within 60 days after the end of the fiscal year.

Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of generallong-terrn debt and acquisitions under capital leases are reported as other financing sources.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmanciaI statements and the reported revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including computation of encumbrances, compensated absences, potential contingent liabilities and useful lives oflong-lived assets.

Cash and Cash Equivalentsllnvestments

Cash and cash equivalents consist of cash on hand, bank deposits and investments with a maturity date of three months or less from date of acquisition.

23

Real Property Taxes

(a) Calendar



(Continued)

Real property taxes are levied armually by the Board of Education during the month of August and become a lien on October 1 and April 1. Taxes were collected during the period by the Town of Hempstead.

(b) Enforcement

Uncollected real property taxes are subsequently enforced by the County of Nassau. An amount representing uncollected real property taxes transmitted to the County for enforcement are paid by the County to the District.

Receivables

Receivables are shown gross, with uncollectible amounts recognized under the direct write-off method. No allowance for uncollectible accounts has been provided since it is believed that such allowance would not be material.

Restricted Resources

When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the District's policy concerning which to apply first varies with the intended use, and with associated legal requirements, many of which are described elsewhere in these Notes to Financial Statements.

Interfund Transactions

The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowings. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Pennanent transfers of funds include the transfer of expenditure and revenues to provide fmancing or other services.

In the district-wide statements, the amounts reported on the Statement of Net Assets for interfund receivables and payables represent amounts due between different fund types (governmental activities and fiduciary funds). Eliminations have been made for all interfund receivables and payables between the funds, with the exception of those due from or to the fiduciary funds.

The governmental funds report all interfund transactions as originally recorded. Interfund receivables and payables are netted on the accompanying governmental funds balance sheet when it is the District's practice to settle these amounts at a net balance based upon the right of legal offset.

A detailed disclosure by individual fund for interfund receivables, payables, expenditures and revenues activity is provided subsequently in these Notes to Financial Statements.

Inventories

Inventories of food in the school lunch fund are recorded at cost on a first-in, first-out basis or in the case of surplus food donated by the U.S. Department of Agriculture, at the Government's assigned value, which approximates market. A reserve for inventory has been recognized to indicate that this does not constitute available spendable resources.

24



(Continued)

Purchases of inventoriable items in other funds are recorded as expenditures at the time of purchase, and are considered immaterial in amount.

Capital Assets

Capital assets are reflected in the district-wide financial statements. Capital assets are reported at actual cost, when the information is available, or estimated historical cost based on professional third-party information. Donated assets are reported at estimated fair market value at the date of donation.

All capital assets, except land and construction in progress, are depreciated on a straight line basis over their estimated useful lives. Capitalization thresholds, the dollar value above which asset acquisitions are added to the capital asset accounts, and estimated useful lives of capital assets as reported in the district-wide statements are as follows:

Buildings and Improvements Site Improvements Vehicles, Furniture and Equipment

Deferred Revenue

Capitalization Threshold

$ 1,000 1,000

500

Depreciation Estimated Method Useful Life

Straight Line 50 years Straight Line 20-50 years Straight Line 5-10 years

Deferred revenue arises when potential revenues do not meet both the measurable and available criteria for recognition in the current period. Deferred revenues also arise when resources are received by the District before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifYing expenditures. In subsequent periods, when both recognition criteria are met, or when the District has legal claim to the resources, the liability for deferred revenues is removed and revenues are recognized.

Vested Employee Benefits - Compensated Absences

Compensated absences consist of unpaid accumulated sick leave and vacation time.

Sick leave eligibility and accumulation is specified in collective bargaining agreements and in individual employment contracts. Upon retirement, resignation or death, employees may be eligible to receive a portion of the value of unused accumulated sick leave.

Vacation eligibility and accumulation is specified in collective bargaining agreements and in individual employment contracts. Some earned benefits may be forfeited if not taken within varying time periods.

Consistent with GASB Statement No. 16, Accounting for Compensated Absences, the liability has been calculated using the termination payment method and an accrual for that liability is included in the district-wide financial statements. The compensated absences liability is determined based on the terms of the collective bargaining agreements and individual employment contracts in effect at year end.

In the fund fmancial statements only the amount of matured liabilities is accrued within the general fund based upon expendable and available financial resources.

25

Other Benefits



District employees participate in Retirement System.

New

(Continued)

or the New York State

aU' ... UVH to pension oellerHS, lTunfllT benefits for retired employees and

DU:,l-t:nUJlUVrnlenL health insurance coverage and ..,<uuu".., agreements determine if District

are eligible for these if care benefits are provided through plans whose

post-retirement benefits is the cost of providing health insurance by recording its

in the year paid.

Accrued Liabilities and Long-Term Obligations

the District. Health U"'ll"'U'" paid during the year. The cost of

employee. The District recognizes as an expenditure in the general

Payables, accrued liabilities and long-term obligations are ,..",,..,,,,.,f,,,ri district-wide financial statements. fu the governmental funds, payables and accrued are in a manner and full current [mancial resources. Claims and judgments, and compensated that will paid from governmental funds, are reported as a liability in the fund [mancia! statements only to for payment in the current year. Bonds and other long-term obligations that will be are recognized as a liability m fund financial statements when due.

Long-term obligations represent the District's future obligations or YPY,nrtpti as due in one year or due within more than one year

Equity Classifications

(a) District-Wide Financial Statements

fu District-wide Financial Statements there are

fuvested in capital assets, net of related depreciation) reduced by outstanding V~'.uH'"''"'O m}:Irovelne:tUs of those assets.

net assets:

p<!rnC'.tpll net assets - reports net assets when constraints on credItors (such as through debt covenants), grantors, contributors, or

ImDm,eu by through constitutional provisions or ,-,u<un.LLl..,

net assets - reports all other net assets that do not meet the UV,U..L.u,,,'oJ'U

<4"~'H'·"'''''V'''' and are deemed to be available for general use by

(b) Fillancial Statements

year ending June 30, 2011, the School and Governmental Fund Type Definitions." This Statement

balance categories to make the nature and extent of the constraints placed on a l'rrv\!",.'t1"''''f1lt'

26

less accumulated constructions or

two



(Continued)

The Cl<llSSlI1C,aW)ns describe the relative stnme:lth '-''''"''tiLL'",- constraints:

Non-Spendable Balance

Includes amounts that cannot be spent because are not in spendable form or or CO]1tn:tctuallj! required to maintained intact. Non-spendable fund u(u,au\.,,", includes the inventory recorded in School Lunch Fund.

Restricted Fund Balance

Includes amounts with constraints placed on the use resources either externally imposed by ","~.rl,tA,"" or laws or regulations of other an1.rp,..,nrnpnt,,· or by law through COIlstItutllonai

When an expense is incurred purposes for wbich both restricted and to first varies

has established the following restncted balances:

• Workers' Compensation - to accumulate funds purpose paying for COlmpen:;atllon .... ".-,,,>",,,, and other under Article 2 of the New York State Workers'

Law, and for payment of expenditures of administering this self-insurance program. Within 60 of any fiscal year, excess reserve amounts may be either to reserve or

appropriations of the next fiscal year's budget. The reserve is for in the

un:emlp'IElYI,nelll Insurance Resen1e - to Municipal Law must to pay the cost mtlur,sernel1t to the State Unemployment Insurance Fund for payments made to claimants where the

ele:cte:a to use the benefit The reserve may be by action budgetary funds as may be Within sixty

any fiscal year, excess amounts may be tr<ln"'t"'l'"1c,,,r!

appropriations of the next budget. LV ... ",",''', basis, excess resources in over the sum sufficient to pay fJ'"'L' .... LLe'l'.

to any other reserve fund. reserve is accounted for in the O"Pl'PYl'Il

• Employee Benefit Accrued Liability - According to urucIP:al Law §6-p, must be used of accrued employee an employee upon termination employee's service. This

reserve may be established by a majority vote of the Board and is funded by appropriations and such funds that may be This reserve is in the general fund.

• Retirement Contribution Reserve - to General Municipal Law r",rnp,~t contributions. The reserve must accounted for separate

of the operation and ",,,,,,,,,,,,uvu of the fund must be nrrnl1l,,,,n

the general

• - Used to account for resources

must be used for financing all other funds and a

Board. This reserve is

fund includes all unused debt proceeds mtlere.st and ean1ings on teIll1D()ral"Y lllve:strnell1 This reserve is accounted for in the ",.,T"llC',., fund.

• Projects - Used to account CQlllsltlOn, construction or major

the capital fund.

UU"L"","" resources that are by voter approved propositions capital facilities. These t'P"tt'll"'tprl amounts are accounted

27



(Continued)

• Capital Reserve - The capital reserve fund is used to pay the cost of any object or purpose for which bonds may be issued. The creation of a capital reserve fund requires authorization by a majority of the people at any special or annual meeting. Such authorization is further required for payments from the capital reserve. The form of the required legal notice for the vote on establishing and funding the reserve and the form of the proposition to be placed on the ballot are set forth in Section 3651 of Education Law. This reserve is accounted for in the general fund.

(c) Reserve for Endowments and Scholarships - This reserve is used to account for various endowment and scholarship awards. This reserve is accounted for in the Fiduciary Fund as restricted net assets.

(d) Unrestricted Resources

When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the School District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the School District has provided otherwise in its commitment or assignment actions.

Committed - Includes amounts that can only be used for the specific purposes pursuant to constraints imposed by formal action of the School District's highest level of decision making authority; i.e. the Board of Education. The School District has no committed fund balances as of June 30, 2011.

Assigned - Includes amounts that are constrained by the District's intent to be used for specific purposes, but are neither restricted nor committed. Intent is expressed by (a) the Board of Education or (b) a body (budget or finance committee, for example) or official to which the Board of Education has delegated the authority to assign amounts to be used for specific purposes. All encumbrances in all funds are classified as assigned or restricted fund balance. The fund balances in the debt service fund and capital projects fund and the amount appropriated for the subsequent year's budget of the general fund are also classified as assigned fund balance in the respective fund.

Unassigned - Includes all other general fund balance amounts that do not meet the definition of the above classifications and are deemed to be available for general use by the School District. In other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in the respective fund.

(e) Order of Use of Fund Balance

Fund balance measures the net financial resources available to fmance expenditures within current or future periods. The District's Unassigned General Fund Fund Balance will be maintained to provide the District with fmancial stability and a margin of safety to fund unanticipated contingent expenditures that may occur unexpectedly during the fiscal year. The Unassigned General Fund Fund Balance used for these purposes may only be appropriated by resolution of the Board of Education unless voter approval is required.

Any portion of Fund Balance may be applied or transferred for a specific purpose either by voter approval if required by law or by formal action of the Board of Education if voter approval is not required. Amendments or modification to the applied or transferred fund balance must also be approved by formal action of the Board of Education.

The Board of Education delegates the authority to assign fund balance, for encumbrance purposes, to the Superintendent or his designee. For budgeting purposes, the authority to assign fund balance for subsequent year's expenditures (I.e. appropriating fund balance to reduce property tax levy for the subsequent year's budget) is

28

2.



exercised by the Board of .LUU,","U'-'ll upon subsequent fiscal year.

In circumstances where an eX'peJld1tur

balance V'''''''''.H''·''UV' the School

the district-wide statements, certain ...... " ... u,"'" a full reconciliation of these items. the Statement of Activities, compared

(Continued)

vote on the resolution adopting the tax levy for said

purpose for which amounts are available in multiple fund will assess the current financial ,",V.UU'.UVH

expenditures to which the fund balance

in the governmental fund statements and The basic financial statements contain

the economic resource measurement focus tinanc:ial resource measurement focus of the governmental funds.

Total Fund Balances of Governmental vs. Net Assets of Governmental Activities

Statement of Net Assets. Statement of Net Assets versus

Statement of Revenues, Expenditures and

Activities fall into one of four

(a) Long-Term Revenue and /:!,xoel1se

Long-tenn revenue rlii'TP,'pn

"available", whereas arise because goveIIllIlt:LlLlil

used on the

(b) Capital Related

(c) Long-Term Debt

Long-term expenditures incurred, and principal

net assets of governmental activities reported the from additional long-tenn economic focus the

uuam;lal resources focus of governmental fund Balance Sheet.

in Fund Balance vs. Statement of Activities

and Changes in Fund Balance and the Statement of

report revenues only when they are considered 'rPTV,,.,t,, revenues when earned. Differences in long-tenn expenses

llV'",U.'V'" accrual basis, whereas the accrual basis of accounting is

TTPrpr.,..p "p1"",3pn proceeds for the sale of rpr,r.rh>li on the Statement

both interest and principal payments are recorded in the

as a reduction ofliabilities in the Statement of Net .n,,,,,,,.,,,.

29

as as

(d) Employee Benefit Allocations



(Continued)

Expenditures for employee benefits are not allocated to a specific function on the Statement of Revenues, Expenditures, and Changes in Fund Balance based on the requirements of New York State. These costs have been allocated based on total salary for each function in the Statement of Activities.

3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

Fund Balance Limitations

NYS Real Property Tax Law 1318 limits the amount of unexpended surplus funds (unassigned fund balance) a school district can retain to no more than 4% of the School District's budget for the General Fund for the ensuing fiscal year. Nonspendable and restricted fund balance of the General Fund are excluded from the 4% limitation. Amounts appropriated for the subsequent year and encumbrances are also excluded from the 4% limitation. The District's unassigned fund balance at June 30,2011 was approximately 7% of the 2011-12 fiscal year's budget.

Budgets

The District administration prepares a proposed budget for approval by the Board of Education for the general fund, the only fund with a legally adopted budget.

The voters of the District approved the proposed appropriation budget for the general fund.

Appropriations are adopted at the program line item level.

Appropriations established by the adoption of the budget constitute a limitation on expenditures (and encwnbrances) that may be incurred. Appropriations lapse at the end of the fiscal year unless expended or encumbered. Encumbrances will lapse if not expended in the subsequent year. Appropriations authorized for the current year are increased by the planned use of specific reserves, and budget amendments approved the Board of Education as a result of selected new revenue sources not included in the original budget (when permitted by law). These supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. During the year ended June 30,2011, the District made a supplemental appropriation of $1 ,500,000 for voter approved expenditures from the capital reserve.

Budgets are adopted annually on a basis consistent with GAAP. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year.

Budgets are established and used for individual capital project funds expenditures as approved by a special referendum of the District's voters. The maximum project amount authorized is based primarily upon the cost of the project, plus any requirements for external borrowings, not annual appropriations. These budgets do not lapse and are carried over to subsequent fiscal years until the completion of the projects.

Encumbrances

Encumbrance accounting is used for budget control and monitoring purposes and is reported as a part of the governmental funds. Under this method, purchase orders, contracts and other commitments for the expenditure of monies are recorded to reserve applicable appropriations. Outstanding encumbrances as of year end are presented as reservations of fund balance and do not represent expenditures or liabilities. These commitments will be honored in the subsequent period. Related expenditures are recognized at that time, as the liability is incurred or the commitment is paid.

30



4. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS

The District's investment policies are by state statutes Insurance insured COltnnlerCI

Permissible investments include U.S. of York State or its IS

not covered by FDIC insurance. Obligations that may be States Agencies and obligations of New State and

Custodial credit risk is the risk that in the event GASB directs that deposits be disclosed as "'''' .. "J'''', .... to insurance and the deposits are either:

A. Uncollateralized, B. Collateralized by securities held by the C. Collateralized by securities held by the pledging fmancial

District's name.

None of the District's aggregate bank balances not covered by U'"'fJV""VL

risk as described above.

5. PARTICIPATION IN ROCES

year ended June 30,2011, the District was $14,lvv .. '/""T"T

The District's share ofBOCES aid amounted to $1,993,706. '-'''J,,-,LJU administrative offices at 71 Clinton Road, P.O. Box 91

6. DUE FROM OTHER GOVERNMENTS

Due other gmrenImtmts at June 30, 2011, VVAAL""""'"

General Fund Nassau - Real Property and PrrDT Tax Receivable New York State Aid - Excess Cost Aid BOCESAid American and Reinvestment Act of2009 Grant (ARRA) MTA TaxReceivable Medicare Part D Reimbursement

Aid Fund Federal and s tate grants

School Lunch Fund Federal and state food service

program reimbursements

Total Due From Other Governments - All Funds

31

$

or

'IS~'U""''''~' repurchase agreements and deposits and certificates of

are obligations of the United

delpO~i1ts may not be returned to it. are not covered by depository

trust department or agent but not in the

were exposed to custodial credit

administrative and program costs. ....'-','-'.L,'-' are available from the

77,194

10,191,400

6,34],884

7. CAPITAL ASSETS

8.

The capital asset

Cbvernmental activities

Capital assets not Land Construction in progress

Total capital assets not being delClrec!alted

Site improvements Furniture, equipment and vehicles

Total capital assets being depreciated

less accumulated depreciation for: Buildings and ,rYm,"""'"

Site improvements furniture, equipment and vehicles

Total accumulated U,",'Jl"'_laLRJ

Net Capital Assets

Net Capital Assets

Depreciation expense

General Instruction

Total U'v!JJ.IA_""'UH expense

on



year June 30, 2011, are as follows:

Balance Balance June 30, 2010 Additions Reductions June 2011

$

$

27,160,404 2,395,345

$

6,080,870

6,080,870

13,425,156

1,018,569

36,746 698,198

1,753,513

11,671,643

$ 17,752,513

was allocated to governmental

$ 1,055,315 698,198

$

$ $ 800,000

Interfund u<u"'".~"''' at June 30,2011, are as follows:

General School Lunch Special Aid Debt Service

Capital Projects

Fiduciary

Total

$ Receivable

6,995,803

383,413

1,500,000

54,588

$

32

1,938,001 75,000

6,636,483

4,448

Transfers Out $ 6,474,801

$ 6,474,80I

(Continued)

9.

FREEPORT IlNION FREE SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS


(Continued)

• The District transferred $175,140 from the general fund to the special aid fund to cover the District's portion of the summer handicapped program.

• The District made an annual transfer of $4,443,661 from the general fund to the debt service fund for required annual debt service expenditures.

• The District made a voter-approved transfer of $1,500,000 from the capital reserve in the general fund to the capital fund for capital projects.

LONG-TERM LIABILITIES

Long-term liability balances and activity for the year arc summarized below:

Amounts Balance Balance Due Within

June 30, 2010 Additions Reductions June 2011 One Year Long-tenn debt:

Bonds payab Ie $ 40,725,000 $ $ 2,020,000 $ 38,705,000 $ 2,115,000 Energy performance contract 8,352,943 462,196 7,890,747 483,134

49,077,943 2,482,196 46,595,747 2,598,134 Other Long-TennUabilities

Post Employment Benefits 37,019,063 13,351,024 50,370,087 Workers I compens atio n 3,886,180 1,371,509 1,175,369 4,082,320

Compensated absences 8,280,680 1,330,636 9,611,316 600,000

$ 98,263,866 $ 16,053,169 $ 3,657,565 $110,659,470 $ 3,198,134

The general fund has typically been used to liquidate long-term liabilities.

Bonds payable, which were issued for capital construction, are comprised of the following:

Issue Final Date Maturity

Serial bonds 2006 1211/2031 Serial bonds 2009 4/112024

The following is a summary of debt service requirements:

Fiscal Year Ending June 30, PrinciEa1 Interest

2012 $ 2,115,000 $ 1,519,600

2013 2,200,000 1,443,538

2014 2,290,000 1,362,350

2015 2,400,000 1,275,625

2016 2,485,000 1,185,162

2017 - 2021 14,065,000 4,376,143

2022- 2026 8,575,000 1,655,072

2027 - 2031 3,725,000 600,806

2032 850,000 18,594

Total $ 38,705,000 $ l3,436,890

33

Interest

Rate

3.5-4.375%

3.75%

Total

$ 3,634,600

3,643,538

3,652,350

3,675,625

3,670,162

18,441,143

10,230,072

4,325,806

868,594

$ 52,141,890

Outstanding at

June 30, 2011

$ 27,455,000

11,250,000

$ 38,705,000

FREEPORT UNION FREE SCHOOL DISTRlCT NOTES TO FINANCIAL STATEMENTS


The following is a summary of debt service requirements for energy perfonnance contract:

Fiscal YearEndin~ June 30, Principal Interest

2012 $ 483,134 $ 348,155 2013 505,021 326,268 2014 527,899 303,390 2015 551,814 279,475 2016 576,813 254,476

2017 - 2021 3,300,516 855,927 2022 - 2024 1,945,550 132,671

Total $ 7,890,747 $ 2,500,362

Interest on long-tenn debt for the year was comprised of:

Interest paid Less interest accrued in the prior year Plus interest accrued in the current year Plus amortization of bond costs

Total interest expense on long-tenn debt

Prior-Year Defeased Debt

$

$

1,961,465 (374,221) 357,261

80,045

2,024,550

Total $ 831,289

831,289 831,289

831,289 831,289

4,156,443 2,078,221

$ 10,391,109

(Continued)

In prior years the School District defeased certain general obligations by placing proceeds of the new bonds in an irrevocable trust to provide for future debt service payments on the defeased bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not assets and the liability for the defeased bonds are not included in the School District's fInancial statements. As of June 30, 2011, $8,035,000 of the defeased bonds were outstanding.

10. PENSION PLANS

General Information

The District participates in the New York State Teachers' Retirement System (NYSTRS) and the New York State and Local Employees' Retirement System (NYSERS). These are cost-sharing multiple employer, public employee retirement systems. The Systems offer a wide range of plans and benefIts which are related to years of service and final average salary, vesting of retirement benefits, death, and disability.

Provisions and Administration

(aJ Teachers' Retirement System

The NYSTRS is administered by the New York State Teachers' Retirement Board. The System provides benefits to plan members and beneficiaries as authorized by the Education Law and the Retirement and Social Security Law of the state of New York. The NYSTRS issues a publicly available fInancial report that contains financial statements and required supplementary infonnation for the System. The report may be obtained by writing to the New York State Teachers' Retirement System, 10 Corporate Woods Drive, Albany, NY 12211-2395.

34

11.


For the Year Ended June 30, 20U

(b) Employees' Retirement System

employees to Security Law. required Employees'

Funding Policies

The Systems are nOJllccmtIiblltOI less than ten years of cn:dl1ted "~"'VH'·'" Employees who joined of their salary to NYSERS annually the rates Py,-.rp'<:<:f'ri

contributions required to Education Law, rates are

The District is required to Systems were equal to 100% of year and two preceding years were:

(a) Plan Descriptions

(b) Funding Policy

plan is calculated determined in "",'rmrl".",,,,

that, if paid on an vU,,,,"VJ.l1J:<.

actuarial liabilities (or .... u .... ".r;

enough money to the Plan to

Year

2011 2010 2009

(Continued)

as death and disability benefits. Obligations of employers and by the New York State Retirement and

.... u«"'''''' report that includes financial statements VU"UUHAL by writing to the New York State and Local

Building, Albany, NY 12244.

determined rate. The District contributions required for each year. The required contributions

NYSTRS

$ 5,635,644 3,772,191 4,725,025

NYSERS

$ 1,257,466 894,550 685,510

available report since there are no assets

requirements of the plan members and the other post-employment benefit (OPEB) cost (experlse)

to current

fITlY,,,,'" required contribution of the employer (ARC), of GASB Statement 45. The ARC rpnrF'<:,>nt"

is projected to cover nonnal cost each year and to <>",lnrt.7p

over a period not to exceed thirty years. The current obligations on a pay-as-you-go basis.

35



(c) """"""1"" «,Pflllll'{J'Fi Contribution

Normal Cost Amortization of Un funded Actuarial_. __ .... J

Interest on Amortization Annual Required Contribution

(d) Annual OPEB Expense and Net Obligation

Annual Contribution Interest on Net OPEB Obligation

to Annual Required Contribution Annual OPEB Cost

Contributions Made Increase in Net OPEB Obligation

Net OPEB Obligation at the of Year Net OPEB obligation - end of year

For the Year Ended

June 2011 $ 8,520,411

7,322,890

"'V''''''''''I5'"' of Expense Contributed 12.9%

(e) Funded Status

Actuarial Accrued Liability at July I, 2010 Funded OPEB Plan Assets at June 2011 Net OPEB Obligation at the End of the Year

Covered Payroll 72,379,419

UAAL as a Percentage of Covered Payroll 204.3%

(j) Trend Information

Annual NetOPEB OPEB % of Expense

Fiscal Year Ending Expense Contributed Contributed June 30, 2011 $ 15,328,789 $ 12.9% June 30, 2010 13,348,351 13.1% June 30, 2009 13,334,483 8.3%

36

(Continued)

NetOPEB

$ 50,370,087

FREEPORT UNION FREE SCHOOl. DISTRICT NOTES TO FINANCIAL STATEMENTS


(Continued)

(g) Actuarial Methods and L'1~,:!Iu'np;t£("":!I

The projected Under this memCIQ

a fraction:

calculations reflect a IOTllHcenn np"'''np,nt

short-term volatility Significant methods

Actuarial Valuation Date Actuarial Cost Method Amortization Period Amortization Period in Years Actuarial Assumptions

InvestIrent Rate ofRetum Projected Salary Increases Healthcare Inflation Rate

accrued liability and cost. etermmf:O based on the current year's benefit accrual

Oe1tenrurled based on the Present Value of by multiplying the Present Value of ~~'J,~L1'" service at retirement.

as actual results are compared to Oerletlts are based on the sut)st,mllve

and include the types of benefits in force at t'\pl'nlf'pn the District the plan to

and employ methods and assumptions that are ~~'''ISAAV~ and the actuarial value of assets.

July 1,2010 Unit Credit

30 Years Open 26

3.00% N/A

12.10% Initial 5.00% U1timate

Fiscal Year that the Rate Reaches the U1timate Trend Rate 2016

12. ruSK MANAGEMENT

The District

Unpaid claims at beginning Incurred claims and claim Claim paYIrents

Unpaid claims at year end

expenses

theft of, damage to, and risks are covered by a

J.H,-,v""VU'UVJ.H third parties. Settled claims from coverage for the past three years.

workers' COlnnens and the amount of the loss can

which were

2011

$ 3,886,180 $

1,371,509 (1,175,369)

37

2010

3,623,542 1,014,833

13. FUND BALANCES



following is the disaggregation of Sheet:

fund

Nonspendable Restricted

Workers' Compensation Unemployment Insurance Employee Benefit Accrued Liability Retirement Contribution Capital Reserve

$

General

18 694,039

14,887,870 9,767,173 2,489,354

School Lunch

Debt Service

(Continued)

governmental fund Balance

Total

$ 74,417

6,320,118 694,039

14,887,870 9,767,173 2,489,354

Debt Services - Principal & Interest Capital Projects

407,554 407,554

Assigned General Support J nstrucHon Pupil Transportation Food Service Program Designated for

Subsequent Year's Expenditures

Unassigned

89,427 163,580

703 154,063

The following is a summary of the change in General Fund .. p",1trlf'tprl

Reserve

Workers' compensation

Unemplo,yrrlent insurance

Retirement contribution

Capital

Grants

Balance

June 30, 2010

$ 6,310,454

64,776 14,850,743

7,997,180

$

Additions Reductions

The has received grants, which are subject to audit by .... F>'"""'.",,

may result in disallowances and a request for a return administration believes disallowances, if any, will be immaterial.

38

3,969,130 38,535,238

89,427 163,580

703 154,063

9,000,000 9,407,773

10,501,380 $ 58,518,808

year ended June 30, 2011:

Balance

June 2011

Such

Litigation



(Continued)

The District is involved in lawsuits arising from the nonnal conduct of its affairs. Some of these lawsuits seek damages which may be in excess of the District's insurance coverage. However, it is not possible to detennine the District's potential exposure, if any, at this time.

Operating Leases

The District leases various equipment under non-cancelable operating leases. Rental expense for the year was $279,093. The minimum remaining operating lease payments are as follows:

Fiscal Year Ending June 30,

2012 2013

2014

2015

15. SUBSEQUENT EVENTS

$

$

Amount

291,802

264,410

191,047

94,233

The District was awarded a $5 million Qualified School Construction Bond, which is interest free, by the New York State Department of Education in May 2011. The voters of Freeport passed the Bond Resolution on September 20, 2011.

39

FREEPORT UNION FREE SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL - GENERAL FUND For tbe Year Ended June 30, 2011

Original Final Budget Budget Actual

Revenues Local Sources

Real Property Taxes $ 69,075,514 $ 69,075,514 $ 69,083,765 Other Real Property Tax Items 559,000 559,000 714,055 State Tax Relief Reimbursement 9,816,298 9,816,298 9,708,319 Nonproperty Tax Items Charges for Services 670,000 670,000 613,179 Use of Money and Property 440,000 440,000 212,278 Forfeitures Sale of Property and Compensation for Loss 462,000 462,000 84,075 Miscellaneous 7\0,000 710,000 1,391,697 Interfund Revenues 109,685

State Aid 51,923,038 51,923,038 52,602,558 Federal Aid 2,470,177 2,470,177 _ _ 2,,332,323

Total Revenues 136,126,027 136,126,027 136,851,934

Otber Financing Sources Transfers from Other Funds 300,000 300,000 Appropriated Fund Balance and Reserves IQ,432,744 11,932,744

Total Revenues and Other Financing Sources ~" 1.16.85Ull ~ Ha m 111 136,851,934

Original Final Year-End Budget Budget Actual Encumbrances

Expenditures General Support

Board of Education $ 34,421 $ 34,421 $ 24,557 $ Central Administration 374,102 377,121 375,935 Finance 931,711 928,651 854,679 Staff 827,994 833,829 667,585 Central Services 8,964,141 9,787,986 8,572,858 89,427 SpeciallLems 1,291 ,424 1,702.990 -~..QlJi

Total General Support 12,823,793 13,664,998 12,180,692 ~9,427 Instruction

Instruction, Administration, and Improvement 8,861,757 8,985,744 8,831,570 3,309 Teaching - Regular School 51,830,431 51,\02,088 48,614,317 91,989 Programs for Children With Special Needs 17,318,408 17,196,254 16,891,446 3,745 Occupational Education 1,560,609 1,655,009 1,655,006 Teaching - Special School 1, 177,763 1,355,395 1,296,900 4,899 Instructional Media 2,919,988 2,540,118 2,352,398 38,407 Pupil Services 7,416,334 7,706,877 7,389,4iL 21,231

Total instruction 21,Q85,690 90,541,485 87,031,088 163,580

Pupil Transportation 8,431 ,215 8,246,215 6,662,618 703 Employee Benefits 29,518,748 29,351,206 25446040

Total Expenditures 141,859,046 141 ,803,904 13 1 ,320,438 253,710

Otber Financing Uses Transfers 10 Other Funds 4,999725 6.554,867 6,474.801

Total Expenditures and Other Financing Uses ~ 1~~m111 ~ 1~~m111 137,795.239 ~ :m21Q

Net Cbange in Fund Balance (943,305)

Fund Balance - Beginning of Year 54,856,949

Fund Balance - End of Year S H 9j3 644

Notes to Required Supplementary Information:

The School District administration prepares a proposed budget for approval by the Board of Education [or the General Fund, the only fund with a legally adopted budget.

'lbe budget is adopted annually on a basis consistent with GAAP. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year.

See Paragraph on Supplementary Infonnation Included in Auditor's Report 40

Final Budget Variance With

Actual

$ 8,251 155,055

(107,979)

(56,821) (227,722)

(377,925) 681,697 109,685 679,520

(137,854) 725,907

(300,000) (11.932.744}

~ (II ~Q~ ~~l)

Final Budget Variance With

Actual And Encumbrances

$ 9,864 1,186

73,972 166,244

1,125,701 17,912

I,J94,879

150,865 2,395,782

301,063 3

53,596 149,313 296,195

3346,817

1,582,894 3.905.166

10,229,756

fiO,Q(i6

~ 1Q..3.Q2.m

Actuarial Valuation

Date

July 1,2010 $

July 1,2009 $

'/uly 1,2008 $

FREEPORT UNION FREE SCHOOL DISTRICT SCHEDULES OF FUNDING PROGRESS OF OTHER POSTEMPLOYMENT BENEFITS

For the Year Eoded June 30, 2011

Actuarial Value 01'

.Assl!ts

(a)

Actuarial Accrue-d Unfunded

Liabi I ity-Projected Actuarial Accrued Unit Credit Liabili!:X {UAAL) Funded Ratio Covered Pa~r()11

(b) (b)-(a) (a)/(b)

$ 147,1137,842 147,837;842 0% $

$ 130,618,829 $ 130,618,829 0% $

$ 134,682,218 $ 134.682,218 0% $

See Paragraph On SupplementalY Information Included in AucUtor's Report 41

(c)

n,37Q,419

77.177,234

70,616,919

UAALas %of

Covered Pal!:oll

l(b)-(a)]/(c)

204.3%

169.2%

190.7%

FREEPORT UNION FREE SCHOOL DISTRICT SCHEDULES OF CHANGE FROM ADOPTED BUDGET to FINAL BUDGET AND

USE OF UNASSIGNED FUND BALANCE - GENERAL FUND For the Year Ended JUJle 30,2011

Change from Adopted Budget to Final Budget

Adopted Budget

Add: Prior Year's Encumbrances

Original Budget

Add: Voter Approved Appropriation of Capital Reserve

Final Budget

Next Year's Budget is a Voter Approved budget

Use of Unassigned Fund Balance

Unassigned Fund Balance - As of the Begilming of the Year

Less: Designated Fund Balance Used For Subsequent Year's Appropriations, Restated

Unassigned Fund BaJance - As ofthe BegilUling of the Year

See Paragrapb on Supplementary Information Tncluded in Auditor's Report 42

$

$

$

$

$

146,286,027

572,744

146,858,771

1,500,000

148358771

I ~2,411,~~n

22,577,905

7.250,000

15321905


SCHEDl.!LE OF PROJECT EXPENDITURES - CAPITAL PROJECTS FUND For the Year Elided JUlie 30, 2011

Fund Balance

Unallocated Prior Years 1,2&4,699 1,284,699 1,284,699 1,284.699 1.284,699 1,284.699 000/-017 H210100

High School Additions & Airs ! 2.893,885 12,893,885 12,893,525 12,893,525 360 12.069,137 824.388 12,893.525 360 0002-013 H210200

Dodd School Additions & AILS 1.277,415 l,277,415 l,277,415 1,277,415 1,118,000 159,415 L277,415 0004-012 H210300

Archer School Additions & Ahs 1,662,690 1,662.690 1,662,690 1.662,690 1,451..000 211,690 1,662.690 0006-013 H2 I 0400

Atkinson School Additions & Ails 4,201,817 4,201,817 4,202.177 4,202,177 (360) 2.828,000 lJ74.177 4.202.177 (:160) 0007-013 H210500

Bayview Additions & Ails 1,858.178 1.858.178 1.858.178 1,432,000 426,178 1,858,178 0009-010 HlI0600

Columbus Additions & Ails 688.866 688,866 688,866 688,866 516,000 172.866 688,866 (JolO-on 11210700

Giblyn Additions & Alts 995,421 995,421 995.421 995,421 752,000 24],421 995,421 0010,016 H210705

Giblyn Roof 481.875 481.875 481.875 481,875 481,875 481.875

'00/6-00/ H210800 New Vision School 15,555,090 15555,090 15.433,863 15,433,863 121.227 15,4.13.863 121,227 15,555,090

H210900 Miscellaneous 57,916 57,916 (57.916) (57,916)

0004-014 H330201 Archer Boilers 475,000 475,000 470.785 470.785 4,215 475,000 475,000 4215

0009,00J H330709 Gym Doors 40,675 40,675 40,675 40.675 40,675 40,675

0007-009 H340303 Bayview School Public Address 30.000 JO,OOO 29,179 29,179 821 JO,OOO 30,000 821

0001-018 1H40607 High School Gym Alts & Public Address 295,000 295,000 223.443 223,443 71,557 295,000 295.000 71,557

OOOI),OJ2 H340104 Columbus Roof & Brick Work 225,000 225,000 197,467 197,467 27,533 225.000 225,000 27.533

0100],006 H340009 Administration Parking lot 72,517 72,517 72.517 72,517 72.517 72.517

H34!OO9

Administrntion Parking lot Phase U 27,219 27.219 16,800 10,385 27,185 34 27,219 27.219 34

0002-014 H350106 Dodd Roof 557,043 557,043 557,043 557,043 557,043 557,043

(JOOI·OIII H350207 Higll School Tech Wiag & Sump Pump 614,730 614.7JO 5 ]3,087 513,087 lOl.643 614,730 614,730 101.643

H]50]09 Miscellaneous 204.545 204,545 135,289 135.289 69,256 204.545 204.545 69,256

()O07-010 H350405 Bayview I'Laygl'ound 5,795 5.795 5,795 5,795 0 5,795 5.795 0

000 7-fJ 16 H360103 Bayview Roof 570,045 570,045 565,446 565,446 4,599 570,045 570,045 4,599

0010-17 H360105 Giblyn Masonry 1..856 l.856 1,855 1,855 1.856 [,856

0006-015 H360202 Atkin.,on Roo f 566,172 566,172 573,445 573,445 (7,273) 566.172 566,172 (7,273)

'00/6-00] H360416 New Visions HV AC 933,177 933,177 933,176 933,176 933,177 933.177

H360510

S;.-e Parab'1'aph on Supplementary Informarion Included in Auditor's Repol1 43

FREEPORT UNION FREE SCHOOL DISTRICT SCHEDULE OF PROJECT EXPENDITURES - CAPITAL PROJECTS FUND

For Ihe Year Ended June 30, 2011

EXEenditures Methods of Financing Fund Budget Budget Prior Current Unexpended Proceeds of Balance

Project Title June 30. 20 I 0 June 30. 20 II Years Year Total Balance Oblib'lltions EXCEL local Sources Total 6/30/11 District Water Meter UPb'Tade S 17.190 $ 17.190 S 17.190 $ 17.190 $ $ 17.190 $ 17.190 $

000/-02/ H360610 District Miscellaneous 244 .024 244,024 244,024 244.024 244,024 244,024

0001-020 H360307 High School Roof & Fire Alann 571 .735 571 ,735 561 .948 561 .948 9.787 571 .735 571.735 9,787

H370000 Capital Projects 4,808 4.808 4,808 4,808 4.808 4.808

0009-015 H370104 Columbus Roof 424,798 424.798 424,795 424,795 424.798 424,798

0001-025 H370807 High School Roof 297,8 20 297,820 291 .603 291 .603 6,217 297,820 297.820 6,217

H370207 H370202 High School HY AC Repairs 83 ,505 83.505 83.505 83.505 83,505 8).505

0002-017 1070306 Dodd Plumbing Repairs 61,360 61,360 60,933 60,9)3 427 61,360 61 ,360 427

0007-019 H370403 Bayvicw Auditurium 281,315 280,890 277,689 1,575 279,264 1,626 280,890 280,890 1,626

0006-019 H370502 Atkinson Public Address 216,886 216,886 218,933 2 18,933 (2,047) 216,886 216,886 (2,047)

H370609 Atkinson Administration Sib'llS 12,276 12.276 12,274 12,274 2 12,276 12,276 2

0001-027 H370709 High School lockers & Ceilings 370,120 370,120 370,811 (693) 370,118 2 370,120 370. 120 2

H370810 District wide security

H380000 Capital Projects 08 09 367,310 4,131 2,564 2.564 1,567 4,131 4,131 1.567

0009-016 H380104 Columbus Ave Floor Tile 79,156 78,987 78,828 78,828 159 78,987 78,987 159

0010-021 H3802-05 Giblyn Wall Tile 22,500 28,629 4,618 23,628 28 ,246 383 28,629 28,629 383

007-020 H3803-03 Bayview Plumbing 22,500 121,580 18,229 77,379 95 ,608 25,972 121 ,580 121,580 25,972

006-020 H380602 Atkinson Drainage and Office Space 232.043 228 ,659 228,657 228 ,658 228.659 228,659

002-018 H380806 Dodd HY AC Upgrades 326,528 365.724 76,240 282,011 358,251 7,473 365.724 365,724 7,473

002-018 H380806 Dodd AC Heating upgrade

001-026 H380807 High School Structural Repairs

001-026 H381107 High School Gen Canst 60,000 396,770 24.000 357,236 381.236 15,534 396.770 396.770 15,534

005-005 H381209 Field House HY AC and Geu Canst 258,140 233,074 92,758 80.426 173, 184 59.890 233,074 233 ,074 59,890

001-028 H392807 High School Track and Mechanical 715.000 975,000 29,727 689,963 719,690 255.310 975.000 975 ,000 255,310

H392102 Atkinson Mechanical / Leak 260.000

H505500 Preconstruction EXCEL 2,027,178 2,027,178 1.715,822 212 ,886 1,928,708 98,470 1.420,178 607,000 2.027,178 98,470

H500009 EXCEL Contingency 496,208 496,208 9.357 346,790 356. 147 140.061 347.708 148.500 496,208 140,061

0002·015 H500106

See Paragraph on Supplementary lnfonnation Included in Auditor's Report 44

Project Title Dodd Fire Alann EXCEL

0002-015 [-1500206 Dodd Roof EXCEL

0001-023 H500207 High School Roof EXCEL

0002-015 H500306 Dodd Windows EXCEL

0001-023 H500407 High School Boiler EXCEL

0009-013 HS00504 Columbus Boiler EXCEL

0004-015 H50060 I Archer Windows EXCEL

0006-017 H500602 Atkinson Windows EXCEL

0007-D 17 H500603 Bayview Windows EXCEL

0004-015 H50070 I Archer Canst EXCEL

0006-017 H500702 Atkinson Cant EXCEL

0007-017 H500703 Bayview ConS[ EXCEL

0009-013 H500704 Columbus Canst EXCEL

0002-015 H500706 Dodd Canst EXCEL

0001-023 H500707 High School Consl EXCEL

0004-015 H50080 I Archer Emerg Lights EXCEL

0006-017 H500802 Atkinson Emerg Lights EXCEL

0007-017 H500803 Bayview Emerg Lights EXCEL

0009-013 H500804 Columbus Emcrg Lights EXCEL

00 I 0-020 H500805 Giblyn Emerg Lights EXC EL

0002-0 \ 5 H500806 Dodd Emerg Lights EXCEL

0001-023 H500807 High School Emerg Lights EXCEL

0006-017 1-[50 I 002 Atkinson Generator EXCEL

0010-020 H50 II 05 Giblyn Masonal)' EXCEL

H501209 Technology Projects EXCEL

H50lJ02 Library Automalion EXCEL

0004-015 H501901 Archer Flat Roof EXCEL

0006-017 H501902

Budget Budget June 30, 20 I 0 June 30, 20 II

fREEPORT UNION mEE SCHOOL DISTRICT SCHE.DULE Oli PROJECT EXPENDITURES - CAPITAL PROJECTS liUND

For the Ycar Ended June 30, 20 II

Prior Ycars

Expenditures Current

Year Total Unexpended Proceeds of

Balance Obligations S 153,882 $ 153,882 $ 153,882 $ 153,882 $ 107,882

566,200 566,200

1,908,898 1,908,898

245,225 245.225

696,823 696,823

254.628 254,628

667,229 667,229

1,140,649 1,140.649

265,500 265,500

200,000 200,000

1,570,423 1,570,423

112.320 112.320

964,000 964,000

248,900 248,900

1,398,284 1,398,284

45,506 45,506

93,099 93,099

52,415 52,415

59,753 59,753

41,400 41,400

40,480 40.480

83,085 8.1,085

364,998 364,998

168,500 168,500

478,856 478,856

23,034 23,034

333.960 333.960

379,815 146,650 526.465 39,735

1.96.1,132 (50,777) 1.912,355 (3.457)

244,353 872 245,225

637,635 61.755 699.390 (2,567)

252.060 (2,499) 249,561 5.067

471,409 171 ,774 64.1,183 24 ,046

1,018,882 147)86 1, 166,268 (25.619)

199,082 65 ,.108 264.390 1,l10

197,511 9.170 206.681 (6.681)

288,76.1 1.368,084 1,656,847 (86.424)

112.320 112,320

263,4.19 665,319 928,758 35,242

106,020 178,591 284,611 (35,711)

752,4.17 621,520 1,373,957 24,327

45 ,506 45,506

80,863 15,795 96.658 (3,559)

52 ,415 52.415

54.753 54,753 5,000

41,400 41.400

40,480 40,480

83,085 83,085

317,800 47,197 364,997

119,476 32,774 152,250 16,250

.129.850 191,827 521,677 (42.821)

23.034 23,0.14

282,822 2.1 ,603 306.425 27,5.15

See Paragraph on Supplementary I nformation Included in Auditor's Report 45

395,700

1,3.16,398

173,225

178,628

467,229

798 ,649

186,200

140.000

1,099,423

78 ,820

675,000

174,900

980,784

32,506

64 ,898

36,690

41 ,828

28.980

25,564

58 ,159

255 ,997

116,000

328,768

23 ,034

23.1.960

Methods of financing

EXCEL Local Sources 46,000

170.500

572,500

72,000

206.500

76.000

200.000

.142,000

79.300

60,000

471,000

3),500

289.000

74,000

417,500

13,000

28.200

15,725

17,925

12.420

14,918

24,926

109,000

52.500

150.088

100,000

Fund Balance

Total 6/30111 153,882 $

566.200 39,735

1,908,898 (.1.457)

245.225

696,823 (2,567)

254,628 5,067

667,229 24,046

1, 140,649 (25,619)

265.500 1,110

200,000 (6,681)

1.570.423 (86.424)

112,320

964,000 35.242

248,900 (35,711 )

1,]98,284 24 . .127

45.506

93,098 (3,560)

52,415

59,753 5,000

41,400

40.482 2

83 ,085

364,997

168 ,500 16,250

478,856 (42,821)

23,034

.133,960 27,535

lludgl'l Rudge"l PrOj""tThlo June JO. 20 I {) June 30. 20 II Alkin"ofl FJJI Roof EXCEL $ 43\340 S 483.340

0007·017 H50190J Hayvi~'w FilII Roof EXCEL 306.925 306.925

O{)()4..01~ 11502901' An:her SIBle Roor EXCEL 698.304 698.304

0006·017 11502902 Alkinson Sialo Roor EXCEL 803.000 RO.1.IJOO

HSlooOO Energy Perfonnancc ContnlCl 8.606,545 8,606,545

riv< Year CapilDI Plan 75.>-18

Dodd· Parkin!! Field/Sidewalks 181.236

O<ldd - Gcncrnl Repairs 10,464

Capi1al R'-'SCrvc I'rojeclS 1.500.UUD

TOlllls S 76.227.2"71 S 78.083.271

FREE ponT VNIOl\' FREE SCHOOL I)JSTRICT SCH~:DULE OF PROJECT EXPF."<OITlIltES - CAPrrAL PRO.JECTS HiM)

S

$

For Iho Voar f,ndrd June 30, 2011

r~'p:"ndilure;; Prior Cun.;onl U nex pcnded Yenn; Y(·.ar Totul !'I.hUlCC

398250 S 59.537 $ 457.787 S 25.553 S

246.4 15 2~.23'J 268.654 ~S.271

638.207 61.401 699.608 (1.304)

719.197 K1.RO.l 803.IX)fJ

8.606.545 8.606.545

60.598 bO.598 14,750

6.893 6.893 J 74.14.1

I ().463 10,463

1.500.000

6S.0D.:!71 S 6.080.870 S 74.114,141 $ ~.%".130 S

Sell Parngrnph on Supplcmonl,;lry Illfoml.uon Included i11 i\udilor's Report 46

P"",_-cd, of Ohli/iollOllS

343.340

214.925

490.304

564.000

X.MIll.5·15

56.116.545

Mcthod.~ of Fin~ncing Fund !'Iabnce

I'XC!:I LocatSoun:es Total 6/,On I S 140.000 S 483.340 S 25.553

92.000 30b.915 38.271

208.000 698.304 (UO·I)

2'9.01J0 803.000

8.606.545

75.348 75 ... 148 14,750

181.236 181.2~G 174.343

10A64 10,464

1.500.000 1.500.000 1.500.000

S 5.033.002 S 16.883.724 S n.os.'.:!?1 S 3.969.130

FREEPORT UNION FREE SCHOOL DISTRICT SCHEDULE OF CERTAIN REVENUES AND EXPENDITURES

COMPARED TO ST-3 DATA For the Year Ended June 30. 2011

Code $1"-3 Amount

Revenues Real Propelty Taxes A -1001 $ 69,083,765 Non-Property Taxes AT-1199 State Aid AT-3999 52 ,602,558 federal Aid AT-4999 2,332,323 Total Revenues AT-5999 136,851,934

Expendlhlres General Support AT-1999 12,180.692 Pupil Transportation AT-5599 6,662,61X Debt Service- Principal AT-9798.6 Debt Service - Interesl AT-9798.7 Total Expenditures AT-9999 137,795,239

See Paragraph on Supplementary Infonnation Included in Auditor's Report 47

Audited Amount

$ 69,083,765

52,602,558 2,332.323

136,85 I ,934

12.180,692 6,662,618

137,795.239

FREEPORT UNION FREE SCHOOL DISTRICT INVESTMENT IN CAPITAL ASSETS, NET OF RELATED DEBT

June 30, 20ll

Capital Assets, Net

Add:

Unamortized Bond Issuance Costs

Deduct: Short-Term Portion of Energy Perfornlance Contract Long-Ternl Portion of Energy Perfonnance Contract Shorl-Term Portion ofSenal Bonds Payable Long-Term Portion of Serial Bonds Payable

Less: Unspent Bond Proceeds

Lnvestment in Capital Assets, Net ot'Related Debt

$

$

See Paragraph on Supplementary Information Included in Auditor's Report 48

76,445.098

891.950

483,134 7,407,613 2,115,000

36,590,000 (272,525)

46,323.222

31 213 826

CULLEN & DANOWSKI, LLP o 0

CERTIFIED PUBLIC ACCOUNTANTS

VJNCENT D. CULLEN, CPA JAMES E. DANOWSKJ, CPA PETER F. RODRJGUEZ, CPA

JILL S. SANDERS, CPA DONALD J. HOFFMANN, CPA CHRISTOPHER V. RElNO, CPA

ALAN YU, CPA

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

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Education Freeport Union Free School District Freeport, New York

We have audited the financial statements of the governmental activities, each major fund and the fiduciary funds of the Freeport Union Free School District (District), as of and for the year ended June 30, 2011, which collectively comprise the District's basic financial statements and have issued our report thereon dated September 30,2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

Management of the Freeport Union Free School District is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Freeport Union Free School District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Freeport Union Free School District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Freeport Union Free School District's internal control over financial reporting.

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 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.

Our consideration of internal control over financial reporting 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 deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Freeport Union Free School District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The

49

1650 ROUTE 112, PORT J EFFERSON STATION, NEW YORK 11776-3060 o 0

Pl-:!ONE: 631-473-3400 ' FAX: 631-473-4863 ' WWvVCDLLP.NET

results of our tests disclosed no lS[i:llIlC~~S of noncompliance or other matters that are to under Government A uditing Standards.

We noted certain matters the Freeport Union

This report is intended management, others share this information parties.

reported to the Board of Education, Audit Committee and of a separate letter dated September 30, 2011.

use and information of the Board of Education, Audit Committee, within the District, and any governmental authorities you need to

to be should not be used by anyone

~ 'f ~ LI.-'f' September

50

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