new issue s&p direct deposit program: aa+ book-entry … · materiality or relative importance,...

NEW ISSUE S&P Direct Deposit Program: AA+ BOOK-ENTRY ONLY See “BOND RATING” herein BANK QUALIFIED In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), (1) the interest on the Bonds is excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Bonds is exempt from Missouri income taxation by the State of Missouri, and (3) the Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. See “TAX MATTERS” in this Official Statement.

$995,000 HALLSVILLE R-IV SCHOOL DISTRICT OF BOONE COUNTY, MISSOURI

GENERAL OBLIGATION REFUNDING BONDS (MISSOURI DIRECT DEPOSIT PROGRAM)

SERIES 2013 Dated: Date of Delivery Due: March 1, as shown on the inside cover The General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2013 (the “Bonds”) will be issued by the Hallsville R-IV School District of Boone County, Missouri (the “District”) for the purpose of providing funds to advance refund a portion of the District’s outstanding general obligation bonds, as further described herein under the section captioned “PLAN OF FINANCING – Refunding of the Refunded Bonds.” Principal on the Bonds will be payable annually as set forth on the inside cover of this Official Statement. Interest on the Bonds is payable semiannually on each March 1 and September 1, commencing on September 1, 2013, by check or draft mailed (or by wire transfer in certain circumstances as described herein) to the persons who are the registered owners of the Bonds as of the close of business on the 15th day of the month preceding the applicable interest payment date. The Bonds are not subject to optional redemption prior to maturity.

THE BONDS AND INTEREST THEREON WILL CONSTITUTE GENERAL OBLIGATIONS OF

THE DISTRICT, PAYABLE FROM AD VALOREM TAXES WHICH MAY BE LEVIED WITHOUT LIMITATION AS TO RATE OR AMOUNT UPON ALL OF THE TAXABLE TANGIBLE PROPERTY, REAL AND PERSONAL, WITHIN THE TERRITORIAL LIMITS OF THE DISTRICT.

See inside cover for maturities, principal amounts, interest rates, prices and CUSIP numbers.

The Bonds are offered when, as and if issued by the District and accepted by the Underwriter, subject to

the approval of validity by Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel. Bond Counsel will also pass on certain matters relating to this Official Statement. It is expected that the Bonds will be available for delivery through the facilities of The Depository Trust Company in New York, New York on or about February 26, 2013.

The date of this Official Statement is February 13, 2013.



SERIES 2013

MATURITY SCHEDULE

Base CUSIP: 098860

Due (March 1)

Principal Amount

Interest

Rate

Price

CUSIP

2015 $125,000 2.50% 104.105% FJ3 2016 175,000 2.50 105.666 FK0 2017 200,000 2.50 106.906 FL8 2018 235,000 2.50 107.826 FM6 2019 260,000 2.50 108.125 FN4

HALLSVILLE R-IV SCHOOL DISTRICT OF BOONE COUNTY, MISSOURI

BOARD OF EDUCATION

Ms. Susan Daly, President and Member Mr. John Cathey, Vice President and Member

Mr. Greg Cotton, Treasurer and Member Mr. Jon Bequette, Member

Mr. Scott Drummond, Member Mr. Steve Koirtyohann, Member

Mr. Joe Rowland, Member

DISTRICT ADMINISTRATION

Mr. John Robertson, Superintendent

UNDERWRITER

Stifel, Nicolaus & Company, Incorporated St. Louis, Missouri

BOND COUNSEL

Gilmore & Bell, P.C. St. Louis, Missouri

REGARDING USE OF THIS OFFICIAL STATEMENT

____________________________ THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. The information set forth herein has been obtained from the District and other sources which are deemed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the District. 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, salesperson or any other person has been authorized by the District to give any information or make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds, and if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor the sale of any of the Bonds hereunder shall under any circumstances create any implication that there has been no change in the affairs of the District or the other matters described herein since the date hereof. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

(i)

TABLE OF CONTENTS Page INTRODUCTION .............................................................................................................................................. 1

General ........................................................................................................................................................... 1 Purpose of the Bonds ..................................................................................................................................... 1 Security for the Bonds.................................................................................................................................... 1 Continuing Disclosure.................................................................................................................................... 2

THE BONDS ....................................................................................................................................................... 2 General ........................................................................................................................................................... 2 Book-Entry Only System ............................................................................................................................... 2 Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System ............ 4 No Redemption .............................................................................................................................................. 5

SECURITY FOR THE BONDS ........................................................................................................................ 5 General ........................................................................................................................................................... 5 Direct Deposit of State Aid Payments ........................................................................................................... 5

PLAN OF FINANCING ..................................................................................................................................... 6 Refunding of the Refunded Bonds ................................................................................................................. 6 Sources and Uses of Funds ............................................................................................................................ 7

VERIFICATION OF MATHEMATICAL COMPUTATIONS ..................................................................... 7 THE DISTRICT .................................................................................................................................................. 7 LEGAL MATTERS ............................................................................................................................................ 7 BOND RATING .................................................................................................................................................. 8 TAX MATTERS ................................................................................................................................................. 8

Opinion of Bond Counsel .............................................................................................................................. 8 Other Tax Consequences ............................................................................................................................... 9

CONTINUING DISCLOSURE UNDERTAKING ........................................................................................ 10 Annual Reports ............................................................................................................................................ 10 Notices of Material Events ........................................................................................................................... 10 Dissemination Agent .................................................................................................................................... 11 Amendments to Continuing Disclosure Undertaking .................................................................................. 11 Remedies ...................................................................................................................................................... 11

ABSENCE OF LITIGATION ......................................................................................................................... 12 UNDERWRITING............................................................................................................................................ 12 CERTAIN RELATIONSHIPS ........................................................................................................................ 12 MISCELLANEOUS ......................................................................................................................................... 13 APPENDIX A - INFORMATION REGARDING THE DISTRICT APPENDIX B - AUDITED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT

OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2012

___________________________

THIS PAGE INTENTIONALLY

LEFT BLANK

___________________________

OFFICIAL STATEMENT



SERIES 2013

INTRODUCTION The following introductory information is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the appendices hereto, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the cover page and appendices hereto, should be considered in its entirety. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. General This Official Statement, including the cover page and appendices hereto, is furnished to prospective purchasers in connection with the offering and sale of $995,000 aggregate principal amount of General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2013 (the “Bonds”) by the Hallsville R-IV School District of Boone County, Missouri (the “District”). The issuance and sale of the Bonds is authorized by a resolution of the Board of Education of the District adopted on February 13, 2013 (the “Resolution”). All capitalized terms used herein and not otherwise defined herein have the meanings assigned to those terms in the Resolution. Purpose of the Bonds The Bonds are being issued for the purpose of providing funds to (1) refund the District’s outstanding General Obligation Bonds (Missouri Direct Deposit Program), Series 2006A maturing on March 1, 2015 and thereafter, in the aggregate principal amount of $990,000 (the “Refunded Bonds”), and (2) pay the costs of issuing the Bonds. See the section herein captioned “PLAN OF FINANCING.” Security for the Bonds General. The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes, which may be levied without limitation as to rate or amount upon all of the taxable tangible property, real and personal, within the territorial limits of the District. See the section herein captioned “SECURITY FOR THE BONDS — General.” Direct Deposit Agreement. Pursuant to a Direct Deposit Agreement among the Office of the Treasurer of the State of Missouri, the Department of Elementary and Secondary Education of the State of Missouri, the Health and Educational Facilities Authority of the State of Missouri, Wells Fargo Bank, N.A. and the District, the District will agree that a portion of its State Aid payments will be transferred to Wells Fargo Bank, N.A., as Direct Deposit Trustee, in order to pay the debt service on the Bonds. See the section herein captioned “SECURITY FOR THE BONDS — Direct Deposit of State Aid Payments.”

-2-

Continuing Disclosure The District has agreed in an Omnibus Continuing Disclosure Undertaking dated as of February 1, 2013 (the “Continuing Disclosure Undertaking”) to provide certain financial information and operating data relating to the District and to provide notices of the occurrence of certain enumerated material events relating to the Bonds. The financial information, operating data and notice of events will be filed by the District in compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. See the section herein captioned “CONTINUING DISCLOSURE UNDERTAKING.”

THE BONDS General The Bonds are being issued in the aggregate principal amount of $995,000. The Bonds are dated as of the date of original delivery of and payment for such Bonds and the principal is payable on March 1 in the years and in the principal amounts set forth on the inside cover page hereof. Interest on the Bonds is calculated at the rates per annum set forth on the inside cover page, computed on the basis of a 360-day year of twelve 30-day months. The Bonds shall consist of fully-registered bonds in denominations of $5,000 or any integral multiple thereof. Interest on the Bonds is payable from the date thereof or the most recent date to which said interest has been paid and is payable semiannually on March 1 and September 1 in each year, beginning September 1, 2013. Payment of the interest on the Bonds will be made to the person in whose name such Bond is registered on the registration books (the “Bond Register”) at the close of business on the 15th day (whether or not a Business Day) of the calendar month next preceding an interest payment date (the “Record Date”). Interest on the Bonds will be paid to the Registered Owners thereof by check or draft mailed by UMB Bank, N.A. (the “Paying Agent”) to each Owner at the address shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner, or by electronic transfer to such Registered Owner upon written notice signed by such Registered Owner and given to the Paying Agent not less than 15 days prior to the Record Date for such interest payment, containing the electronic transfer instructions including the name and address of the bank (which shall be in the continental United States), the ABA routing number and the account number to which such Owner wishes to have such transfer directed and an acknowledgement that an electronic transfer fee is payable. Principal of the Bonds will be paid by check or draft to the Registered Owner of such Bond at the maturity of such Bond or otherwise, upon presentation and surrender of such Bond at the payment office of the Paying Agent in Kansas City, Missouri or at such other payment office as designated by the Paying Agent. Book-Entry Only System General. The Bonds are available in book-entry only form. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Ownership interests in the Bonds will be available to purchasers only through a book-entry system (the “Book-Entry System”) maintained by The Depository Trust Company (“DTC”), New York, New York. The following information concerning DTC and DTC’s book-entry system has been obtained from DTC. The District takes no responsibility for the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time.

-3-

DTC will act as securities depository for 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, each in the aggregate principal amount of such maturity and will be deposited with DTC. DTC and its Participants. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Ownership Interests. Purchases of 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 the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. Transfers. 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. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the

-4-

transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal and Interest. Payment of principal of and interest 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 the District or the Paying Agent, on the payment 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 Paying Agent or District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Direct Participants holding a majority position in the Bonds may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, registered in the name of DTC’s partnership nominee, Cede & Co. (or such other name as may be requested by an authorized representative of DTC), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described herein under the caption “Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book Entry Only System.” Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System The Paying Agent will keep or cause to be kept the Bond Register at its principal payment office or such other office designated by the Paying Agent. Upon surrender of any Bond to the Paying Agent, the Paying Agent shall transfer or exchange Bonds as provided in the Resolution. Any Bond may be transferred upon the Bond Register by the person in whose name it is registered and shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Registered Owner thereof or by the Registered Owner’s duly authorized agent. The Owner requesting such transfer or exchange will be required to pay any additional costs or fees that might be incurred in the secondary market with respect to such exchange. In the event any Registered Owner fails to provide a correct taxpayer identification number

-5-

to the Paying Agent, the Paying Agent may make a charge against such Registered Owner sufficient to pay any governmental charge required to be paid as a result of such failure. No Redemption The Bonds are not subject to optional redemption prior to maturity.

SECURITY FOR THE BONDS General Pledge of Full Faith and Credit. The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes, which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the District. Levy and Collection of Annual Tax. Under the Resolution, there is levied upon all of the taxable tangible property within the District a direct annual tax sufficient to produce the amounts necessary for the payment of the principal of and interest on the Bonds as the same become due and payable in each year. Such taxes shall be extended upon the tax rolls in each year, and shall be levied and collected at the same time and in the same manner as the other ad valorem taxes of the District are levied and collected. Except as otherwise provided under the heading “SECURITY FOR THE BONDS – Direct Deposit of State Aid Payments,” the proceeds derived from said taxes shall be deposited in the Debt Service Fund, shall be kept separate and apart from all other funds of the District, and shall be used solely for the payment of the principal of and interest on the Bonds as and when the same become due, taking into account scheduled mandatory redemptions, if any, and the fees and expenses of the Paying Agent. Direct Deposit of State Aid Payments Pursuant to Section 360.111 et seq. of the Revised Statutes of Missouri, as amended, and related statutes (the “Deposit Law”), the State of Missouri (the “State”) and the District may agree to transfer to Wells Fargo Bank, N.A., as direct deposit trustee (the “Deposit Trustee”), a portion of the District’s State aid payments and distributions normally used for operational purposes (“State Aid”) in order to provide for payment of debt service on the Bonds. On the date of issuance of the Bonds, the District will enter into a Direct Deposit Agreement (the “Deposit Agreement”) with the Office of the Treasurer of the State of Missouri (“Treasurer’s Office”), the Department of Elementary and Secondary Education of the State of Missouri (“DESE”), the Health and Educational Facilities Authority of the State of Missouri and the Deposit Trustee. The Deposit Agreement will provide for payment of one-ninth (1/9) of the debt service on the Bonds to be paid on September 1, 2013 and March 1, 2014 in each of the nine (9) months of April 2013 through December 2013 and one-tenth (1/10) of the annual debt service on the Bonds in the next bond year to be paid in each of the ten (10) months of March 2014 through December 2014 and each succeeding ten (10) similar months (i.e., March through December) for each bond year after the Bonds are issued as long as the Bonds are outstanding. Amounts of State Aid to the District in excess of the one-tenth (1/10) monthly deposit will not be deposited with the Deposit Trustee but will be transferred directly to the District as has historically been the case with all State Aid. Each month, pursuant to the terms of the Deposit Agreement, DESE will advise the Treasurer’s Office of the amount of the District’s State Aid to be deposited with the Deposit Trustee for the purpose of paying the Bonds, as specified in the Deposit Agreement. If there is a shortfall in a monthly payment, it is to be made up in the succeeding monthly payment of State Aid. Following receipt of the deposits, the Deposit Trustee will invest the amounts for the benefit of the District. The Deposit Trustee will transfer to the Paying Agent the

-6-

amount necessary for payment of debt service on the Bonds not later than the day prior to each payment date with respect to the Bonds. The District remains obligated to provide funds to the Paying Agent for debt service on the Bonds if the amounts of State Aid transferred are not sufficient to pay the Bonds when due. Nothing in the Deposit Law or the Deposit Agreement relieves the District of its obligation to make payments of principal and interest on the Bonds, or to impose any debt service levy sufficient to retire the Bonds. Moneys of the District which would otherwise be used to pay the Bonds on each payment date may be transferred to the District’s operational funds to replace State Aid funds used to pay the Bonds. The State has not committed pursuant to the Deposit Law, the Deposit Agreement or otherwise to maintain any particular level of State Aid on behalf of the District, and the State is not obligated in any manner, contractually or morally, to make payments of debt service on the Bonds, other than its obligation to make transfers to the Deposit Trustee as described above. No assurance can be made that the amount of annual State Aid to the District will not in the future drop below that of the annual debt service requirements on the Bonds.

PLAN OF FINANCING

Refunding of the Refunded Bonds

The proceeds of the Bonds will be used for the purposes of advance refunding and redeeming the Refunded Bonds on March 1, 2014 at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the date of redemption.

The District will enter into an Escrow Trust Agreement dated as of February 1, 2013 (the “Escrow Trust Agreement”), with UMB Bank, N.A., St. Louis, Missouri, as escrow agent (the “Escrow Agent”). Pursuant to the Escrow Trust Agreement, the District will transfer a portion of the proceeds of the Bonds to the Escrow Agent for deposit in the Escrow Fund (the “Escrow Fund”) established under the Escrow Trust Agreement to purchase direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (the “Escrowed Securities”). The Escrowed Securities will mature in such amounts and at such times as shall be sufficient, together with interest to accrue thereon and any cash deposit to the Escrow Fund, to redeem and pay the principal of and interest on the Refunded Bonds as the same become due and payable.

Robert Thomas CPA, LLC, Shawnee Mission, Kansas (the “Escrow Verifier”), a firm of independent

certified public accountants, will provide a report to the effect that the principal of and interest income on the Escrowed Securities, together with any cash deposit in the Escrow Fund, will provide sufficient moneys to make the required payments in accordance with the District’s refunding plan as set forth herein. See the section herein captioned “VERIFICATION OF MATHEMATICAL COMPUTATIONS.”

After the issuance of the Bonds and the deposit of the proceeds thereof with the Escrow Agent, the

principal of and interest on the Refunded Bonds will be payable from the maturing principal of the Escrowed Securities and other funds on deposit in the Escrow Fund. The Escrow Trust Agreement provides that the Escrowed Securities are irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds and may be applied only to such payment.

[Remainder of Page Intentionally Left Blank.]

-7-

Sources and Uses of Funds

The estimated sources and uses of the proceeds of the Bonds are as follows:

Sources of Funds: Par Amount of Bonds $ 995,000.00 Plus: Original Issue Premium 68,374.85 Plus: District’s Contribution 19,800.00 Total $1,083,174.85

Uses of Funds: Deposit to Escrow Fund $1,047,865.00 Costs of Issuance (including Underwriter’s Discount) 35,309.85 Total $1,083,174.85

VERIFICATION OF MATHEMATICAL COMPUTATIONS Upon delivery of the Bonds, the Escrow Verifier will deliver to the District and the Underwriter (defined herein) a report indicating that such firm has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the Underwriter and the District and its representatives. Included in the scope of its examination will be a verification of the mathematical accuracy of (a) the adequacy of the maturing principal amount of the Escrowed Securities held in the Escrow Fund, interest earned thereon and certain uninvested cash to redeem and pay the principal of, redemption premium, if any, and interest on the Refunded Bonds as the same become due and payable (as described under the caption “PLAN OF FINANCING – Refunding of the Refunded Bonds”), and (b) the mathematical computations supporting the conclusion that the Bonds are not “arbitrage bonds” under Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”). Such verification of the accuracy of the computations will be based upon information supplied by the Underwriter and on interpretations of the Code provided by Bond Counsel.

THE DISTRICT

The District is located in the central portion of Missouri, approximately 10 miles north of Columbia, Missouri. The District covers approximately 80 square miles with its administrative office located in Hallsville, Missouri, which is located in Boone County. See APPENDIX A – INFORMATION REGARDING THE DISTRICT for further information regarding the District.

LEGAL MATTERS Legal matters with respect to the authorization, execution and delivery of the Bonds are subject to the approval of Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel, whose approving opinion will be available at the time of delivery of the Bonds. Gilmore & Bell, P.C. will also pass upon certain legal matters relating to this Official Statement. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transactions opined upon, or of the future performance of parties to such

-8-

transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

BOND RATING

Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) has assigned a

municipal bond rating of “AA+” to the Bonds based upon the District’s participation in the Missouri Direct Deposit Program.

Such rating reflects only the views of S&P, and an explanation of the significance of such rating may only be obtained therefrom. There is no assurance that the rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, by S&P if, in its judgment, circumstances warrant. The Underwriter has not undertaken any responsibility to bring to the attention of the holders of the Bonds any proposed revision or withdrawal of the rating of the Bonds or to oppose any such proposed revision or withdrawal. Pursuant to the Continuing Disclosure Undertaking, the District is required to bring to the attention of the holders of the Bonds any change to the rating of the Bonds but has not undertaken any responsibility to oppose any such change. See the section herein captioned “CONTINUING DISCLOSURE UNDERTAKING.” Any revision or withdrawal of the rating could have an adverse effect on the market price and marketability of the Bonds.

TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of holding and disposing of the Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Bonds as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Missouri, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Bonds. Opinion of Bond Counsel In the opinion of Gilmore & Bell, P.C., Bond Counsel, under the law existing as of the issue date of the Bonds: Federal and Missouri Tax Exemption. The interest on the Bonds is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri. Alternative Minimum Tax. Interest on the Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Bank Qualification. The Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code.

-9-

Bond counsel’s opinions are provided as of the date of the original issue of the Bonds, subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal and Missouri income tax purposes retroactive to the date of issuance of the Bonds. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Bonds but has reviewed the discussion under the heading “TAX MATTERS.” Other Tax Consequences Original Issue Premium. If a Bond is issued at a price that exceeds the stated redemption price at maturity of the Bond, the excess of the purchase price over the stated redemption price at maturity constitutes “premium” on that Bond. Under Section 171 of the Code, the purchaser of that Bond must amortize the premium over the term of the Bond using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the owner’s basis in the Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to the owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Bond prior to its maturity. Even though the owner’s basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium.

Sale, Exchange or Retirement of Bonds. Upon the sale, exchange or retirement (including

redemption) of a Bond, an owner of the Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Bond (other than in respect of accrued and unpaid interest) and such owner’s adjusted tax basis in the Bond. To the extent a Bond is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Bond has been held for more than 12 months at the time of sale, exchange or retirement.

Reporting Requirements. In general, information reporting requirements will apply to certain

payments of principal, interest and premium paid on the Bonds, and to the proceeds paid on the sale of the Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner’s federal income tax liability.

Collateral Federal Income Tax Consequences. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Bonds, including the possible application of state, local, foreign and other tax laws.

-10-

CONTINUING DISCLOSURE UNDERTAKING

The District will enter into an Omnibus Continuing Disclosure Undertaking for the benefit of the owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”). The District is the only “obligated person” with responsibility for continuing disclosure.

The District made similar undertakings to file annual financial information with respect to its outstanding general obligation bonds issued by the District in 2010 and 2012 (the “Existing Bonds”). The Omnibus Continuing Disclosure Undertaking is being entered into by the District to consolidate the continuing disclosure obligations of the District with respect to the Existing Bonds and the Bonds to enhance efficiency of the administration of those obligations and to promote timely secondary market disclosure by the District. Annual Reports Pursuant to the Continuing Disclosure Undertaking, the District will, not later than 180 days after the end of the District’s fiscal year, commencing with the year ending June 30, 2013, provide to the Municipal Securities Rulemaking Board (“MSRB”), through EMMA (described below) the following financial information and operating data (the “Annual Report”):

(1) The audited financial statements of the District for the prior fiscal year, prepared in accordance with the accounting principles described in the notes to the financial statements set forth in APPENDIX B of this Official Statement. If audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in this Official Statement and the audited financial statements shall be filed in the same manner as the Annual Report promptly after they become available.

(2) Updates as of the end of the fiscal year of the following financial information and operating

data contained in the table in APPENDIX A of this Official Statement under the following captions:

(a) PROPERTY TAX INFORMATION CONCERNING THE DISTRICT –

Property Valuations – History of Property Valuations; (b) PROPERTY TAX INFORMATION CONCERNING THE DISTRICT – Tax

Rates - History of Tax Levies; and (c) PROPERTY TAX INFORMATION CONCERNING THE DISTRICT – Tax

Collection Records. Notices of Material Events Pursuant to the Continuing Disclosure Undertaking, the District also is required to give notice to the MSRB no later than 10 business days after the occurrence of any of the following events with respect to the Bonds (“Material Events”):

(1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final

determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other

-11-

material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the District; (13) 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

(14) appointment of a successor or additional trustee or the change of name of the trustee, if material.

The District is also required to file a notice with the MSRB of any failure of the District to file an Annual Report by the deadline prescribed above. Dissemination Agent The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent will not be responsible in any manner for the content of any notice or report prepared by the District pursuant to the Continuing Disclosure Undertaking. Amendments to Continuing Disclosure Undertaking Notwithstanding any other provision of the Continuing Disclosure Undertaking, the District may amend the Continuing Disclosure Undertaking and any provision of the Continuing Disclosure Undertaking may be waived, provided Bond Counsel or other counsel experienced in federal securities law matters provides the District with its opinion that the undertaking of the District, as so amended or after giving effect to such waiver, is in compliance with the Rule and all current amendments thereto and interpretations thereof that are applicable to the Continuing Disclosure Undertaking.

Notwithstanding the preceding paragraph, in conjunction with the public offering of any series of bonds, the District and the Dissemination Agent, if any, may amend the categories of operating data to be updated on an annual basis as described above to conform to the operating data included in the final official statement for such series of bonds, in conformance with the requirements and interpretations of the Rule as of the date of such final official statement, without further amendment to the Continuing Disclosure Undertaking. Thereafter, the annual operating data to be filed by the District with the MSRB with respect to the Bonds (and all other series of bonds then subject to the Continuing Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised operating data disclosure for the new series of bonds. Remedies In the event of a failure of the District to comply with any provision of the Continuing Disclosure Undertaking, the Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under the Continuing Disclosure Undertaking. A default under the Continuing Disclosure Undertaking will not be deemed an event of default under the Resolution, and the sole

-12-

remedy under the Continuing Disclosure Undertaking in the event of any failure of the District to comply with the Continuing Disclosure Undertaking is an action to compel performance. Electronic Municipal Market Access System (EMMA) All Annual Reports and notices of Material Events required to be filed by the District under the Continuing Disclosure Undertaking must be submitted to the MSRB through the MSRB’s Electronic Municipal Market Access system (“EMMA”). EMMA is an internet-based, online portal for free investor access to municipal bond information, including offering documents, material event notices, real-time municipal securities trade prices and MSRB education resources, available at www.emma.msrb.org. Nothing contained on EMMA relating to the District, the Bonds or the Existing Bonds is incorporated by reference into this Official Statement.

ABSENCE OF LITIGATION

As of the date hereof, there is no controversy, suit or other proceeding of any kind pending or, to the District’s knowledge, threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the District or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act in connection with the authorization, issuance and sale of the Bonds, or the constitutionality or validity of the Bonds or any of the proceedings had in relation to the authorization, issuance or sale thereof, or the levy and collection of a tax to pay the principal and interest thereof, or which might affect the District’s ability to meet its obligations to pay the Bonds.

UNDERWRITING Stifel, Nicolaus & Company, Incorporated, St. Louis, Missouri (the “Underwriter”), has agreed to purchase the Bonds at a price of $1,045,874.85 (which is equal to the original principal amount of the Bonds, less an underwriting discount of $17,500.00, plus an original issue premium of $68,374.85). The Underwriter is purchasing the Bonds for resale in the normal course of the Underwriter’s business activities. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, shall determine.

CERTAIN RELATIONSHIPS

Gilmore & Bell, P.C., Bond Counsel, has represented the Underwriter and the Paying Agent in transactions unrelated to the issuance of the Bonds, but is not representing either of them in connection with the issuance of the Bonds.


-13-

MISCELLANEOUS The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is made to all such documents for full and complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the rights of the Owners thereof. During the period of the offering, copies of drafts of such documents may be examined at the offices of the Underwriter. The information contained in this Official Statement has been compiled from official and other sources that are deemed to be reliable, and while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the information presented herein since the date hereof. This Official Statement is not to be construed as a contract or agreement between the District, the Paying Agent, or the Underwriter and the purchasers or Owners of any Bonds. The District has duly authorized the delivery of this Official Statement.

HALLSVILLE R-IV SCHOOL DISTRICT OF BOONE COUNTY, MISSOURI By: /s/ Susan Daly President of the Board of Education

___________________________


LEFT BLANK

___________________________

APPENDIX A

INFORMATION REGARDING THE DISTRICT

(i)

TABLE OF CONTENTS PAGE

GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT .......................... A-1

Location and Size ..................................................................................................................................... A-1 Government and Organization ................................................................................................................. A-1 Administration ......................................................................................................................................... A-1 Professional Staff ..................................................................................................................................... A-1 Educational Facilities ............................................................................................................................... A-2 Enrollment................................................................................................................................................ A-2 School Rating and Accreditation ............................................................................................................. A-2 Risk Management .................................................................................................................................... A-3 Employee Retirement and Pension Plans ................................................................................................. A-3 Employee Relations ................................................................................................................................. A-3 Employment ............................................................................................................................................. A-4 Medical Facilities ..................................................................................................................................... A-6 Higher Education ..................................................................................................................................... A-6 Population and Other Statistics ................................................................................................................ A-6 Housing .................................................................................................................................................... A-8

DEBT STRUCTURE OF THE DISTRICT ................................................................................................ A-9 Overview .................................................................................................................................................. A-9 Long-Term General Obligation Indebtedness .......................................................................................... A-9 Debt Service Requirements .................................................................................................................... A-10 Overlapping or Underlying Indebtedness .............................................................................................. A-10 Legal Debt Capacity............................................................................................................................... A-11 History of Indebtedness ......................................................................................................................... A-11 Capital Leases ........................................................................................................................................ A-11 Future Plans ........................................................................................................................................... A-11

FINANCIAL INFORMATION CONCERNING THE DISTRICT ....................................................... A-12 Accounting, Budgeting and Auditing Procedures .................................................................................. A-12 Sources of Revenue ................................................................................................................................ A-12 Tax Limitation Provisions ...................................................................................................................... A-17 Fund Placement and Expenditure Restrictions....................................................................................... A-18 Fund Balances Summary ....................................................................................................................... A-19

PROPERTY TAX INFORMATION CONCERNING THE DISTRICT .............................................. A-20 Property Valuations................................................................................................................................ A-20 Property Tax Levies and Collections ..................................................................................................... A-21 Tax Rates ............................................................................................................................................... A-21 Tax Collection Record ........................................................................................................................... A-22 Major Property Taxpayers ..................................................................................................................... A-23

A-1

GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT Location and Size The Hallsville R-IV School District of Boone County, Missouri (the “District”) is located in the central portion of Missouri, approximately 10 miles north of Columbia, Missouri. The District covers approximately 80 square miles with its administrative office located in Hallsville, Missouri, which is located in Boone County (the “County”). The District’s estimated population is 6,312. Government and Organization The District is governed by a seven-member Board of Education (the “Board”). The members of the Board are elected by the voters of the District for three-year staggered terms with two members being elected in each of two years and three members being elected every third year. All Board members are elected at-large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and presides over the Board meetings. The Treasurer and Secretary are appointed by the Board, but are not required to be members of the Board. Ms. Judy George serves as Secretary to the Board. The current members and officers of the Board are:

Name

Office

Original Term Began

Current Term Expires

Susan Daly President and Member 2010 2013 John Cathey Vice President and Member 2009 2015 Greg Cotton Treasurer and Member 2009 2015 Jon Bequette Member 2011 2014 Scott Dummond Member 2010 2013 Steve Koirtyohann Member 2011 2014 Joe Rowland Member 2011 2014

Administration The Board appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. Upon recommendation by the Superintendent, the Board appoints additional members of the administrative staff. John Robertson was named Superintendent of Schools in 2008. Mr. Robertson previously served the District as Director of Finance and Curriculum and as a principal of the Hallsville Elementary School. Mr. Robertson has a total of 33 years of experience working in education. Mr. Robertson received a bachelor’s degree in Music Education from Central Methodist College, a master’s degree in Education from the University of Missouri and a specialist degree in Education also from the University of Missouri. Professional Staff

The District has 171 full-time employees, including 9 administrative personnel, 104 teachers, librarians and counselors and 58 support staff. Approximately 64% of the teaching staff hold advanced degrees. Approximately 61% of the staff is tenured. The current average student-classroom teacher ratio for the District is 20 to 1.

A-2

Educational Facilities The District operates the four schools listed below. The replacement cost of the physical facilities of the District as most recently determined for insurance purposes is $30,631,388.61 (buildings and contents).

Name of School

Grades Served

Hallsville Primary School Pre-K - 1 Hallsville Intermediate School 2-5 Hallsville Middle School 6-8 Hallsville High School 9-12

Enrollment Listed below are the District’s Fall enrollment figures for the school years shown below:

Grade 2008-09 2009-10 2010-11 2011-12 2012-13

PK 38 0 0 41 38 K 104 96 98 99 111 1st 104 104 95 104 108 2nd 94 105 99 99 102 3rd 97 101 112 101 98 4th 81 100 107 111 109 5th 108 87 96 106 119 6th 108 107 81 107 112 7th 100 105 95 86 111 8th 123 111 104 100 92 9th 90 127 111 101 108 10th 108 92 116 108 99 11th 106 106 87 116 107 12th 82 94 100 82 112

Total 1,343 1,335 1,301 1,361 1,426

_____________ Source: Missouri Department of Elementary and Secondary Education. School Rating and Accreditation Missouri law requires the Department of Elementary and Secondary Education (“DESE”) to regularly evaluate each public school district. DESE has assigned the District “accredited” status, the highest accreditation status given by DESE. The process of accrediting school districts is mandated by State law, and the specific responsibilities are outlined both by rules of the State Board of Education and in Section 161.092 of the Revised Statutes of Missouri, as amended. Under DESE’s current accreditation system, school districts are evaluated every five years based on DESE standards in three areas: resource standards, educational process standards and performance standards. Districts receive an evaluation judgment for each of the three sets of standards and an overall evaluation, which evaluations are in one of three categories: “accredited,” “provisionally accredited” or “unaccredited.” As of January 20, 2013, 510 (97.7%) of all school districts in the State were “accredited,” 9 (1.7%) were “provisionally accredited,” 3 (0.6%) were “unaccredited” under the Missouri School Improvement Program (“MSIP”) rating system. Annually, DESE gives special recognition to certain school districts that have demonstrated outstanding academic performance and consistent progress in the areas that are measured by the State’s school-accreditation standards. For the past two years, the District

A-3

has received the prestigious “Distinction in Performance Award” from DESE. The award is based on the same 14 academic standards used in the accreditation review process. To receive the award, a school district must meet 13 out of the 14 standards, including all of the Missouri Assessment Program based measures. Risk Management The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, business interruptions, errors and omissions, natural disasters, employee injuries and illness, and employee health and accident benefits. Commercial insurance coverage is purchased for claims arising from such matters other than employee health benefits. Settled claims have not exceeded this commercial coverage in any of the three preceding years. The District is a member of the Missouri United School Insurance Council (“MUSIC”), a protected self-insurance program of approximately 467 Missouri public school districts. The District does not pay premiums to purchase insurance policies, but pays an assessment to be a member of this self-sustaining risk sharing group. Part of the assessment is used to purchase excess insurance for the group as a whole. Employee Retirement and Pension Plans The District contributes to The Public School Retirement System of Missouri (“PSRS”). PSRS is a cost-sharing multiple-employer defined benefit pension plan. PSRS provides retirement and disability benefits to certified employees and death benefits to members and beneficiaries. Positions covered by the PSRS are not covered by social security. Benefits are set forth in Chapter 169 of the Missouri Revised Statutes. The statutes assign responsibility for the administration of the system to a seven member Board of Trustees. PSRS members are required to contribute 14.5% of their annual covered salary and the District is required to contribute a matching amount. The contribution requirements of members and the District are established and may be amended by the PSRS Board of Trustees. The District’s contributions to PSRS for the fiscal years ended June 30, 2012, 2011 and 2010 were $767,644, $734,597 and 786,403, respectively, equal to the required contributions for each year. The District also contributes to the Public Education Employee Retirement System of Missouri (“PEERS”), a mandatory cost-sharing multiple-employer defined benefit pension plan. PEERS provides retirement, disability and death benefits to employees of the District who work 20 or more hours per week and who do not contribute to the PSRS. For the fiscal year ended June 30, 2012, PEERS members were required to contribute 6.86% of their annual covered salary and the District was required to contribute a matching amount. The District’s contributions to PEERS for the fiscal years ended June 30, 2012, 2011 and 2010 were $90,417, $75,547 and $92,804, respectively, equal to the required contributions for each year. For additional information regarding PSRS and PEERS, see the notes to the District’s audited financial statements included in this Official Statement as Appendix B. Employee Relations Teaching staff is not unionized, but may join professional groups or associations. The District, pursuant to state law, conducts a meet and confer process with the representative teacher organizations. The District considers its relations with its employees to be good.

A-4

Employment Listed below are the major employers located in the area of the District and the range of employees employed by each employer:

Rank

Major Employers

Product/Service

Number of Employees

1. University of Missouri Higher Education 15,000 - 20,000 2. Boone Hospital Center Healthcare 1,000 - 2,500 3. City of Columbia Government 1,000 - 2,500 4. Columbia College Higher Education 1,000 - 2,500 5. Shelter Mutual Insurance Insurance 1,000 - 2,500 6. Truman Memorial Hospital Healthcare 1,000 - 2,500 7. State Farm Mutual Insurance Insurance 750 - 1,000 8. Hubbell Power Systems Manufacturer for Utility Companies 500 - 700 9. Kraft Foods North America Food Distributor 500 - 700 10. MBS Textbook Exchange Wholesale Textbook Distributor 500 - 700

Source: Missouri Economic Research and Information Center, Missouri Department of Economic Development. The following table sets forth unofficial employment figures for the County and, for comparative purposes, the unemployment rates for the County, the State of Missouri and the United States, for the years 2008 through 2012:

Boone County Labor Force Unemployment Rates

Year

Employed

Unemployed

Total Boone

County State of

Missouri United States

2008 83,886 3,729 87,615 4.3% 5.9% 5.8% 2009 83,047 5,694 88,741 6.4 9.4 9.3 2010 84,272 5,748 90,020 6.4 9.4 9.6 2011 86,410 5,339 91,749 5.8 8.6 8.9 2012(1) 89,063 3,926 92,989 4.2 6.4 7.4

(1) Preliminary figures as reported in November 2012. Source: U.S. Department of Labor, Bureau of Labor Statistics.


A-5

The following table represents workforce by occupation in the District, the County and the State of Missouri:

District Boone County State of Missouri Occupation Number Percent Number Percent Number Percent Management, business,

science, professional, arts and related occupations 1,094 31.9% 38,140 43.4% 945,122 34.5%

Service 512 14.9 13,777 15.7 512,995 18.7 Sales and office 776 22.7 23,684 27.0 674,356 24.6 Natural resources, construction

and maintenance occupations(1) 578 16.9 4,313 4.9 251,332 9.2

Production, transportation and material moving 465 13.6 7,897 9.0 358,252 13.1

Total 3,425 100.0% 87,811 100.0% 2,742,057 100.0% (1) Includes farming, fishing and forestry occupations. Source: For the District - ProximityOne Information Resources & Solutions based on U.S. Census Bureau 2009 American

Community Survey. For the County and the State of Missouri - U.S. Census Bureau, 2011 American Community Survey.

The following table represents employees by industry in the County and the State of Missouri:

Boone County State of Missouri Industry Number Percent Number Percent Agriculture, forestry, fishing,

hunting and mining 685 0.8% 49,508 1.8% Construction 4,230 5.0 171,856 6.2 Manufacturing 4,461 5.3 314,738 11.4 Wholesale trade 1,834 2.2 79,149 2.9 Retail trade 10,477 12.3 327,056 11.9 Transportation and warehousing

and utilities 2,423 2.9 142,771 5.2 Information 2,040 2.4 59,803 2.2 Finance, insurance, real estate,

and rental and leasing 6,276 7.4 187,912 6.8 Professional, scientific,

management, administrative and waste management services 6,299 7.4 246,099 839

Educational, health and social services 31,478 37.1 662,004 24.0

Arts, entertainment, recreation, accommodation and food services 7,859 9.3 249,278 9.1

Other services (except public administration) 3,368 4.0 132,336 4.8

Public administration 3,488 4.1 131,156 4.8 Total 84,918 100.0% 2,753,666 100.0%

Source: U.S. Census Bureau, 2008-2010 American Community Survey.

A-6

Medical Facilities The District is served by a number of medical facilities. Boone Hospital Center is a 394-bed full service hospital located in Columbia, Missouri. It is a regional referral center and provides services to people in 26 mid-Missouri counties. University of Missouri Health Care system is a comprehensive health-care network, with seven hospitals and numerous clinics. The hospitals and clinics offer primary, secondary and tertiary health-care services. Higher Education There are many institutions of higher education located in central Missouri. Columbia College, Stephens College and University of Missouri – Columbia are all located in the County. Columbia College is a private, non-profit, coeducational liberal arts and sciences college with more than 3,500 students. Stephens College is the second-oldest women’s college in the country and is the only four-year women’s institution for higher education within the State of Missouri. There are approximately 700 full-time residential students at Stephens College. The University of Missouri – Columbia is a public university with of an enrollment of approximately 33,000 students and offers more than 280 degree programs. Population and Other Statistics The following table shows population information for the District, the County and the State of Missouri:

1990 2000 2010 District 4,685 6,239 6,312 Boone County

112,379 135,454 162,642 State of Missouri 5,117,073 5,595,211 5,988,927

_______________ Source: For the District, 2010 - ProximityOne Information Resources & Solutions based on U.S. Census Bureau 2009

American Community Survey. For the County and the State of Missouri - U.S. Census Bureau. The following table shows the median age of the populations of the District, the County and the State of

Missouri:

Median Age

District 38.2 Boone County 29.6 State of Missouri 38.0

Source: For the District - ProximityOne Information Resources & Solutions based on U.S. Census Bureau 2009 American


A-7

The per capita income and median family income for the District, and for comparative purposes, the County and the State of Missouri, are:

District

Boone County

State of Missouri

Per Capita Income $26,412 $25,523 $24,634 Median Family Income 52,332 66,189 56,616


Community Survey. For the County and the State of Missouri - U.S. Census Bureau, 2011 American Community Survery.

The following table represents the distribution of household income for the District, the County and the State of Missouri:

District Boone County State of Missouri Income

Number

Percent

Number

Percent

Number

Percent

Under $10,000 48 1.8% 6,854 10.8% 195,538 8.4% $10,000 to $14,999 152 5.6 2,991 4.7 145,096 6.2 $15,000 to $24,999 239 8.8 8,294 13.1 292,448 12.5 $25,000 to $34,999 473 17.4 5,725 9.0 273,290 11.7 $35,000 to $49,999 618 22.8 9,783 15.4 363,857 15.5 $50,000 to $74,999 558 20.6 11,345 17.9 433,447 18.5 $75,000 to $99,999 242 8.9 8,392 13.2 266,329 11.4 $100,000 to $149,999 277 10.2 6,069 9.6 233,828 10.0 $150,000 or more 107 3.9 4,063 6.4 137,241 5.9 Total 2,714 100.0% 63,516 100.0% 2,341,074 100.0%




A-8

The following table sets forth per capita personal income(1) for the County and the State of Missouri for 2007 through 2011, the most recent years for which figures are available:

Boone County

State of Missouri

Year

Per Capita Personal Income

% Change

Per Capita Personal Income

% Change

2007 $34,818 N/A $35,521 N/A 2008 36,377 +4.48% 37,738 +6.24% 2009 34,942 -3.94 35,837 -5.04 2010 35,977 +2.96 36,406 +1.59 2011 37,409 +3.98 37,969 +4.29

(1) Per Capita Personal Income is the annual total Personal Income of residents divided by resident population as of July 1.

“Personal Income” is the sum of Net Earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. “Net Earnings” is earnings by place of work — the sum of wage and salary disbursements (payrolls), other labor income, and proprietors’ income — less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).

Source: U.S. Department of Commerce - Bureau of Economic Analysis. Housing The following table shows the median value of owner-occupied housing units in the District, the County and the State of Missouri:

District $129,000 Boone County 156,600 State of Missouri 138,900

_______________ Source: For the District - ProximityOne Information Resources & Solutions based on U.S. Census Bureau 2009 American Community Survey. For the County and the State of Missouri - U.S. Census Bureau, 2007-2011 American Community Survey. The following table shows the value of specified owner-occupied housing units of the District, the County and the State of Missouri:

District Boone County State of Missouri Value

Number

Percent

Number

Percent

Number

Percent

Under $50,000 216 10.3% 2,711 7.4% 182,738 11.2% $50,000 to $99,999 530 25.4 5,016 13.7 347,333 21.2 $100,000 to $149,999 567 27.1 9,385 25.5 364,808 22.3 $150,000 to $199,999 353 16.9 7,503 20.4 294,487 18.0 $200,000 to $299,999 281 13.5 7,275 19.8 259,417 15.8 $300,000 or more 142 6.8 4,848 13.2 187,922 11.5 Total 2,089 100.0% 36,738 100.0% 1,636,705 100.0%

Source: For the District - ProximityOne Information Resources & Solutions based on U.S. Census Bureau 2009 American Community Survey. For the County and the State of Missouri - U.S. Census Bureau, 2007-2011 American Community Survey.

A-9

DEBT STRUCTURE OF THE DISTRICT Overview Under Missouri law, refunding bonds and obligations payable from annual appropriations do not require voter approval. Any general obligation bonds, other than refunding bonds, require voter approval for issuance. Pursuant to the Missouri Constitution, the District is authorized to issue general obligation bonds payable from unlimited ad valorem taxes upon a two-thirds or, at elections held on general municipal election days or state primary or general election days, a four-sevenths majority vote of the qualified voters voting on the specific proposition. The following table summarizes certain financial information concerning the District. This information should be reviewed in conjunction with the information contained in this section and the financial statements of the District in Appendix B hereto. District Population: 6,312 Assessed Valuation: $72,308,887 Estimated Actual Value: $340,184,816 Outstanding Direct Debt(1): $6,384,941.95 Overlapping General Obligation Debt: $447,939 Per Capita Direct Debt(1): $1,011.56 Per Capita Direct and Overlapping General Obligation Debt(1): $1,082.52 Ratio of Direct General Obligation Debt to Assessed Valuation(1): 8.83% Ratio of Direct General Obligation Debt to Estimated Actual Value(1): 1.88% Ratio of Direct and Overlapping General Obligation Debt to Assessed Value(1): 9.45% Ratio of Direct and Overlapping General Obligation Debt to Estimated Actual Value(1): 2.01% _________________ (1) Excludes the Refunded Bonds; Includes the Bonds. Long-Term General Obligation Indebtedness The following table shows the general obligation bonded indebtedness of the District that will be outstanding after the issuance of the Bonds:

Series

Final Maturity

Currently Outstanding

General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2006

03/01/2025 $3,474,941.95

General Obligation Bonds (Missouri Direct Deposit Program), Series 2006A(1)

03/01/2014 220,000.00

General Obligation Refunding Bonds, Series 2012 (Missouri Direct Deposit Program)

03/01/2020 1,695,000.00

General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2013

03/01/2019 995,000.00

Total

$6,384,941.95

____________________ (1) Excludes the Refunded Bonds.

A-10

Debt Service Requirements The following schedule shows the yearly principal and interest requirements for all general obligation indebtedness of the District, including the Bonds:

Fiscal Year

Ended June 30

Outstanding Bonds(1)

The Bonds

Principal

Interest

Total

Total

Debt Service

2013 $ 620,795.00 $ 620,795.00 2014 723,565.00 $ 25,220.49 $ 25,220.49 748,785.49 2015 623,215.00 $125,000.00 24,875.00 149,875.00 773,090.00 2016 592,865.00 175,000.00 21,750.00 196,750.00 789,615.00 2017 596,140.00 200,000.00 17,375.00 217,375.00 813,515.00 2018 589,090.00 235,000.00 12,375.00 247,375.00 836,465.00 2019 596,300.00 260,000.00 6,500.00 266,500.00 862,800.00 2020 512,100.00 512,100.00 2021 603,600.00 603,600.00 2022 362,400.00 362,400.00 2023 360,000.00 360,000.00 2024 362,200.00 362,200.00 2025 358,800.00 358,800.00

Total $6,901,070.00 $995,000.00 $108,095.49 $1,103,095.49 $8,004,165.49

_____________

(1) Excludes the Refunded Bonds. Overlapping or Underlying Indebtedness The following table sets forth overlapping and underlying general obligation indebtedness of political subdivisions with boundaries overlapping the District or lying within the District as of February 1, 2013, and the percent attributable (on the basis of assessed valuation) to the District, based on information furnished by the jurisdictions responsible for the debt and the District has not independently verified the accuracy or completeness of such information. Furthermore, political subdivisions may have issued additional bonds since the date indicated or may have ongoing programs requiring the issuance of substantial additional bonds, the amounts of which cannot be determined at this time. Taxing Body

General Obligation Debt

Approx. Percent

Applicable

Amount of Overlapping

Debt City of Hallsville $ 375,000 100% $375,000 Boone County 2,431,000 3% 72,939 TOTAL $447,939 Source: Boone County Clerk; Missouri State Auditor’s Office, Bond Registration Reports.

A-11

Legal Debt Capacity Under Article VI, Section 26(b) of the Constitution of Missouri, the District may incur indebtedness for authorized school district purposes not to exceed 15% of the valuation of taxable tangible property in the District according to the last completed assessment upon the approval of four-sevenths of the qualified voters in the District voting on the proposition at any municipal, primary or general election or two-thirds voter approval on any other election date. The current legal debt limit of the District is approximately $10,846,333.05 (the limit would be higher if the valuation of State assessed railroad and utility property were included, as explained below). The total outstanding indebtedness of the District, including the Bonds, is $6,384,941.95, resulting in a legal debt margin of the District of approximately $4,461,391.10.

Because of the manner in which tax collections are distributed to school districts from assessments of State assessed railroad and utility property (see the caption “PROPERTY TAX INFORMATION CONCERNING THE DISTRICT–Property Valuations–Current Assessed Valuation”), the valuation of such property physically located within a school district is not normally determined unless, without the value of such property included in the calculation, the school district would exceed its legal debt limit. If the value of state assessed railroad and utility property physically located within the District were determined, the District’s legal debt limit and its legal debt margin shown in the previous paragraph would be increased by 15% of the assessed value of such State assessed railroad and utility property.

History of Indebtedness The following table sets forth debt information pertaining to the District as of the end of each of the last five fiscal years:

As of June 30

Outstanding General

Obligation Debt

Assessed

Valuation as of January 1

Debt as % of Assessed Value

2010 $7,294,942 $66,891,719 10.91% 2011 6,864,942 68,056,246 10.09 2012 6,379,942 69,831,246 9.14

The District has never defaulted on the payment of any of its debt obligations. Capital Leases The District has entered into various capital lease agreements to finance school buses and building improvements. The ending balance for capital leases for the fiscal year ended June 30, 2012 was $203,716. Future Plans The District is asking voters to approve the issuance of $2,000,000 principal amount of general obligation bonds at an election to be held in April 2013. The bonds will be used to provide funds for improving safety and security at existing facilities of the District; demolishing the original high school building used for science education due to structural concerns; constructing, equipping and furnishing of a science education addition, health and fitness classrooms at the high school and site improvements; and, to the extent funds are available, remodeling and repairing of the existing facilities of the District.

A-12

FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures The District follows a modified cash basis method of accounting in conformity with the requirements of Missouri law and DESE. Under this system, revenues are recorded when received and expenses are recorded when paid. Cash transactions have been recorded in the following funds for the accounting of all District funds:

General (Incidental) Fund Special Revenue Fund

Debt Service Fund Capital Projects Fund

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

1. In accordance with Chapter 67 of the Revised Statutes of Missouri, the District adopts a budget for each fund. 2. Prior to July, the Superintendent, who serves as the budget officer, submits to the Board a proposed budget for the fiscal year beginning on the following July 1. The proposed budget includes estimated revenues and proposed expenditures for all District funds. Budgeted expenditures cannot exceed beginning available monies plus estimated revenues for the year. 3. A public hearing is conducted to obtain taxpayer comments. Prior to approval by the Board, the budget documents are available for public inspection. 4. Prior to July 1, the budget is legally enacted by a vote of the Board. 5. Subsequent to its formal approval of the budget, the Board has the authority to make necessary adjustments to the budget by formal vote of the Board. Adjustments made during the year are reflected in the budget information included in the financial statements. Budget amounts are as originally adopted or as amended by the Board. 6. Budgets for district funds are prepared and adopted on the cash basis (budget basis), recognizing revenues when collected and expenditures when paid. Budgets lapse at year-end.

The financial records of the District are audited annually by a firm of independent certified public accountants in accordance with generally accepted accounting standards. The audit for the fiscal year ended June 30, 2012 was performed by Gerding, Korte and Chitwood, Columbia, Missouri, a copy of which is included in this Official Statement in Appendix B. A summary of significant accounting policies of the District is contained in the Notes accompanying the financial statements in Appendix B. Sources of Revenue Missouri school districts finance their operations through the local property tax levy, State sales tax, State Aid, federal grant programs and miscellaneous sources including State Aid for Transportation, State Aid for Handicapped Students, a State sales tax on cigarettes (“fair share revenues”) and a pro rata share of interest income from the counties in which each school district operates. Debt service is financed primarily through local property taxes.

A-13

The following table shows the allocation of the District’s revenue from the various sources for the fiscal year ended June 30, 2012:

Revenue Source % of Total State Revenue 50.99% Local Revenue 40.40 Federal Revenue 7.11 County Revenue 1.34 Other Revenue 0.16 Total 100.00%

____________ Source: Audited Financial Statements for Fiscal Year ended June 30, 2012. Local Revenue. The primary sources of “local revenue” are (1) taxes upon real and personal property within a school district, excluding railroad and utility property taxes, which are more fully described below under the caption “PROPERTY TAX INFORMATION,” (2) fines and forfeitures collected as a result of violations within a school district’s boundaries, (3) a school district’s allocable portion of state assessed railroad and utility property taxes collected and distributed by the county or counties in which it is located, and (4) receipts from a 1% state sales tax (commonly referred to as “Proposition C revenues”). For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of the railroad and utility property that is physically located within the boundaries of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula, based in part on total student enrollment in each district and in part on the taxes levied by each district. Proposition C revenues are generated by a 1-cent state sales tax that was approved by the voters in 1982. The sales tax proceeds are deemed to be “local” revenues for school district accounting purposes. Such revenues are distributed under the provisions of a revised State Aid formula using weighted average daily attendance (see the section below captioned “FINANCIAL INFORMATION CONCERNING THE DISTRICT – State Revenue”). The following table shows the amounts of Proposition C revenue per pupil distributed for each of the fiscal years shown below:

Fiscal Year Ended June 30

Proposition C Revenue

2008 $845.28 2009 804.07 2010 763.83 2011 777.49 2012 833.75

Source: Missouri Department of Elementary and Secondary Education. Under Proposition C, after determining its budget and the levy rate needed to produce required revenues to fund the budget, a school district must reduce the operating levy by an amount sufficient to decrease the revenues it would have received therefrom by an amount equal to approximately one-half of the estimated revenues to be received through Proposition C during the year. School districts may submit propositions to voters to forego some or all of the reduction in the operating levy that is otherwise required under the terms of Proposition C. The voters in the District have approved a full waiver of the Proposition C reduction in the operating levy.

A-14

State Revenue. The amount of State Aid for school districts in Missouri has historically been calculated using a complex formula. Senate Bill 287 passed by the Missouri General Assembly in its 2005 regular session is intended to transition the State away from a local tax rate based formula to a formula that is primarily student-needs based. The new formula is being phased in over a seven-year period that started with the 2006-07 fiscal year. During the phase-in period, State Aid for each school district will be based on a percentage of both the old local tax rate based formula (determined as a percentage of the 2005-06 State Aid Payments), and the new student-needs based formula. State Aid will be calculated using the following percentages of the old and new formulas:

Phase-In Year

Percentage of 2005-06

State Aid Payment

Percentage of SB 287

Formula

2006-07 85% 15% 2007-08 70 30 2008-09 56 44 2009-10 42 58 2010-11 28 72 2011-12 14 86 2012-13 0 100

The basic formula for State Aid has not been fully funded since the 2008-09 fiscal year. To lessen the impact of the funding shortfall, the General Assembly approved an amendment to Chapter 163 of the Revised Statutes of Missouri, which provides that in fiscal years 2010-11, 2011-12 and 2012-13, if the State’s basic formula appropriation is less than the amount needed to fully fund the phased-in formula, or the appropriation for transportation is funded at a level that provides less than 75% of the allowable transportation-related costs, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain fund placement and expenditure requirements, described below under the caption “Mandatory Deposit and Expenditures of Certain Amounts in the Teachers’ Fund.” School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. Property Tax Levy Requirements. The sum of a district’s local property tax levies in its Incidental and Teachers’ Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the 2005-06 fiscal year. Levy reductions required as a result of a “Hancock rollback” or an “SB 711 rollback” (see the caption “Tax Limitation Provisions” below) will not affect a district’s eligibility for State Aid increases. The Formula. A district’s State Aid is determined by first multiplying the district’s weighted average daily attendance (“ADA”) by the state adequacy target (discussed below). This figure may be adjusted upward by a “dollar value modifier,” which is an index of the relative purchasing power of a dollar, calculated as one plus 15% of the difference of the regional wage ratio minus one. The product of the weighted ADA multiplied by the state adequacy target is then reduced by a district’s “local effort” (discussed below) to calculate a district’s final State Aid amount. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. Students receive additional weighted treatment if, categorically, they exceed certain thresholds (based on the percentage of students in each of the categories in “Performance Districts,” as defined below). Currently, additional weight is assigned to students above the following thresholds: above 32.0% for students who qualify for free or reduced lunch, above 13.7% for students receiving special education services, and above 0.9% for students possessing limited English language proficiency. The District’s State Aid revenues would be adversely affected by decreases in its weighted ADA resulting from decreased enrollment generally and, specifically,

A-15

decreased enrollment of students eligible for free and reduced lunch, special education students, or students with limited English language proficiency. State Adequacy Target. The new State Aid formula requires DESE to calculate a “state adequacy target,” which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE’s calculation of the state adequacy target will be based upon amounts spent, excluding federal and state transportation revenues, by certain high performing districts (known as “Performance Districts”). Every two years, using the most current list of Performance Districts, DESE will recalculate the state adequacy target. The recalculation can never result in a decrease from the previous state adequacy target amount. DESE established the state adequacy target at $6,131 for fiscal year ended June 30, 2012 and $6,423 for the fiscal year ending June 30, 2013. Local Effort. For the 2006-07 fiscal year, the “local effort” figure utilized in a district’s State Aid calculation is the amount of locally generated revenue that the district would have received in the 2004-05 fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the “performance levy.” For all subsequent years, a district’s “local effort” amount will be frozen at the 2006-07 amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement, and (4) educational and screening program entitlements. Classroom Trust Fund (Gambling Revenue) Distribution. A portion of the State Aid received under the formula will be in the form of a distribution from the “Classroom Trust Fund”, a fund of the state treasury containing a portion of the State’s gambling revenues. This money is distributed to school districts on the basis of average daily attendance (versus weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and may be spent at the discretion of the local school district, except that, beginning with the 2010-11 fiscal year, all proceeds of the Classroom Trust Fund in excess of amounts received in the 2009-10 fiscal year must be placed in the Teachers’ or Incidental Funds. Mandatory Deposit and Expenditures of Certain Amounts in the Teachers’ Fund. The following state and local revenues must be deposited in the Teachers’ Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district’s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district’s boundaries. In addition to these mandatory deposits, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. School districts are further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year’s weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers’ Fund, plus the amount of any transfers from the Incidental Fund to the Teachers’ Fund that are calculated to be local and county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. Commencing with the 2006-07 fiscal year, the formula provides that certificated staff compensation now includes the costs of public school retirement and Medicare for those staff members. These items were previously paid from the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers’ Fund will result in a deduction of the amount of the expenditure shortfall from a district’s basic formula State Aid for the following year, unless the district receives an exemption from the State Board of Education. In fiscal years

A-16

2010-11, 2011-12 and 2012-13, under certain circumstances described above under “State Aid”, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain of these fund placement and expenditure requirements. School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers’ Fund. Any school district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the school district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers’ Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers’ Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds (which are repaid from a Debt Service Fund levy); (ii) revenue from the school district’s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Teachers’ and Incidental Funds; and (iv) a portion of the funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers’ and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Transfers from Incidental Fund to Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund under the following limited circumstances:

(1) The amount to be expended for transportation equipment that is considered an allowable cost under the State Board of Education rules for transportation reimbursements during the current year;

(2) Current year obligations for lease-purchase obligations entered into prior to

January 1, 1997; (3) The amount necessary to repay costs of one or more guaranteed energy savings

performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and

(4) To satisfy current year capital project expenditures, an amount not to exceed the

greater of:

a. $162,326; or b. Seven percent (7%) of the state adequacy target (currently, $6,423 for fiscal

year ending 2013) times the school district’s weighted ADA. Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school district is not using the seven percent (7%) or the $162,326 transfer (as discussed above) and is not making payments on lease purchases pursuant to Section 177.088 of the Revised Statutes of Missouri, as amended,

A-17

then the school district may transfer from the Incidental Fund to the Debt Service and/or the Capital Projects Fund the greater of:

(1) The State Aid received in the 2005-2006 school year as a result of no more than eighteen (18) cents of the sum of the debt service and capital projects levy used in the foundation formula and placed in the Capital Projects Fund or Debt Service Fund; or

(2) Five percent (5%) of the state adequacy target (currently, $6,423) times the school

district’s weighted ADA. Federal Revenue. School districts receive certain grants and other revenue from the federal government, which are usually required to be used for the specified purposes of the grant or funding program. The federal “No Child Left Behind” law requires that every public school student must score at a “proficient” level or higher in math and reading by 2014. Each state establishes its own proficiency levels. Federal sanctions for school districts that fail to meet established proficiency standards include providing parents and students from underperforming schools within a district the right to request a transfer to a school within the district that meets proficiency standards. In addition, schools that continue to fail to meet proficiency standards must, in addition to transfers and tutoring, make additional changes in staffing, curriculum and management. Federal sanctions apply only to public schools that receive Title I federal money.

In July of 2012, the State of Missouri earned a waiver from the No Child Left Behind law when the United States Department of Education approved the State’s proposed accountability system aimed at replacing the existing accountability measures of the No Child Left Behind law. Tax Limitation Provisions The operating levy of a school district (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against a school district’s assessed valuation for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment and SB 711, more fully explained below). Under Article X, Section 11(b) of the Missouri Constitution, a school district may increase its operating levy up to $2.75 per $100 assessed valuation without voter approval. Any increase above $2.75, however, must be approved by a majority of the voters voting on the proposition. Further, pursuant to Article X, Section 11(c) of the Missouri Constitution, any increase above $6.00 must be approved by two-thirds of the voters voting on the proposition. The tax levy for debt service on a school district’s general obligation bonds is exempt from these limitations upon the tax rate ceiling. Article X, Section 22(a) of the Missouri Constitution (popularly known as the “Hancock Amendment”), approved in 1980, places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of “total state revenues” to exclude voter-approved tax increases. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than the increase in the Consumer Price Index from the previous year (or 5%, if greater), the maximum authorized current levy must be reduced to yield the same gross revenue from existing property, adjusted for changes in the Consumer Price Index, as could have been collected at the existing authorized levy on the prior assessed value. This reduction is often referred to as a “Hancock rollback.” The Hancock rollback does not apply to taxes levied in the Debt Service Fund for the payment of principal and interest on general obligation bonds.

A-18

In 2008, through the enactment of Senate Bill 711 (“SB 711”), the Missouri General Assembly approved further limitations on the amount of property taxes that can be imposed by a local governmental unit. Prior to the enactment of SB 711, a Hancock rollback would not necessarily result in a reduction of a district’s actual operating tax levy if its current tax levy was less than its current tax levy ceiling, due to the district’s voluntary rollback from the maximum authorized tax levy. Under SB 711, in reassessment years (odd-numbered years), the Hancock rollback is applied to a district’s actual operating tax levy, regardless of whether that levy is at the district’s tax levy ceiling. This further reduction is sometimes referred to as an “SB 711 rollback.” In non-reassessment years (even-numbered years), the operating levy may be increased to the district’s tax levy ceiling (as adjusted by the Hancock rollback), only after a public hearing and adoption of a resolution or policy statement justifying the action. Further pursuant to SB 711, governing bodies of political subdivisions, including school districts, are required to informally project non-binding tax rate levies and provide the projected levies to the County Clerk by April 8th of each year.

Fund Placement and Expenditure Restrictions With few exceptions, revenues of school districts are required to be deposited, at the board of education’s discretion, in the Incidental or Teachers’ Funds. Money required to be deposited in the Incidental Fund includes money received from other districts for transportation and 25% of basic formula state aid, excluding state aid distributed from the Classroom Trust Fund (gaming revenues). The proceeds of property tax levies must be placed in the fund for which the levy was extended. Money donated to the school districts is to be deposited in the fund where it can be expended to meet the purpose for which it was donated and accepted. Money received from any other source may be placed to the credit of the fund or funds designated by the school board.


A-19

Fund Balances Summary The following Summary Statement of Cash Receipts, Disbursements and Changes in Fund Balances was prepared from the audited financial statements of the District prepared by its independent auditors. The information set forth below should be read in conjunction with the other financial statements and notes appertaining hereto set forth in Appendix B of this Official Statement and the financial statements on file at the District’s office.

Summary Statement of Cash Receipts, Disbursements and Changes in Fund Balances

2010 2011 2012 General (Incidental) Fund Balance--Beginning of Year $ 3,355,038 $ 2,749,591 $ 3,398,135 Revenue Collected 4,514,982 4,434,151 4,357,895 Expenditures Paid (3,923,728) (3,658,405) (3,856,880) Transfers To (From) (1,196,701) (127,202) (571,638) Balance--End of Year $ 2,749,591 $ 3,398,135 $ 3,327,512 Special Revenue Fund Balance--Beginning of Year $ 0 $ 0 $ 0 Revenue Collected 6,431,288 6,226,326 6,367,923 Expenditures Paid (6,928,522) (6,353,528) (6,406,778) Transfers To (From) 497,234 127,202 38,855 Balance--End of Year $ 0 $ 0 $ 0 Debt Service Fund Balance--Beginning of Year $ 623,532 $ 567,377 $ 622,751 Revenue Collected 683,308 735,724 849,521 Expenditures Paid (2,859,463) (680,350) (2,609,542) Transfers To (From) 2,120,000(1) 0 1,845,000(1) Balance--End of Year $ 567,377(1) $ 622,751 $ 707,730(1) Capital Projects Fund Balance--Beginning of Year $ 761,476 $ 511,876 $ 268,905 Revenue Collected 109,795 109,195 114,176 Expenditures Paid (1,059,389) (352,166) (743,919) Transfers To (From) 699,994 0 532,783 Balance--End of Year $ 511,876 $ 268,905 $ 171,945 Total Funds Balance--Beginning of Year $ 4,740,046 $ 3,828,844 $ 4,289,791 Revenue Collected 11,739,373 11,505,396 11,689,515 Expenditures Paid (14,771,102) (11,044,449) (13,617,119) Transfers To (From) 2,120,527(1) 0 1,845,000(1) Balance--End of Year $ 3,828,844(1) $ 4,289,791 $ 4,207,187

_____________________ (1) Includes sale of bonds. Source: Audited Financial Statements of the District.

A-20

PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Property Valuations Assessment Procedure. All taxable real and personal property within the District is assessed annually by the County Assessor of the County. State law requires that personal property be assessed at 33-1/3% of true value and that real property be assessed at the following percentages of true value: Residential real property ........................................................................................ 19% Agricultural and horticultural real property............................................................ 12% Utility, industrial, commercial, railroad and all other real property ....................... 32% On January 1 in every odd-numbered year, each county assessor must adjust the assessed valuation of all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission. The assessment ratio for personal property is generally 33-1/3% of true value. However, subclasses of tangible personal property are assessed at the following assessment percentages: grain and other agricultural crops in an unmanufactured condition, 0.5%; livestock, 12%; farm machinery, 12%; historic motor vehicles, 5%; and poultry, 12%. The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll to the Board of Equalization. The County Board of Equalization of the County has the authority to adjust and equalize the values of individual properties appearing on the tax rolls. Current Assessed Valuation. The following table shows the total assessed valuation and the estimated actual valuation, by category, of all taxable tangible property situated in the District, excluding State assessed railroad and utility property and amounts for tax increment financing, according to the assessment as of January 1, 2012 as finally adjusted and equalized:

Type of Property

Total Assessed Valuation

Assessment Rate

Total Estimated

Actual Valuation(1)

Real Estate Residential $48,488,861 19% $255,204,532 Agricultural 2,425,959 12 14,542,700 Commercial 4,653,664 32 20,216,325 Total Real Estate $55,568,484 $289,963,557

Personal Property $16,740,403 33 1/3 $ 50,221,259

TOTAL $72,308,887 $340,184,816 _____________________ (1)Assumes all personal property is assessed at 33 1/3%; because certain subclasses of tangible personal property are assessed at

less than 33 1/3%, the estimated actual valuation for personal property would likely be greater than that shown above. See “Assessment Procedure” discussed above.

Source: Boone County Clerk’s Office.

A-21

History of Property Valuations. The total assessed valuation of all taxable tangible property situated in the District, excluding State assessed railroad and utility property and amounts for tax increment financing, according to the assessments as of January 1 in each of the following years, has been as follows:

Year Assessed

Valuation %

Change

2008 $66,739,416 N/A 2009 66,891,719 +0.23 2010 68,056,246 +1.74 2011 69,831,246 +2.61 2012 72,308,887 +3.55

Property Tax Levies and Collections Property taxes are levied and collected for the District by the County for which the County receives a collection fee of approximately 1.5% of the gross tax collections made. The District is required by law to prepare an annual budget, which includes an estimate of the amount of revenues to be received from all sources for the budget year, including an estimate of the amount of money required to be raised from property taxes and the tax levy rates required to produce such amounts. The budget must also include proposed expenditures and must state the amount required for the payment of interest, amortization and redemption charges on the District’s debt for the ensuing budget year. Such estimates are based on the assessed valuation figures provided by the County Clerk. The District must fix its ad valorem property tax rates and certify them to the County Clerk not later than September first for entry in the tax books. The County Clerk receives the county assessment books from the respective County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified to him by the local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown in such books. The County Clerk forwards the tax books by October 31 to the respective County Collector, who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early November. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and city lots on which delinquent taxes are due are charged with a penalty of 18% of each year’s delinquency. All lands and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. The County Collector is required to make disbursements of collected taxes to the District each month. Because of the tax collection procedure described above, the District receives the bulk of its moneys from local property taxes in the months of December, January and February. Tax Rates Debt Service Levy. The District is required under Article VI, Section 26(f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board may set the tax rate for debt service, without limitation as to the rate or amount, at the level required to make such payments. Section 137.073.6(2), RSMo, provides that the amount of the debt service levy will be prima facie valid if, after making the payment for which the tax is levied, general obligation bonds remain outstanding and the amount remaining in the Debt Service Fund does not exceed the following year’s payments.

A-22

Operating Levy. The operating levy (consisting of all the taxes levied, except those allocated to the debt service fund) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the assessed valuation of the District for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment and SB 711, more fully explained above under the caption “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Tax Limitation Provisions”). The tax levy for debt service on the District’s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Under Article X, Section 11(c) of the Missouri Constitution, any increase in the District’s operating levy above $6.00 must be approved by two-thirds of the voters voting on the proposition. History of Tax Levies. The following table shows the District’s tax levies per $100 of assessed valuation for each of the following fiscal years (adjusted for Proposition C revenues):

Fiscal Year Ended

June 30

General Incidental Fund

Special Revenue Teachers’ Fund

Debt Service

Fund

Capital Projects Building Fund

Total Levy

2010 $3.0293 $0.0000 $0.8036 $0.1600 $3.9929 2011 3.0273 0.0000 1.0600 0.1600 4.2473 2012 3.0211 0.0000 1.0600 0.1600 4.2411 2013 3.0171 0.0000 1.0600 0.1600 4.2371

Tax Collection Record The following table sets forth tax collection information for the District for the last four fiscal years:

Fiscal Year

Ended June 30

Total Adjusted Levy

(per $100 of Assessed Value)

Assessed Valuation

Total Taxes Levied

Current and Delinquent

Taxes Collected(1) Amount %

2009 $3.9188 $66,739,416 $2,615,384 $2,634,499 100.73% 2010 3.9929 66,891,719 2,670,919 2,676,521 100.21 2011 4.2473 68,056,246 2,890,553 2,869,604 99.28 2012 4.2411 69,831,246 2,961,613 2,992,487 101.04

_______________

(1) Delinquent taxes are shown in the year payment is actually received, which may cause the percentage of current and delinquent taxes collected to exceed 100%.

Source: Annual Secretary of the Board Reports for fiscal years ended June 30, 2009 – 2012 for Total Adjusted Levy and Current and Delinquent Taxes Collected; Boone County Clerk for Assessed Valuation.

A-23

Major Property Taxpayers The following table sets forth the taxpayers owning property with the greatest amount of assessed valuation within the District based on the valuation of property owned as of January 1, 2012, as finally equalized. The District has not independently verified the accuracy or completeness of such information.

Taxpayer

Assessed Valuation

% of District’s

Total Assessed Valuation

1. Boone Electric Coop $1,565,120 2.16% 2. Ameren Union Electric 630,615 0.87 3. Powers Enterprises LLC 508,215 0.70 4. Townsquare Industrial LLC 235,169 0.33 5. Townsquare LLC 195,399 0.27 6. T-Vine Development Corp 191,042 0.26 7. HSM LLC 172,566 0.24 8. Martinsburg Bancorp Inc. 168,606 0.23 9. DSR Properties LLC 167,578 0.23 10. Martinsburg Bank and Trust 163,190 0.23

$3,997,500 5.53% ________________ Source: Boone County Clerk.

* * *

___________________________


LEFT BLANK

___________________________

APPENDIX B

AUDITED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT

OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2012

___________________________


LEFT BLANK

___________________________

FINANCIAL REPORT OF

HALLSVILLE R-IV SCHOOL DISTRICT

HALLSVILLE, MISSOURI

JUNE 30, 2012


Table of Contents

Independent Auditors' Report 1-2

Management's Discussion and Analysis 3-8

BASIC FINANCIAL STATEMENTS:

District-Wide Financial Statements:

Statement ofNet Assets Arising From Modified Cash Basis Transactions-Governmental Activities 9

Statement of Activities Arising From Modified Cash Basis Transactions-Governmental Activities 10

Fund Financial Statements:

Combined Statement of Assets, Liabilities and Fund BalancesArising from Cash Basis Transactions - All Governmental Fund Types 11

Combined Statement of Revenues Collected, Expenditures Paidand Changes in Fund Balances - All Governmental Fund Types 12

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

General (Incidental) Fund 13Special Revenue (Teachers) Fund 14

Notes to Financial Statements 15-30

SUPPLEMENTARY INFORMATION:

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

Debt Service Fund 31Capital Projects Fund 32

Schedule ofRevenues Collected by Source 33


Table of Contents

SUPPLEMENTARY INFORMATION (Continued):

Schedule ofExpenditures Paid by Object 34

Schedule of Selected Statistics 35-37

Schedule of Transportation Costs Eligible for State Aid 38

Schedule of Expenditures of Federal Awards 39

Notes to Schedule of Expenditures of Federal Awards .40

COMPLIANCE AND INTERNAL CONTROL:

Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit ofFinancialStatements Performed in Accordance with Government Auditing Standards 41-42

Independent Auditors' Report on Compliance with RequirementsThat Could Have a Direct and Material Effect on Each MajorProgram and on Internal Control Over Compliance inAccordance with OMB Circular A-B3 43-44

Schedule ofFindings and Questioned Costs and Summaryof Auditors' Results - Federal Requirements 45-47

Independent Accountants' Report on Management's AssertionsAbout Compliance with Specified Requirements of MissouriLaws and Regulations 48

Schedule of Findings - State Requirements .49

Schedule ofPrior Year Audit Findings 50

___________________________


LEFT BLANK

___________________________

GK&CGERDING. KORTE & CHITWOOD

Professional Corporation

Certified Public Accountants

20 South Fifth Street

Columbia, MO 65201

(573) 449-1599

Fax: (573) 443-8603

www.gkccpas.com

PARTNERS

Robert A. Gerding

Fred W. Korte, Jr.

Joseph E. Chitwood

Jaliles R. McGillllis

Travis W. Hundley

Jeffrey A. Chitwood

MEMBERS OF AMERICAN INSTITUTEOF CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

Board of EducationHallsville R-IV School DistrictHallsville, Missouri

We have audited the accompanying basic financial statements of the govermnentalactivities and each major fund of Hallsville R-IV School District, Hallsville, Missouri,(the "District") as ofand for the year ended June 30, 2012, which collectively comprisethe District's financial statements as listed in the table of contents. These financialstatements are the responsibility of the Hallsville R-IV School District's management.Our responsibility is to express opinions on these financial statements based on ouraudit.

We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the UnitedStates. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free ofmaterial misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinions.

As described in Note 1 to the basic financial statements, the District's policy is toprepare its financial statements on the modified cash basis ofaccounting. Consequently,revenue and the related assets are recognized when received rather than when eamed andexpenditures are recognized when paid rather than when an obligation is incurred. Themodified cash basis of accounting is a comprehensive basis of accounting other thanaccounting principles generally accepted in the United States of America.

In our opinion, the basic financial statements refelTed to above present fairly, in allmaterial respects, the financial position (modified cash basis) of the governmentalactivities and each major fund ofHallsville R-IV School District, Hallsville, Missouri, atJune 30,2012, and the respective changes in financial position (modified cash basis) andthe respective budgetary comparisons for the general fund and teachers fund for the yearthen ended in conformity with the basis of accounting described in Note 1.

1

In accordance with Government Auditing Standards, we have also issued a report dated October 30,2012 on our consideration of the Hallsville R-IV School District's internal control over financialreporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grantagreements and other matters. The purpose of ~hat report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on the internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards and should beconsidered in assessing the results of our audit.

Accounting principles generally accepted in the United States ofAmerica require that the management'sdiscussion and analysis on pages 3 through 8 be presented to supplement the basic financial statements.Such information, although not a part ofthe basic financial statements, is required by the GovernmentalAccounting Standards Board, who considers it to be an essential part of financial reporting for placingthe basic financial statements in an appropriate operational, economic, or historical context. We haveapplied certain limited procedures to the required supplementary information in accordance withauditing standards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with management's responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit ofthe basic financial statements. We do not express an opinionor provide any assurance on the information because the limited procedures do not provide us withsufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the Hallsville R-IV School District's basic financial statements as a whole. Theaccompanying supplementary information (pages 31-38), are presented for purposes of additionalanalysis and are not a required part of the financial statements. The accompanying schedule ofexpenditures offederal awards (pages 39-40) is presented for purposes ofadditional analysis as requiredby U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, andNon-Profit Organizations, and is also not a required part ofthe financial statements. The supplementaryinformation and the schedule of expenditures of federal awards are the responsibility of managementand were derived from and relate directly to the underlying accounting and other records used to preparethe financial statements. The information has been subjected to the auditing procedures applied in theaudit of the financial statements and certain additional procedures, including comparing and reconcilingsuch information directly to the underlying accounting and other records used to prepare the financialstatements or to the financial statements themselves, and other additional procedures in accordance withauditing standards generally accepted in the United States ofAmerica. In our opinion, the information isfairly stated in all material respects in relation to the basic financial statements taken as a whole.

October 30, 2012

2

1d~~~=o!CW;;,JCertified Public Accountants

Hallsville R-IV School District'~ Vision ofExcellence Through Success"

Hallsville Central Office421 East Highway 124Hallsville, Missouri 65255

Phone: (573) 696-5512Fax: (573) 696-3606

MANAGEMENT'S DISCUSSION AND ANALYSIS(Unaudited)

The discussion and analysis of the Hallsville R-IV School District's (the District) financialperformance provides an overview of the District's financial activity for the fiscal year endingJune 30, 2012. Please read it in conjunction with the District's financial statements, notes to thefinancial statements, and other supplemental information, which immediately follow this section.

Financial Highlights

• The cash balances of the District's governmental funds decreased by $108,615 to$4,207,186 during the 2012 fiscal year.

• The debt service fund balance increased by $84,979 to $707,730. This balance issufficient to pay 94.2% of the District's general obligation debt service requirement for2013.

• Total revenues of the governmental funds were $11,689,515 or an increase of 1.6%compared to prior year total revenue. State revenues increased by $636,566 or 12%. Thiswas offset by a decrease of federal funds of $631,503 or -43%. The decrease in federalfunds was due to a loss of ARRA funding and a decrease in overall federal funding inmost programs.

• Expenses for the "operating funds" (general and teachers funds) increased $251,725 or2.5%, over prior year levels and were in-line with the District's budget. After a few yearsof frozen salaries, the district was able to reinstate the salary schedules and provideincreases for all employees. Salary increases totaled $133,998 or 53% of our increasedexpenses. Other areas in operations with increased expenditures included non-teacherretirement, property services and property insurance.

• Outlays for new capital assets were $694,737 during the year. The school district enteredinto a lease purchase for 5 new school buses in July 2011 with principal balance of$292,705. We made an initial down payment of $61,402. The district had a CD that camedue in September for $240,000 and the board decided to go ahead and payoff the lease

John M. RobertsonSuperintendent

Robert PlourdeHigh School Principal

Clinton Hague Stacy Fick Karen JimersonMiddle School Principal Intermediate Principal Primmy Principal

Emily SchmidtSpecial Programs Director

David J. DownsDirector ofCurriculum & Instruction

George RudisaileOperations Director

Brad BlakemoreActivities Director

BOARD OF EDUCATION

Susan Daly, President • John Boo Cathey, Vice President • Judy George, Secretary • Greg Cotton, TreasurerJon Bequette, Member. Joe Rowland, Member • Scott Drummond, Member • Steve Koirtyohann, Member

on the new buses rather than reinvest the CD at the market's poor interest rates. Othercapital expenditures included purchasing a new dishwasher in the secondary kitchen for$11,137. Other expenses included improvements to our main campus parking lots.

Overview of the Financial Statements

The annual financial report consists of three parts:

• Management's discussion and analysis (this section),

• Basic financial statements (District-wide and fund financial statements), including notesto the financial statements, and

• Supplemental information.

The basic financial statements consist of two different types of statements that present differentviews of the District's financial activities.

• The District-wide Financial Statements provide information about the District's overallfinancial status. The District-wide statements include the Statement of Net Assets andStatement ofActivities.

• The Fund Financial Statements focus on individual funds of the District, reporting theDistrict's operations in more detail than the District-wide statements. These financialstatements report the fund balances, revenues and expenses of each fund. Additionally,the budget is compared to actual operating results for each of the District's major funds.

The financial statements also include notes that explain some of the information in the statementsand provide more detailed data. The statements are followed by a section of supplementaryinformation that further explains and supports the financial statements.

District-wide financial statements

The District-wide statements report information about the District as a whole using accountingmethods similar to those used by private-sector companies. The two District-wide statementsreport the District's net assets and how they have changed. "Net assets" (the difference betweenthe District's assets and liabilities) is one way to measure the District's financial health orposition.

• In the District-wide financial statements, the District's activities are categorized as"governmental activities". All of the District's basic services are included here, such asregular and special education, transportation, food service, and administration. Propertytaxes and State aid finance most ofthese activities.

4

Fund Financial Statements

The fund financial statements provide more detailed information about the District's fundsindividually. In the funds, capital asset acquisitions and debt payments are treated asexpenditures. Funds are accounting devices the District uses to keep track of specific sources offunding and spending on particular programs. All funds are required by state law and by bondcovenants. The District maintains one type of fund:

• Governmental funds: All of the District's basic services are included in governmentalfunds, which generally focus on (l) how cash and other financial assets that can readilybe converted to cash flow in and out and (2) the balances left at year-end that areavailable for spending. Consequently, the governmental funds statements provide adetailed short-term view that helps you determine whether there are more or fewerfinancial resources that can be spent in the near future to finance the District's programs.Because this information does not encompass the additional long-term focus of theDistrict-wide statements, additional information at the bottom of the governmental fundsstatements explains the relationship (or differences) between them.

Financial Analysis of the District as a Whole

The net assets of the District are summarized as follows:

Assets:Cash and investmentsCapital assets, net of depreciation

Total assets

Current & Long-term debtTotal Net Assets

June 30,2012

$ 4,223,850---H.567,799

18,791,649

(6.600.321)$ 12.191.328

June 30, 2011

$ 4,315,80114.517.19318,832,994

<7218.346)$ 11.614,648

The District's total net assets were $12,191,328 as of June 30, 2012. Ofthis amount, $4,207,187was unrestricted.

The District's net asset position related to capital assets increased by $659,284. This amountreflects the cost of new capital assets, less depreciation and less the amount of the District'slong-term debt. The funding for this increase in capital assets was provided by fund balancereserves spent during the year ended June 30, 2012.

Total net assets increased by $576,680 for the year ended June 30, 2012, representing an increaseof approximately 5.0% compared to the prior year. The increase in net assets relates to adecrease in current and long-term debt. As previously mentioned, the district was able to payoffmost of its lease purchase debt and refinance debt service debt from past bond issues.

5

Governmental ActivitiesThe financial activities of the District for the year ended June 30, 2012 and 2011 are summarizedas follows:

InstructionSupport servicesAdministrationOperation of plantPupil transportationFood serviceInterest & feesCommunity serviceTotal

InstmctionSUPP0l1 servicesAdministrationOperation ofplantPupil transportationFood serviceFacilities acquisition & constructionInterest & feesCommunity service

Total

Year Ended June 30, 2012Expenditures Program Receipts

$ 6,343,308 $ 835,182875,716 95,681958,484 0

1,512,124 °590,374 131,878501,160 480,266301,540 °

30.129 20,110$ 11.112.835 $ 1.563,117

General RevenuesIncrease in Net Assets

Year Ended June 30,2011Expenditures Program Receipts

$ 6,143,384 $ 1,024,724904,204 102,309931,631 0

1,487,047 0581,539 118,785503,534 521,561

5,234 0265,670 °

30,277 19,975$ 10.852,520 $ 1.787.354

General RevenuesIncrease in Net Assets

Net Expenditures$ (5,508,126)

(780,035)(958,484)

(1,512,124)(458,496)(20,894)

(301,540)00,019)

(9,549,718)10.126,398

$ 576,680

Net Expenditures$ (5,118,660)

(801,895)(931,631)

(1,487,047)(462,754)

18,027(5,234)

(265,670)00,302)

(9,065,166)9,718,042

$ 652.876

The District primarily relies on local property taxes and State basic formula aid for funding itsgovernmental activities. In 2012 and 2011, respectively, 34.5% and 34.1 % of general revenueswas derived from local property taxes and 48.1% and 41.7% from State basic formula aid. Eachof these revenues is classified as general revenues in the above tables. Revenues received fromlocal property taxes increased by $122,883 in 2012. We are beginning to see growth in theassessed valuation and, as the economy improves, the collection rate for local taxes is once againover 100%. This is due to an increase in the payment of delinquent taxes.

State basic formula revenue increased in 2012 with the reinstatement of summer school and thecontinued increase in student enrollment. The basic formula is driven by average dailyattendance. These increases in state aid were offset by losses of federal ARRA funds that wereused in 2011 to supplement our basic formula funds. Our state basic formula revenue increasedby $636,566 in 2012, while our federal funds were reduced by $631,503.

Expenditures in all funds were increased by $643,478 or 6.21% in 2012. The district was able toreactivate salary schedules which resulted in salary increases of $133,998 or 2.24%. Capitaloutlay increased $384,844 - mainly due to the purchase of 5 new school buses. Improvementswere made to the main campus parking lots as well.

6

Program receipts are revenues directly attributable to a specific function of the District andtypically include fees for services or grants. Program receipts decreased $224,237 from the prioryear, from $1,787,354 to $1,563,117. Special education costs continue to escalate as revenuesare steadily reduced.

The District's major governmental activities include: instruction, pupil support serVIces,administration, other support services, and food service.

• The cost of all governmental activities this year was $11,112,835 compared to $10,852,520in 2011. To compare the level of spending on the significant operating functions of theDistrict total expenses for the 2012 fiscal year excludes the cost of interest and fees. Thecomparison of functional costs is as follows:

• Instruction represents 58.7% of the total cost of all governmental activities of the District,compared to 58.1% in 2011. As stated previously, increases in salary expense was theprimary factor for instructional expense increases.

• Pupil Support Services (this area includes, Guidance, Media Services - Library,Health/Psychology/Speech services and attendance services) represents 8.1% of the totalcosts of all governmental activities of the District, compared to 8.6% in 2011. Decreases inpupil services expenditures were primarily due to changes in personnel.

• Administration (includes Board of Education, District-wide, and Building levelAdministrative Services) represents 8.9% of the total costs of all governmental activities,compared to 8.8% in 2011.

In 2012, the net cost of all governmental activities was $9,549,718 with $1,563,117of the total costs being financed by revenues generated by the governmental activities.

Financial Analysis of the District's Funds

As the District completed the year, its governmental funds 'reported combined fund balances of$4,207,187 which is below last year's ending fund balances of $4,289,791. The followingincludes some of the more significant items related to the District's funds:

• The District originally budgeted a deficit of revenues to expenses in the General Fund of$(77,646) and ended the year with a deficit of $(70,623). The original budget did not includefull payment for 5 new school buses (additional transfer to our capital projects fund). We hadbudgeted for a 5 year lease. Otherwise, we would not have deficit spent. We try to projectrevenues low and expenditures high in our budget projections.

• The Teachers fund maintains a zero fund balance and relies on transfers from the GeneralFund to cover the expenses charged to the fund. Revenues allocated to the teachers fundwere above budget, requiring less of a transfer from the general fund than originallybudgeted to balance the fund to zero. This was due to conservative budgeting.

7

• The fund balance in the Debt Service Fund increased for the year by $84,979 to arrive at$707,730. The activity of this fund reflected the scheduled debt service obligation of theDistrict. The refinancing of some of our bonded debt accounted for $40,712 of this increase.The additional funds were from increases in local taxes in the debt service fund.

• The balance of the Capital Projects fund decreased by $(96,960) and ended at $171,945. Allof the June 30, 2012, fund balance is unrestricted. The expenditures and transfer to theCapital Projects fund were higher than originally budgeted, relating mainly to the decision topay-off lease the bus lease obligation.

General Fund Budgetary Highlights

During the course of the year, the District amended the annual operating budget two times. Thefinal budget amendment of the District was to approve actual financial activity of the funds equalto the budget.

Capital Assets

As of June 30, 2012, the District had $14,567,799 net of depreciation, invested in land, buildingsand equipment. Generally, the buildings have been well maintained and are in good condition.

Buses are the primary equipment component. The district purchased 5 new school buses in the2011-12 school year.

Long-Term Debt

At the year-end, the District had $6,583,658 in general obligation bonds and other long-term debtoutstanding. The District continued to pay down its debt, retiring $2,330,000 of outstandingbonds and $416,383 of capital lease obligations during 2012. The District's estimated legal debtmargin related to bonded indebtedness at June 30, 2012 was $4,802,475.

The district refinanced $1,845,000 of its bonded debt on January 10,2012. This resulted in a netsavings of $24,468 in interest paid over the term of the bonds.

Contacting the District's Financial Management

This financial report is designed to provide the District's citizens, taxpayers, customers, andinvestors and creditors with a general overview of the District's finances and to demonstrate theDistrict's accountability for the money it receives. Questions concerning any of the informationprovided in this report or requests for additional information should be addressed to the office ofthe Superintendent, 421 E Highway 124, Hallsville MO 65255.

8

BASIC FINANCIAL

STATEMENTS

HALLSVILLE R-IV SCHOOL DISTRICTSTATEMENT OF NET ASSETS ARISING FROM MODIFIED

CASH BASIS TRANSACTIONS - GOVERNMENTAL ACTIVITIESAS OF JUNE 30, 2012

ASSETS:Cash and investmentsLand, buildings and equipment, net of

accumulated depreciationTotal Assets

LIABILITIES:Payroll withholding payableCurrent maturities:

Capital leaseBonds payable

Long-term maturities:Capital leaseBonds payable

Total Liabilities

NET ASSETS:Investment in capital assets, net of related debtUmestricted

Total Net Assets

See Notes to Financial Statements9

$

$

4,223,850

14,567,79918,791,649

16,663

4~,930

530,000

154,7865,849,9426,600,321

7,984,1414,207,187

12,191,328

HALLSVILLE R-IV SCHOOL DISTRICTSTATEMENT OF ACTIVITIES ARISING FROM MODIFIED CASH BASIS TRANSACTIONS

GOVERNMENTAL ACTIVITIESYEAR ENDED JUNE 30, 2012

Regular instructionSpecial instructionStudent activitiesTuition to other districtsPupil support servicesInstructional support servicesAdministrationOperation of plantPupil transportationFood servicesFacilities acquistio.n and constructionCommunity servicesInterest and fees

Total

Expenditures$ 4,438,636

1,520,779325,508

58,385399,215476,501958,484

1,512,124590,374501,160

30,129301,540

$ 11,112,835

Program ReceiptsOperating Capital

Charges for Grants and Grants andServices Contributions Contributions

$ 18,742 $ 1,800 $

11,843 599,194203,603

- -676

95,005--

131,878249,307 230,959

- -20,110

-$ 483,495 $ 1,079,622 $"

General Revenues:Property and other taxesGeneral StatelFederal aidEarnings on investmentsOther

Increase/(decrease) in net assets

Net Assets, June 30, 2011Net Assets, June 30, 2012

Net Expensesand Changesin Net Assets

$ (4,418,094)(909,742)(121,905)

(58,385)(398,539)(381,496)(958,484)

(1,512,124)(458,496)

(20,894)

(10,019)(301,540)

4,198,2085,700,377

93,641134,172576,680

11,614,648$ 12,191,328

See Notes to Financial Statements

10

HALLSVILLE R-N SCHOOL DISTRICTCOMBINED STATEMENT OF ASSETS, LIABILITIES AND

FUND BALANCES ARISING FROM CASH BASIS TRANSACTIONSALL GOVERNMENTAL FUND TYPES

AS OF JUNE 30, 2012

Governmental Fund TypesSpecial

General Revenue Debt Capital Total(Incidental) (Teachers) Service Projects June 30,

Fund Fund Fund Fund 2012

ASSETS:Cash and investments $ 3,344,175 $ - $ 707,730 $ 171,945 $ 4,223,850

TOTAL ASSETS $ 3,344,175 $ - $ 707,730 $ 171,945 $ 4,223,850

LIABILITIES AND FUND BALANCES:LIABILITIES

Payroll withholding payable $ 16,663 $ - $ - $ - $ 16,663Total Liabilities 16;663 - - 16,663

FUND BALANCES:Commited 320,203 - - 320,203Assigned - - 707,730 171,945 879,675Unassigned 3,007,309 - - 3,007,309

Total Fund Balances 3,327,512 - 707,730 171,945 4,207,187

TOTAL LIABILITIES AND FUND BALANCES $ 3,344,175 $ - $ 707,730 $ 171,945

Amounts reported for governmental activities in the statement of net assets are different because:Capital assets (net of accumulated depreciation) used in governmental activities are not financial resources and,

therefore are not reported in the funds.Long term liabilities are not due and payable in the current period and, therefore are not reported in the funds.

Net assets of governmental activities


14,567,799(6,583,658)

$ 12,191,328

HALLSVILLE R-IV SCHOOL DISTRICTCOMBINED STATEMENT OF REVENUES COLLECTED, EXPENDITURES PAIDAND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES

YEAR ENDED JUNE 30,2012

Governmental Fund Types

REVENUES COLLECTED:LocalCountyStateFederalOther

Total Revenues Collected

EXPENDITURES PAID:Regular instructionSpecial instructionStudent activitiesTuition to other districtsPupil support servicesInstructional support servicesAdministrationOperation of plantPupil transportationFood servicesFacilities acquisition and constructionCommunity servicesDebt service:

Principal repaymentInterest and other charges

Total Expenditures Paid

EXCESS (DEFICIT) OF REVENUESCOLLECTED OVER EXPENDITURES PAID

OTHER FINANCING SOURCES (USES):Refunding bond issueTransfers

Total Other Financing Sources (Uses)

EXCESS (DEFICIT) OF REVENUES COLLECTED ANDOTHER FINANCING SOURCES OVER EXPENDITURESPAID AND OTHER FINANCING USES

FUND BALANCES, BEGINNING OF YEAR

FUND BALANCES, END OF YEAR

General(Incidental)

Fund

$ 2,740,17288,589

828,006701,128

4,357,895

362,291511,025216,531

7,045166,860254,851382,873944,729499,404501,160

10,111

3,856,880

501,015

(571,638)(571,638)

(70,623)

3,398,135

$ 3,327,512

SpecialRevenue

(Teachers)Fund

$ 1,035,64050,833

5,132,173130,535

18,7426,367,923

4,076,3451,009,754

108,97751,340

232,355221,650575,611

65,77644,952

20,018

6,406,778

(38,855)

38,85538,855

$

$

$

DebtServiceFund

833,74515,776

849,521

2,330,000279,542

2,609,542

(1,760,021)

1,845,000

1,845,000

84,979

622,751

707,730

CapitalProjects

Fund

$ 113,430746

114,176

10,677

6,320

18,704389,200

13,543256,293

27,18421,998

743,919

(629,743)

532,783532,783

(96,960)

268,905

$ 171,945

TotalJune 30,

2012

$ 4,722,987155,944

5,960,179831,663

18,74211 ,689,515

4,438,6361,531,456

325,50858,385

399,215482,821958,484

1,029,209933,556514,703256,293

30,129

2,357,184301,540

13,617,119

(1,927,604)

1,845,000

1,845,000

(82,604)

Amounts reported for governmental activities in the Statement of Activities are different because:Governmental funds report capital outlays as expenditures. However, in the Statement of Activities capital costs are allocated

over their estimated useful lives through depreciation expense. This is the amount by which capital outlays exceeded depreciation. 50,606Issuance of long term debt provides current financial resources hut has no effect on net assets. (2,137,705)Repayment of the principal long-term debt consumes current financial resources but has no effect on net assets of governmental funds. 2,746,383

Changes in net assets of governmental activities $ 576,680


HALLSVILLE R-IV SCHOOL DISTRICTGENERAL (INCIDENTAL) FUND

STATEMENT OF REVENUES COLLECTED, EXPENDITURES PAIDAND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

YEAR ENDED JUNE 30, 2012

Variance toOriginal Final FinalBudget Budget Actual Budget

REVENUES COLLECTED:Local $ 2,589,969 $ 2,740,] 72 $ 2,740,]72 $County 51,200 88,589 88,589State 858,000 828,006 828,006Federa] 662,000 70],]28 70],]28

. Other 5,000Tota] Revenues Collected 4,166,169 4,357,895 4,357,895

EXPENDITURES PAID:Regular instruction 351,085 362,291 362,29]Special instruction 406,950 511,025 511,025Student activities 225,550 216,531 216,531Tuition to other districts 20,000 7,045 7,045Pupil support services 180,515 166,860 166,860Instructional support services 235,850 254,851 254,851Administration 395,480 382,873 382,873Operation of plant 996,250 944,729 944,729Pupil transportation 485,455 499,404 499,404Food services 5] 8,005 501,160 50],160Community services 12,200 ]0, III 10,1] 1

Total Expenditu~es Paid 3,827,340 3,856,880 3,856,880

EXCESS (DEFICIT) OF REVENUESCOLLECTED OVER EXPENDITURES PAID 338,829 501,015 501,015

OTHER FINANCING SOURCES (USES):Transfers (416,475) (571,638) (571,638)

EXCESS (DEFICIT) OF REVENUES COLLECTEDOVER EXPENDITURES PAID AND OTHERFINANCING USES (77,646) (70,623) (70,623)

FUND BALANCE, BEGINNING OF YEAR 3,398,135 3,398,135 3,398,135

FUND BALANCE, END OF YEAR $ 3,320,489 $ 3,327,512 $ 3,327,512 $


HALLSVILLE R-IV SCHOOL DISTRICTSPECIAL REVENUE (TEACHERS) FUND


YEAR ENDED JUNE 30,2012


REVENUES COLLECTED:Local $ 1,050,000 $ 1,035,640 $ 1,035,640 $County 51,660 50,833 50,833State 5,170,800 5,132,173 5,132,173Federal 130,535 130,535Other 18,742 18,742

Total Revenues Collected 6,272,460 6,367,923 6,367,923

EXPENDITURES PAID:Regular instruction 4,140,935 4,076,345 4,076,345Special instruction 1,017,575 1,009,754 1,009,754Student Activities 122,550 108,977 108,977Tuition to other districts 82,500 51,340 51,340Pupil support services 222,800 232,355 232,355Instructional support services 195,125 221,650 221,650Administration 572,300 575,611 575,611Operation of plant 66,350 65,776 65,776Pupil transportation 50,475 44,952 44,952Community services 18,325 20,018 20,018

Total Expenditures Paid 6,488,935 6,406,778 6,406,778

EXCESS (DEFICIT) OF REVENUESCOLLECTED OVER EXPENDITURES PAID (216,475) (38,855) (38,855)

OTHER FINANCING SOURCES (USES):Transfers 216,475 38,855 38,855

EXCESS (DEFICIT) OF REVENUES COLLECTEDAND OTHER FINANCING SOURCES OVEREXPENDITURES PAID

FUND BALANCE, BEGINNING OF YEAR

FUND BALANCE, END OF YEAR $ $ $ $


HALLSVILLE R-IV SCHOOL DISTRICTNOTES TO FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Hallsville R-IV School District (the "District") have beenprepared in conformity with the modified cash basis ofaccounting. As such, these financialstatements reflect the cash and investment position of the District and the receipts anddisbursements arising from its cash activities. Additionally, these financial statementsinclude the capital assets and long term debt ofthe District as modifications to the cash basisof accounting. The significant accounting policies of the District are described below.

A. Reporting Entity

The District is governed by an elected seven-member board. The Hallsville R-IV SchoolDistrict's Board of Education (the "Board") is the basic level of government that hasfinancial accountability and control over all activities related to public school educationin the District. The accompanying financial statements present the activities of theDistrict.

Component units are legally separate organizations for which the District is financiallyaccountable. The District is financially accountable for an organization if the Districtappoints a voting majority of the organization's governing board and (a) the District isable to significantly influence the programs or services performed or provided by theorganization; or (b) the District is legally entitled to or can otherwise access theorganization's resources; the District is legally obligated or has otherwise assumed theresponsibility to finance the deficits of, or provide financial support to, the organization;or the District is obligated for the debt of the organization. Component units may alsoinclude organizations that are fiscally dependent on the District in that the Districtapproves the budget, the issuance of debt or the levying of taxes. The District is not acomponent unit of another reporting entity and the District has no component units.

B. District-wide and Fund Financial Statements

District-wide Statements:The Statement of Net Assets and the Statement of Activities present financialinformation about the District's governmental activities. These statements include thefinancial activities of the overall District, in its entirety. Governmental activitiesgenerally are financed through taxes, intergovernmental revenues, and othernonexchange transactions.

15


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Statement ofActivities presents a comparison between direct expenses and programrevenues for each function ofthe District's governmental activities. Direct expenses arethose that are specifically associated with and are clearly identifiable to a particularfunction. Program revenues include (a) charges paid by the recipients for goods orservices offered by the programs and (b) grants and contributions that are restricted tomeeting the operational or capital requirements of a particular program. Revenues thatare not classified as program revenues, including all taxes, are presented as generalrevenues.

Fund Financial Statements:During the year, the District segregates transactions related to certain functions oractivities into separate funds in order to aid financial management and to demonstratelegal compliance. Fund financial statements are designed to present financialinformation ofthe District at this more detailed level. The focus ofgovernmental fundsis on "major funds". Each major fund is presented in a separate column. The Districtdoes not maintain any non-major funds.

C. Fund Accounting

The District uses funds tel maintain its financial records during the year. A fund isdefined as a fiscal and accounting entity with a self-balancing set ofaccounts. There arethree categories of funds: governmental, proprietary, and fiduciary. The District doesnot maintain any proprietary or fiduciary funds.

Governmental Funds:Governmental funds are those through which most governmental functions typically arefinanced. Governmental fund reporting focuses on the sources, uses, and balances ofcurrent financial resources. Expendable assets are assigned to the various governmentalfunds according to the purposes for which they may, or must, be used. Current liabilities(if any) are assigned to the fund from which they will be paid. The difference betweengovernmental fund assets and liabilities is reported as fund balance. The following arethe District's major governmental funds:

General Fund -The General Fund is the operating fund of the District and is used toaccount for all financial resources except those required to be accounted for in anotherfund.

16



Teachers Fund -The Teachers Fund is required to be established by state law and may beused for the payment of salaries and insurance benefits for certificated personnel. Thefund's revenues include property taxes, investment income, and county, state, and federalaid. The fund is also used to account for certain tuition payments made between schooldistricts.

Debt Service Fund -The Debt Service Fund accounts for the revenue collected fromlocal taxation restricted for the payment of principal and interest on bondedindebtedness.

Capital Projects Fund -The Capital Projects Fund accounts for expenditures from theproceeds ofbond issues, investment income earned on the proceeds and other revenuesdesignated for acquisition or construction of capital assets. The expenditures includecapital outlay projects and equipment purchases for instructional and support programs.

D. Basis of Accounting, Measurement Focus and Financial Statement Presentation

Basis of accounting refers to when revenues and expenditures or expenses arerecognized in the accounts and reported in the financial statements. Basis ofaccountingrelates to the timing of the measurements made, regardless of the measurement focusapplied.

The district-wide financial statements are prepared using the modified cash basis ofaccounting. Revenues are recorded when received and expenses are recorded when paid.However, the district-wide financial statements have been modified to include thecapital assets ofthe District, including depreciation. Additionally, the long term debt ofthe District is included in the district-wide financial statements.

Governmental fund financial statements are prepared using the cash basis ofaccounting,including both cash and investments as assets. However, certain cash basis payrollassets or liabilities are also included. Revenues are recognized when received andexpenditures are recognized when paid.

17



E. Budgets and Budgetary Accounting

The District follows these procedures in establishing the budgetary data reflected in thefinancial statements:

• In accordance with Chapter 67, RSMo, the District adopts a budget for each fund.

• Prior to July, the superintendent, who serves as the budget officer, submits to theBoard ofEducation a proposed budget for the fiscal year beginning on the followingJuly 1. The proposed budget includes estimated revenues and expenditures for allDistrict funds. Budgeted expenditures cannot exceed beginning available moniesplus estimated revenues for the year.

• A public hearing is conducted to obtain taxpayer comments. Prior to its approval bythe Board of Education, the budget document is available for public inspection.

• Prior to July 1, the budget is legally enacted by a vote of the Board of Education.

• Subsequent to formal approval of the budget, the Board of Education has theauthority to make necessary adjustments to the budget by formal vote of the Board.Adjustments made during the year are reflected in the budget information includedin the financial statements. The budget was amended at the December 14,2011 andthe June 27, 2012, board meetings. The amendments were approved to reflect thecorrect placement of revenues, the allocation of expenses, and interfund transfers.The final budget amendment approved the budget to equal actual receipts andexpenditures.

• Budgets for District funds are prepared and adopted on the cash basis ofaccounting(budget basis), which recognizes revenues when collected and expenditures whenpaid.

F. Pooled Cash and Temporary Investments

Cash resources of the individual funds are combined to form a pool of cash andtemporary investments. Investments of the pooled accounts consist primarily ofcertificates of deposit and money market checking accounts. Interest income earned isallocated to contributing funds based on cash and temporary investment balances. Allfunds except the Debt Service Fund participate in the pooled cash and investments.State law requires the Debt Service Fund's cash to be maintained separately.

18



G. Capital Assets

Capital assets, which include land, buildings, furniture and equipment, are reported inthe district-wide financial statements. The District defines capital assets as assets with aninitial, individual cost ofmore than $5,000 and an estimated useful life in excess ofoneyear. All land purchases are capitalized. Such assets are recorded at historical cost orestimated historical cost if actual historical cost is not available. Donated capital assetsare recorded at estimated fair market value at the date ofdonation. The District does notown any infrastructure. The costs ofnormal maintenance and repairs that do not add tothe value ofthe asset or materially extend assets lives are not capitalized. Capital assetsbeing constructed and in progress as ofthe date ofthe financial statements are reportedas Construction in Progress.

H. Liabilities and Long-Term Obligations

Long-term obligations are reported only in the district-wide financial statements.

In the fund financial statements, the proceeds from sales of bonded indebtedness arerecorded as revenue when the payment is received. Repayments are recognized asexpenditures when the disbursements are made. Interest on bonded indebtedness isrecorded when it is disbursed.

I. Use of Estimates

The preparation of financial statements in conformity with the modified cash basis ofaccounting requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ from thoseestimates. Depreciation is the primary estimate.

J. Fund Balance Reporting

Fund balances for governmental funds are reported in classifications that comprise ahierarchy based primarily on the extent to which the government is bound to honorconstraints on the specific purposes for which amounts in those funds can be spent. TheDistrict has no policies regarding fund balance classification. Missouri establishes thatthe Board of Education is the highest level of decision making authority. Theclassifications are as follows:

19

NOTE 1:


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

• Nonspendable Fund Balance-The nonspendable fund balance classificationincludes amounts that cannot be spent because they are either (a) not inspendable form or (b) legally or contractually required to be maintained intact.

• Restricted Fund Balance-Fund balance should be reported as restricted whenconstraints placed on the use of resources are either:

a. Externally imposed by creditors (such as through debt covenants), grantors,contributors, or laws or regulations of other governments; or

b. Imposed by law through constitutional provisions or enabling legislation.

• Committed Fund Balance-Amounts that can only be used for specific purposespursuant to constraints imposed by formal action of the government's highestlevel of decision-making authority should be reported as committed fundbalance.

• Assigned Fund Balance-Amounts that are constrained by the government'sintent to be used for specific purposes, but are neither restricted nor committed,should be reported as assigned fund balance, except for stabilizationarrangements. Typically, assigned fund balances are the residual balance ofgovernmental funds, other than the general fund.

• Unassigned Fund Balance-Unassigned fund balance is the residual classificationfor the general fund. This classification represents fund balance that has notbeen assigned to other funds and that has not been restricted, committed, orassigned to specific purposes within the general fund.

K. Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested incapital assets, net of related debt, consists of capital assets, net of accumulateddepreciation, reduced by the outstanding balances of any borrowings used for theacquisition, construction, or improvement of those assets. Net assets are reported asrestricted when there are limitations imposed on their use either through the enablinglegislation adopted by the District or through external restrictions imposed by creditors,grantors or laws, or regulations of other governments.

20



L. Vacation and Sick Leave

Vacation time, personal business days, and sick leave are considered expenditures in theyear paid. Amounts that are unused and which are vested in the employee are payableupon termination. The amount of this liability has not been calculated.

M. Teacher Salaries

The contractual teacher salary payment schedule ofthe District requires the payment ofsalaries for a twelve month period beginning in September ofeach year. Consequently,the July and August 2012 payroll checks, written and dated in June 2012, are included inthe financial statements as an expenditure in the 2011-12 year. This practice isconsistent with prior years.

NOTE 2: RECONCILIATION OF DISTRICT-WIDE AND FUND FINANCIALSTATEMENTS

The governmental fund statement of assets, liabilities and fund balances includes areconciliation between fund balance of total governmental funds and net assets ofgovernmental activities as reported in the district-wide statement ofnet assets. One elementofthat reconciliation states that "Long-term liabilities are not due and payable in the currentperiod and therefore are not reported in the funds." The details of this $6,583,658difference are as follows:

Capital LeasesGeneral Obligation Bonds

Net adjustment to reduce fund balance of totalgovernmental funds to arrive at net assets ofgovernmental activities

$ 203,7166379,942

$ 6,583,658

The governmental fund statement ofrevenues, expenditures, and changes in fund balancesincludes a reconciliation between net changes in fund balances oftotal governmental fundsand changes in assets ofgovernmental activities as reported in the district-wide statement ofactivities. One element of that reconciliation explains that "Governmental funds reportcapital outlays as expenditures. However, in the Statement of Activities capital costs areallocated over their estimated useful lives through depreciation expense."

21


NOTE 2: RECONCILIATION OF DISTRICT-WIDE AND FUND FINANCIALSTATEMENTS (Continued)

The details of this $50,606 difference are as follows:

Construction and improvements to buildingsEquipment and vehiclesLess: Depreciation expenseNet adjustment to increase net changes in fund

balances of total goverruilental activities

$ 256,293436,450

(642.137)

$ 50,606

Another element of that reconciliation states that "Repayment of the principal oflong-termdebt consumes current financial resources but has no effect on net assets of governmentalfunds." The details ofthis $2,746,383 difference are as follows:

Lease payment (included in pupil transportationfunction)

Bond paymentsNet adjustment to decrease net changes in fund

balances of total governmental funds

NOTE 3: DEPOSITS AND INVESTMENTS

$ 416,3832,330,000

$ 2.746,383

Deposits:At June 30, 2012, the carrying value of the District's deposits was $2,135,233 and the bankbalance was $2,261,834. Custodial credit risk is the risk that in the event ofa bank failure, agovernment's deposits may not be returned to it. The District's deposit policy for custodialcredit risk requires compliance with the provisions of state law.

State law requires collateralization of all deposits with federal depository insurance; bondsand other obligations ofthe U. S. Treasury, U. S. agencies or instrumentalities ofthe state ofMissouri; bonds of any city having a population of not less than two thousand, county,school district or special road district of the state of Missouri; bonds of any state, taxanticipation notes issued by any first class county, or a surety bond having an aggregatevalue at least equal to the amount of the deposits.

22


NOTE 3: DEPOSITS AND INVESTMENTS (Continued)

Investments:The District may legally invest in direct obligations ofand other obligations guaranteed as toprincipal by the U. S. Treasury and U S. agencies and instrumentalities; obligationsguaranteed by the full faith and credit of the state of Missouri; repurchase agreement;certificates of deposit; bankers acceptances; and commercial paper. The Missouri SchoolDistrict Direct Deposit Program also operates under state law and is restricted to the aboveinvestments.

Interest rate risk-The District manages its exposure to declines in fair values by investing inbank certificates, U. S. Treasury and Agency Securities, and managed external investmentpools. District policy mandates liquidity and safety as the primary objectives regardinginterest rate risk. Accordingly, all investments are short-term. The investments in theMissouri Direct Deposit Program external investment pool (maintained at Wells Fargo) arepresented with a maturity of less than 1 year because they are redeemable at six monthintervals to coincide with the District's general obligation bond principal and interest debtservice requirements.

Credit risk-Credit risk is the risk that the issuer or other counterparty to an investment willnot fulfill its obligations. At June 30, 2012, the District's overnight repurchase agreementwas backed by debt securities of the U.S. government and its agencies. The District'sinvestment in the Missouri School District Direct Deposit Program is not rated.

Concentration of credit risk-As a means of limiting its exposure to losses arising fromconcentration of investments, the District's investment policy mandates that the portfolionot have a concentration of assets in specific maturity, specific issuer, or specific class ofsecurities. At a minimum, diversification standards by security type and issuer areestablished as a) US. treasuries and securities having principal and/or interest guaranteed bythe U. S. Government - 95%; b) collateralized time and demand deposits - 50%; c) U S.Government agencies, and government sponsored enterprises, no more than 70%; d)collateralized repurchase agreements, no more than 50%; e) U. S. Government callablesecurities, no more than 15%; f) commercial paper, no more than 40%; g) bankers'acceptances, no more than 40%.

Custodial credit risk - investments- For an investment, this is the risk that, in the event ofthe failure of the counterparty, the District will not be able to recover the value of itsinvestments or collateral securities that are in the possession of an outside party. TheDistrict's investments are held by financial institutions and are contractually obligated to theDistrict through a repurchase agreement.

23


NOTE 3: DEPOSITS AND INVESTMENTS (Continued)

As of June 30, 2012, the District had the following deposits and investments:

Investment TypeU. S. agency security collateralized

repurchase agreementMissouri School District deposit external

investment poolTotal Investments

DepositsTotal Deposits and Investments

Weighted AverageFair Value Maturity (years)

$ 1,744,000 -0-

344,617 6 months-----='---'---'--'-=--=--'-

2,088,6172,135,233

$ 4.223,850

Financial Statements:Governmental Funds

NOTE 4: TAXES

$ 4.223,850

Property taxes attach as an enforceable lien on property as ofJanuary 1. Taxes are levied onNovember 1, and payable by December 31. The County collects the property tax and remitsit to the District.

The District also receives sales tax collected by the State and remitted based on eligiblepupils.

The assessed valuation of the tangible taxable property for the ca~endar year 2011 forpurposes oflocal taxation was $69;831,246.

The tax levy per $1 00 ofthe assessed valuation oftangible taxable property for the calendaryear 2011 for purposes of local taxation was:

2011

General (Incidental) FundSpecial Revenue (Teachers) FundDebt Service FundCapital Projects Fund

Total

24

Unadjusted$ 3.0211

o1.06000.1600

$ 4.2411

Adjusted$ 3.0211

o1.06000.1600

$ 4.2411


NOTE 5: LONG-TERM DEBT

General Obligation Bonds: The following is a summary of bond transactions for the yearended June 30, 2012:

Bonds payable, July 1, 2011Bonds issuedBonds retiredBonds payable, June 30,2012

Bonds payable at June 30, 2012 consist of:

$3,659,942 general obligation refunding bonds dated February 2,2006, due in varying annual installments through March 1,2025;interest 3,5% to 4.0%, proceeds used to partially refund other issues.

$1,500,000 general obligation bonds dated May 24,2006, due invarying annual installments through March 1, 2019; interest 4.0%,proceeds used for construction and improvement to facilities.

$1,845,000 general obligation refunding bonds dated January 10,2012, due in varying annual installments through March 1,2020;interest 0.40% to 2.25%, proceeds used to refund other issues.

Total Bonds Payable

$ 6,864,9421,845,000

(2.330,000)$ 6,379,942

$ 3,474,942

1,210,000

1,695,000$ 6.379,942

The present value of the interest savings from the January 10,2012 bond refunding totaled$55,963. The issuance costs totaled $31,495. The net amount saved was $24,468.

Debt service requirements are:

Years EndingJune 30, Principal Interest Total

2013 $ 530,000 $ 221,190 $ 751,1902014 330,262 432,903 763,1652015 494,680 288,135 782,8152016 620,000 177,665 797,6652017 670,000 154,140 824,140

2018-2022 2,735,000 459,090 3,194,0902023-2025 1,000,000 81,000 1,081,000

Total $ 6.379.942 $ 1,814,123 $ 8,194,065

25


NOTE 5: LONG-TERM DEBT (Continued)

Article VI, Section 26(b), ofthe Constitution of Missouri, limits the outstanding amount ofauthorized general obligation bonds ofa District to fifteen percent ofthe assessed valuationof the District. The approximate legal debt margin (excluding state-assessed railroad andutility) of the District at June 30, 2012, was:

Constitutional debt limitGeneral obligation bonds payableAmount in Debt Service Fund available for payment of principal

Total

$ 10,474,687(6,379,942)

707,730$ 4,802.475

Capital Leases: The District has entered into various capital lease agreements to financeschool buses and building improvements. Changes in the District's obligation under capitalleases are as follows:

Beginning balanceCurrent borrowingPrincipal paidEnding balance at June 30, 2012

$ 327,394292,705(416,383)

$ 203,716

The remaining 0 bligation under the lease agreements, which expire in fiscal year 2018, is asfollows:

Years EndingJune 30, Principal Interest Total

2013 $ 48,930 $ 5,735 $ 54,6652014 28,994 4,797 33,7912015 29,944 3,847 33,7912016 30,925 2,866 33,7912017 31,938 1,853 33,7912018 32,985 806 33,791Total $ 203,716 $ 19.904 $ 223,620

26


NOTE 6: CONTINGENT LIABILITIES

GrantsThe District receives federal grants and state funding for specific purposes that are subjectto review and audit. These reviews and audits could lead to a request for reimbursement, orto withholding of future funding, for expenditures disallowed for noncompliance with theterms of the grants. The District is not aware of any noncompliance with federal or stateprovisions that might require the District to provide reimbursement.

LitigationThe District may periodically be the defendant in a lawsuit arising principally in the normalcourse of operations. In the opinion of the administration, the outcome of these lawsuitswill not have a material adverse effect on the accompanying combined financial statementsand accordingly, no provision for losses has been recorded.

NOTE 7: INDIVIDUAL FUND DISCLOSURES

Transfers: The District routinely transfers amounts from the General Fund to the TeachersFund and the Capital Projects Fund in accordance with regulations ofthe State ofMissouri.The amounts transferred to the Teachers Fund are required to balance the fund's revenuesand expenditures. The District maintains a Teachers Fund balance of zero at the beginningand end of each fiscal year.

The transfers to the Capital Projects Fund are for bus costs, food service equipment andother amounts allowed by State regulation.

Type of TransfersTeachers' Fund$162,326 or 7% X SAT X WADATransportation

Total net transfers

General(Incidental) Fund$ (38,856)

(532 783)o

$ (571.639)

Special Revenue(Teachers) Fund

$ 38,856oo

$ 38.856

CapitalProjects Fund$ 0

532,783o

$ 532,783

Committed Fund Balance: The District's committed fund balance in its general fundrepresent the budget deficit approved for that fund in the 2012 fiscal year.

27


NOTE 8: RETIREMENT PLAN

The Hallsville R-IV School District contributes to the Public School Retirement System ofMissouri (PSRS), a cost-sharing multiple-employer defined benefit pension plan. PSRSprovides retirement and disability benefits to full-time (and certain part-time) certificatedemployees and death benefits to members and beneficiaries. Positions covered by thePublic School Retirement System of Missouri are not covered by Social Security. PSRSbenefit provisions are set forth in Chapter 169.010 - .141 ofthe Missouri Revised Statutes.The statutes assign responsibility for the administration of the system to a seven memberBoard of Trustees. PSRS issues a publicly available financial report that includesfinancial statements and required supplementary information. That report may beobtained by writing to: The Public School Retirement System of Missouri, P. O. Box 268,Jefferson City, Missouri 65102, or by calling 1-800-392-6848.

PSRS members are required to contribute 14.50% of their annual covered salary and theHallsville R-IV School District is required to contribute a matching amount. Thecontribution requirements of members and the Hallsville R-IV School District areestablished and may be amended by the PSRS Board of Trustees. The District'scontributions to PSRS for the year ended June 30, 2012, were $767,644, equal to therequired contributions. The contributions for the last three years are as follows:

Year EndedJune 30,

201220112010

Amount of EmployerContribution$ 767,644

734,597786,403

Percentage ofContribution

14.50%14.00%13.50%

The Hallsville R-IV School District also contributes to the Public Education EmployeeRetirement System of Missouri (PEERS), a cost-sharing multiple-employer definedbenefit pension plan. PEERS provides retirement and disability benefits to employees ofthe district who work 20 or more hours per week and who do not contribute to the PublicSchool Retirement System of Missouri. Positions covered by the Public EducationEmployee Retirement System of Missouri are covered by Social Security. Benefitprovisions are set forth in Chapter 169.600 - .715 of the Missouri Revised Statutes. Thestatutes assign responsibility for the administration ofthe system to the Board ofTrusteesof the Public School Retirement System of Missouri. PEERS issues a publicly availablefinancial report that includes financial statements and required supplementary information.That report may be obtained by writing to: The Public Education Employee RetirementSystem of Missouri, P. O. Box 268, Jefferson City, Missouri 65102 or by calling 1-800392-6848.

28


NOTE 8: RETIREMENT PLAN (Continued)

PEERS members are required to contribute 6.86% oftheir arumal covered salary and theHallsville R-IV School District is required to contribute a matching amount. Thecontribution requirements of members and the Hallsville R-IV School District areestablished and may be amended by the Board ofTrustees. The District's contributions toPEERS for the year ended June 30, 2012, were $90,417, equal to the requiredcontributions. The contributions for the last three fiscal years are as follows:

Year EndedJune 30,

201220112010

Amount of EmployerContribution$ 90,417

75,54792,804

Percentage ofContribution

6.86%6.63%6.50%

NOTE 9: RISK MANAGEMENT - MISSOURI SCHOOL INSURANCE COUNCIL

The District is a member ofthe Missouri School Insurance Council (MUSIC), a protectedself-insurance program of approximately 400 Missouri Public School Districts. TheDistrict does not pay premiums to purchase insurance policies, but pays an assessment tobe a member of the self-sustaining risk sharing group. Part of the assessment is used topurchase excess insurance for the group as a whole.

NOTE 10: CHANGES IN CAPITAL ASSETS

The following is a summary ofchanges in capital assets for the fiscal year ended June 30,2012:

Balance BalanceJune 30, 2011 Additions Deletions Depreciation June 30, 2012

Land $ 1,139,870 $ 0 $ 0 $ 0 $ 1,139,870Buildings andimprovements 14,781,363 256,293 0 0 15,037,656

Equipment 2,304,812 436,450 (246,528) 0 2,494,734Accum. Depreciation (3,708,852) 0 0 095,609) (4,104,461)

Total $ 14,517,193 $ 692,743 $ (246,528) $ (395.609) $ 14,567.799

29


NOTE 10: CHANGES IN CAPITAL ASSETS (Continued)

In the statement of activities, depreciation is primarily allocated to operation ofplant andtransportation as follows:

Operation of plantTransportation

Total

$ 495,088147,049

$ 642,137

Depreciation is provided using the straight-line method over each asset's estimated life.Buildings and building addition lives are estimated at 75 years. Equipment and vehicleuseful lives are estimated between 5 and 20 years, depending on the item.

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS

The District provides health insurance benefits to its retirees on a reimbursable basis. Thecost of the insurance premium is charged to the retirees at the same cost as activeemployees. This situation causes an implicit premium subsidy for the difference theretirees would have to pay for similar insurance coverage and the actual amount of theirpremiums. This implicit premium subsidy represents an unfunded obligation to theDistrict. This obligation has not been valued or reported because the District reports itsfinancial activity using the cash basis of accounting.

30

SUPPLEMENTARY INFORMAnON

HALLSVILLE R-IV SCHOOL DISTRICTDEBT SERVICE FUND




REVENUES COLLECTED:Local $ 706,109 $ 833,745 $ 833,745 $County 9,000 15,776 15,776

Total Revenues Collected 715,109 849,521 849,521

EXPENDITURES PAID:Principal repayment 485,000 2,330,000 2,330,000Interest and other charges 243,330 279,542 279,542

Total Expenditures Paid 728,330 2,609,542 2,609,542

EXCESS (DEFICIT) OF REVENUESCOLLECTED OVER EXPENDITURES PAID (13,221) (1,760,021) (1,760,021)

OTHER FINANCING SOURCES (USES):Refunding bond issue 1,845,000 1,845,000

EXCESS (DEFICIT) OF REVENUES COLLECTED ANDOTHER FINANCING SOURCES OVER EXPENDITURESPAID AND OTHER FINANCING USES (13,221) 84,979 84,979

FUND BALANCE, BEGINNING OF YEAR 622,751 622,751 622,751

FUND BALANCE, END OF YEAR $ 609,530 $ 707,730 $ 707,730 $

31

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF REVENUES COLLECTED BY SOURCE


SpecialGeneral Revenue Debt Capital Total

(Incidental) (Teachers) Service Projects June 30,Fund Fund Fund Fund 2012

LOCAL:Property taxes $ 2,131,666 $ $ 747,926 $ 112,895 $ 2,992,487

School District Trust Fund (prop C) 1,035,640 1,035,640

Other taxes 10,070 3,533 533 14,136

Earnings on investments 52,065 41,574 2 93,641

Food service 249,307 249,307

Student body activities 203,602 203,602

Other local 93,462 40,712 134,174

Total Local 2,740,172 1,035,640 833,745 113,430 4,722,987

COUNTY:Fines, escheats, and etc. 42,898 42,898

State assessed utility taxes 88,589 7,935 15,776 746 113,046

Total County 88,589 50,833 15,776 746 155,944

STATE:Basic formula - state monies 5,130,373 5,130,373

Transportation 131,878 131,878

Early Childhood Special Education 181,549 181,549

Career ladderBasic formula - Classroom Trust Fund 490,773 490,773

Educational Screening Program/PAT 20,110 20,110

Vocationavrechnical Aid 1,800 1,800

Food service 3,696 3,696

Residential placement/excess costOther

Total State 828,006 5,132,173 5,960,179

FEDERAL:Medicaid 11,843 11,843Basic formula - federal budget stabilization - ARRA 118,950 118,950Basic formula - government services - ARRA 6,605 6,605Classroom trust fund - jobs bill 4,980 4,980Individuals with disabilities Ed Act (IDEA) 250 250Early Childhood Special Education - Federal 22,694 22,694Food service 227,263 227,263Title I, ESEA 167,973 167,973

. Title IV, Drug Free Schools 676 676Title II, Part A, ESEA - Teacher and Principal Quality 43,701 43,701IDEA Entitlement Funds, Part B IDEA 226,728 226,728Other

Total Federal 701,128 130,535 831,663

OTHER:Area vocational fees from other LEA's 18,742 18,742Contracted educational services

Total Other 18,742 18,742

TOTAL REVENUES COLLECTED $ 4,357,895 $ 6,367,923 $ 849,521 $ 114,176 $ 11,689,515

33

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF EXPENDITURES PAID BY OBJECT


SpecialGeneral Revenue Capital Total

(Incidental) (Teachers) Project~ June 30,Fund Fund Fund 2012

SALARIES $ 1,160,794 $ 4,964,529 $ $ 6,125,323

EMPLOYEE BENEFITS:Teacher retirement 1,128 766,516 767,644

Non-teacher retirement 90,417 90,417

Payroll taxes 85,789 77,566 163,355

Employee insurance 288,712 512,177 800,889

PURCHASED SERVICES:Tuition 7,045 85,990 93,035

Professional services 67,827 67,827

Audit 5,925 5,925

Legal services 18,157 18,157

Technical services 20,934 20,934

Property services 245,871 245,871

Travel 94,407 94,407

Property insurance 80,165 80,165

Fidelity premium 67 67

Liability insurance 6,259 6,259

Other purchased services 526,516 526,516

SUPPLIES:General supplies 731,767 731,767

Library books 22,611 22,611

Periodicals 28,291 28,291

Food service - food only 180 180

Energy supplies 291,479 291,479

Other supplies 82,539 82,539

CAPITAL OUTLAY:Improvement to sites 245,156 245,156

Building 11,137 11,137Equipment 49,244 49,244School buses 389,200 389,200

DEBT SERVICE:Principal 27,184 27,184Interest and other charges 21,998 21,998

TOTAL EXPENDITURES PAID $ 3,856,880 $ 6,406,778 $ 743,919 $ 11,007,577

34

Type of audit performed:

1. Calendar

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF SELECTED STATISTICS

Yellow Book:_---=X-=--_ Single Audit: X

A. The number ofactual calendar hours classes were in session and pupils were under the directionof teachers during this school year was as follows:

Kindergarten to grade 12Hours

1,113.75

B. The number of days classes were in session and pupils were under the direction of teachersduring this school year was as follows:

DaysKindergarten to grade 12 165

2. Average Daily Attendance (ADA)

Full Time/Regular Term Part Time Remedial TotalGrades K-5 600.73 0 600.73Grades 6-8 283.94 0 283.94Grades 9-12 373.45 0.05 373.50

Subtotal Regular Term 1,258.12 0.05 1,258.17

Resident TotalSummer School Subtotal 64.72 ~ 64.72Total Regular Term Plus Summer

School ADA 1.322.84 0.05 1.322.89

3. September Membership

Full Time Part Time TotalSeptember Membership FTE Count 1.313.00 1.90 1.314.90

35


4. Free and Reduced Priced Lunch FTE Count (Section 163.011(6), RSMo)

Full Time/Part Time Total

5. Finance

State FTE TotalFreeReduced

Total

403.1448.00

451.14

403.1448.00

451.14

Fill in the blank with the appropriate response of true, false, or N/A unless otherwise noted.

A. As required by Section 162.401, RSMo, a bond was purchased for thetotal amount of:

B. The District's deposits were secured during the year as required bySections 110.010 and 110.020, RSMo.

C. The District maintained a separate bank account for the Debt ServiceFund in accordance with Section 165.011, RSMo.

D. Salaries reported for educators in the October Core Data cycle areSupported by payroll/contract records.

E. If a $162,326 or 7% SAT x WADA transfer was made in excess ofadjustedexpenditures, the board approved a resolution to make the transfer, whichidentified the specific projects to be funded by the transfer and anexpected expenditure date for the projects to be undertaken.

F. The District published a summary of the prior year's audit report withinthirty days of the receipt of the audit pursuant to Section 165.121, RSMo.

G. All above "false" answers must be supported by a finding or managementletter comment.

Finding #Management Letter Comment #

36

$ 50,000

True

True

True

N/A

True

N/AN/A


6. Transportation (Section 163.161, RSMo)

Fill in the blank with the appropriate response of true, false, or N/A unless otherwise noted.

A.' The school transportation allowable costs substantially conform to5 CSR 30-261.040, Allowable Costs for State Transportation Aid.

B. The District's school transportation ridership records are maintained in amanner to accurately disclose in all material respects the average number ofregular riders transported.

C. Based .on the ridership records, the average number of students(non-disabled K-12, K-12 students with disabilities and career education)transported on a regular basis (ADT) was:

• Eligible ADT• Ineligible ADT

D. The District's transportation odometer mileage records are maintained in amanner to accurately disclose in all material respects the eligible andineligible mileage for the year.

E. Actual odometer records show the total district-operated and contractedmileage for the year was:Of this total, the eligible non-disabled and students with disabilities routemiles and the ineligible non-route and disapproved miles (combined) was:

• Eligible miles• Ineligible miles (non-route disapproved)

F. Number of days the District operated the school transportation systemduring the regular school year:

G.. All above "False" answers must be supported by a finding or managementletter comment.

Finding #Management Letter Comment #

37

True

True

857.500.00

True

169,107

124,24332,360

165

N/AN/A

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF TRANSPORTATION COSTS ELIGIBLE FOR STATE AID


DISTRICT OPERATED TRANSPORTATION:Salaries $ 205,241Fringe benefits 98,455Purchased services 45,690Supplies 116,280Capital outlay, Lease purchase principal 389,200

Total $ 854,866

HANDICAPPED:Salaries $ 25,428Benefits 11,556Supplies 18,808

Total $ 55,792

ECSE, NOT ELIGIBLE FOR STATE AID:Salaries $ 8,060Benefits 7,089Supplies 7,748

Total $ 22,897

38

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal Grantor; Federal Subrecipient

Pass-through Grantor; CFDA Identifying AwardProgram Title Number Number Amount Disbursements

u. S. Department of Agriculture:Passed-through MO DESE:

National School Lunch Program 10.555 010-089 (1) $ 178,173

School Breakfast Program 10.553 010-089 (1) 49,090

Food Distribution 10.555 010-089 (1) 47,262

Total U. S. Department of Agriculture 274,525

U. S. Department of Education:Passed-through MO DESE:

Title I 84.010A 010-089 211,773 173,001

Education of Handicapped Act,Public Law 94-142 - EN 84.027A 010-089 203,968 198,125

Education ofHandicapped Act,Public Law 94-142 - EC: 84.173A 010-089 (1) 22,694

Title ILA 84.367A 010-089 41,206 41,206ARRA - State Fiscal Stabilization Fund (SFSF) - Education State Grants 84.394 010-089 118,950ARRA - State Fiscal Stabilization Fund (SFSF) - Government Services 84.397 010-089 6,605ARRA - Federal Education Jobs Fund - Classroom Trust Fund 84.410A 010-089 4,980

Total U. S. Department of Education 565,561

TOTAL FEDERAL FINANCIAL ASSISTANCE $ 840,086

(1) - No award specified

39

HALLSVILLE R-IV SCHOOL DISTRICTNOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

Basis ofaccounting refers to when revenues and expenditures are recognized in the accountsand reported in the financial statements. The accounting ofthe District is maintained, andthe accompanying financial statements have been prepared, on the cash basis ofaccounting.Therefore, revenues and expenditures are recognized only when collected or paid, andreceivables and accrued liabilities are not reflected in the financial statements.

Nonmonetary Assistance

The District receives commodities under the Food Distribution Program. The amount ofexpenditures presented on the Schedule of Expenditures of Federal Awards representdonated commodities used, which totaled $47,262, valued at the cost assigned to thosecommodities by the U. S. Department of Agriculture.

40

COMPLIANCE

AND

INTERNAL CONTROL

GK&CGERDING, KORTE & CHITWOOD




Columbia, MO 65201

(573) 449-1599

Fax: (573) 443-8603

www.gkccpas.com

PARTNERS

Robert A. Gerding

Fred W Korte, Jr.

Joseph E. Chitwood

James R. McGinnis

Travis W Hundley

Jeffrey A. Chitwood

MEMBERS OF AMERICAN INSTITUTEOFCERTIFIEO PUBLIC ACCOUNTANTS

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT A UDITING STANDARDS

To the Board of EducationHallsville R-IV School DistrictHallsville, Missouri

We have audited the financial statements ofthe governmental activities, each m~or fundand the aggregate remaining fund information of Hallsville R-IV School District as ofand for the year ended June 30, 2012, which collectively comprise the Hallsville R-IVSchool District's basic financial statements and have issued our report thereon datedOctober 30, 2012. We conducted our audit in accordance with auditing standardsgenerally accepted in the United States of America and the standards applicable tofinancial audits contained in Government AuditingStandards, issued by the ComptrollerGeneral of the United States.

Internal Control Over Financial ReportingIn planning and performing our audit, we considered Hallsville R-IV School District'sinternal control over financial reporting as a basis for designing our auditing proceduresfor the purpose of expressing our opinion on the financial statements, but not for thepurpose of expressing an opinion on the effectiveness of Hallsville R-IV SchoolDistrict's internal control over financial reporting. Accordingly, we do not express anopinion on the effectiveness of Hallsville R-IV School District's internal control overfinancial reporting.

A deficiency in internal control exists when the design or operation ofa control does notallow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct misstatements on a timely basis. A materialweakness is a deficiency, or combination of deficiencies in internal control such thatthere is a reasonable possibility that a material misstatement of the entity's financialstatements will not be prevented, or detected and corrected on a timely basis.

Our consideration of the internal control over financial reporting was for the limitedpurpose described in the first paragraph ofthis section and was not designed to identifyall deficiencies in the internal control over financial reporting that might be deficiencies,significant deficiencies or material weaknesses. We did not identify any deficiencies ininternal control over financial reporting that we consider to be material weaknesses, asdefined above. However, we identified a certain deficiency in internal control overfinancial reporting, described in the accompanying schedule offindings and questionedcosts that we consider to be a significant deficiency in internal control over financialreporting, see item 2012-01: Segregation of Duties. A significant deficiency is adeficiency, or a combination ofdeficiencies, in internal control that is less severe than amaterial weakness, yet important enough to merit attention by those charged withgovernance.

41

Compliance and Other MattersAs part ofobtaining reasonable assurance about whether the Hallsville R-IV School District's fmancialstatements are free of material misstatement, we performed tests of its compliance with certainprovisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have adirect and material effect on the determination offinancial statement amounts. However, providing anopinion on compliance with those provisions was not an objective ofour audit, and accordingly, we donot express such an opinion. The results ofour tests disclosed no instances ofnoncompliance or othermatters that are required to be reported under Government Auditing Standards.

We noted certain matters that we reported in a separate audit communications letter to the Board ofEducation dated October 30, 2012.

Hallsville R-IV School District's response to the finding identified in our audit is described in theaccompanying schedule of findings and questioned costs. We did not audit Hallsville R-IV SchoolDistrict's response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of the Board ofEducation, management, theMissouri Department ofElementmy and Secondary Education, and Federal awarding agencies and is notintended to be and should not be used by anyone other than these specified parties.

October 30, 2012ij~,KJ-t~Gerding,~d ChitwoodCertified Public Accountants

42





Columbia, MO 65201

(573) 449-1599

Fax: (573) 443-8603

www.gkccpas.com

PARTNERS

Robert A. Gerding

Fred W Korte, Jr.

Joseph E. Chitwood

James R. McGinnis

1J'ovis W Hundley

Jeffrey A. Chitwood

MEMBERS OF AMERICAN INSTITUTEOF CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITHREQUIREMENTS THAT COULD HAVE A DIRECT AND MATERlAL EFFECT

ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROLOVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-I33


ComplianceWe have audited the compliance of the Hallsville R-IV School District with the types ofcompliance requirements described in the U. S. Office of Management and Budget(OMB) Circular A-I33 Compliance Supplement that are applicable to each of its majorfederal programs for the year ended June 30, 2012. The Hallsville R-IV SchoolDistrict's major federal programs are identified in the summary of auditor's resultssection of the accompanying schedule of findings and questioned costs. Compliancewith the requirements oflaws, regulations, contracts and grants applicable to each of itsmajor federal programs is the responsibility of the Hallsville R-IV School District'smanagement. Our responsibility is to express an opinion on the Hallsville R-IV SchoolDistrict's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generallyaccepted in the United States of America; the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of theUnited States; and OMB Circular A-133,AuditsofStates, Local Governments, and NonProfit Organizations. Those standards and OMB Circular A-133 require that we planand perform the audit to obtain reasonable assurance about whether noncompliance withthe types of compliance requirements referred to above that could have a direct andmaterial effect on a major federal program occurred. An audit includes examining, on atest basis, evidence about the Hallsville R-IV School District's compliance with thoserequirements and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.Our audit does not provide a legal determination ofthe Hallsville R-IV School District'scompliance with those requirements.

In our opinion the Hallsville R-IV School District complied, in all material respects,with the compliance requirements referred to above that could have a direct and materialeffect on each of its major federal programs for the year ended June 30, 2012.

43

Internal Control Over ComplianceManagement of the Hallsville R-IV School District is responsible for establishing and maintainingeffective internal control over compliance with the requirements of laws, regulations, contracts andgrants applicable to federal programs. In planning and performing our audit, we considered theHallsville R-IV School District's internal control over compliance with the requirements that could havea direct and material effect on a major federal program in order to determine our auditing procedures forthe purpose of expressing our opinion on compliance and to test and report on internal control overcompliance in accordance with 0 MB Circular A-133, but not for the purpose ofexpressing an opinionon the effectiveness of internal control over compliance. Accordingly, we do not express an opinion onthe effectiveness of the Hallsville R-IV School District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation ofa control overcompliance does not allow management or employees, in the normal course of performing theirassigned functions, to prevent, or detect and correct, noncompliance with a type of compliancerequirement of a federal program on a timely basis. A material weakness in internal control overcompliance is a deficiency, or combination of deficiencies, in internal control over compliance, suchthat there is a reasonable possibility that material noncompliance with a type ofcompliance requirementof a federal program will not be prevented, or detected and corrected, on a timely basis.

Our consideration ofinternal control over compliance was for the limited purpose described in the firstparagraph and was not designed to identify all deficiencies in internal control over compliance thatmight be deficiencies, significant deficiencies or material weaknesses and therefore, there can be noassurance that all deficiencies, significant deficiencies or material weaknesses. We did not identifydeficiencies in internal control over compliance that we consider to be material weaknesses, as definedabove.

This report is intended solely for the information and use ofthe Board ofEducation, management, theMissouri Department ofElementary and Secondary Education, and Federal awarding agencies and is notintended to be and should not be used by anyone other than these specified parties.

October 30, 2012 !m1tJ~~1m!~Certified Public Accountants

44

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF FINDINGS AND QUESTIONED COSTS

AND SUMMARY OF AUDITORS' RESULTS - FEDERAL REQUIREMENTS

Section I: Summary of Auditors' Results

Financial Statements

Type of auditor's report issued: unqualified, modified cash basis

Internal control over financial reporting:

• Material weakness(es) identified? Yes~ No

• Significant deficiencies identified thatare not considered to be material weaknesses? lLYes __ None reported

Noncompliance material to financialstatements noted? Yes~ No

Federal Awards

Internal control over major programs:

• Material weakness(es) identified?

• Significant deficiencies identified thatare not considered to be material weaknesses

Yes~No

_ Yes~ None reported

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

Any audit findings disclosed that are required tobe reported in accordance with section 5I0(a) ofCircular A-133?

Identification of maj or programs:

Yes~No

CFDA NumberCs)Special Education Cluster CIDEA)

84.027A84.173A

Child Nutrition Cluster10.55510.55310.555

Name of Federal Program or Cluster

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

National School Lunch ProgramSchool Breakfast ProgramFood Distribution

45



Section I: Summary of Auditors' Results (continued)

Dollar threshold used to distinguish between type A and type B programs: $300,000

Auditee qualified as low-risk auditee?

Section II: Financial Statement Findings

Finding 2012-01: Segregation of Duties

X Yes No

The objectives of internal control are to provide reasonable, but not absolute, assurancethat assets are safeguarded and the financial statements are reliable. When the duties ofone employee involve complete control over most, or all, aspects of an accounting cycle,without the involvement ofother intervening employees, conflicts with the internal controlobjective may arise. This kind ofconflict is generally referred to as a lack ofsegregation ofduties. Hallsville R-IV School District has potential conflicts with personnel who have theability to access, adjust, record, reconcile and report financial activity.

Because of the inherent limitations of internal control over financial reporting, includingthe possibility of collusion or improper management override of controls, materialmisstatements due to error or fraud may not be prevented or detected on a timely basis.Also, projections of any evaluation of the effectiveness of the internal control overfinancial reporting to future periods are subject to the risk that the controls may becomeinadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

View ofResponsible Official: Cross-training of accounting staff began on October 17,2007 and has continued on a yearly basis. Duties such as bank reconciliation and payrollare rotated between the accounting staff. Documentation of duty rotation will be madeavailable at the end of the fiscal year. The district has continued to cross-train accountingstaff and searches for ways to improve internal controls. Monthly discussion of stafffocuses on identifying additional areas where cross-training may be necessary.

46



Section III: Federal Award Findings and Questioned Costs

None

47





Columbia, MO 65201

(573) 449-1599

Fax: (573) 443-8603

www.gkccpas.com

PARTNERS

Robert A. Gerding

Fred W. Karle, Jr.

Joseph E. Chitwood

James R. McGinnis

Travis W. Hundley

Jeffrey A. Chitwood

INDEPENDENT ACCOUNTANTS' REPORT ON MANAGEMENT'SASSERTIONS ABOUT COMPLIANCE WITH SPECIFIED

REQUIREMENTS OF MISSOURI LAWS AND REGULATIONS


We have examined management's assertions that Hallsville R-IV School District,Hallsville, Misso'uri, complied with the requirements of Missouri laws and regulationsregarding budgetary and disbursement procedures; accurate disclosure by the District'sattendance records of average daily attendance, resident membership on the lastWednesday of September and the number ofstudents eligible to receive free or reducedprice lunches on the last Wednesday of January; and accurate disclosure by pupiltransportation records of the average daily transportation ofpupils eligible and ineligiblefor state aid, the number of miles eligible and ineligible for state aid and the allowablecosts for pupil transportation during the year ended June 30, 2012. Management isresponsible for the District's compliance with those requirements. Our responsibility isto express an opinion on the District's compliance based on our examination.

Our examination was conducted in accordance with attestation standards established bythe American Institute of Certified Public Accountants and, accordingly, includedexamining, on a test basis, evidence about the District's compliance with thoserequirements and performing such other procedures as we considered necessary in thecircumstances. We believe that our examination provides a reasonable basis for ouropinion. Our examination does not provide a legal determination on the District'scompliance with specified requirements.

In our opinion, Hallsville R-IV School District, Hallsville, Missouri complied, in allmaterial respects, with the aforementioned requirements for the year ended June 30,2012.

This report is intended solely for the information and use of the Board of Education,District management, and the Missouri Department of Elementary and SecondaryEducation and is not intended to be and should not be used by anyone other than thesespecified parties.

MEMBERS OF AMERICAN INSTITUTEOFCERTIFIEO PUBLIC ACCOUNTANTS

October 30,2012

48

&f~e~mf~Certified Public Accountants

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF FINDINGS - STATE REQUIREMENTS

SECTION 1: STATE COMPLIANCE REQUIREMENTS

Budget

None

Attendance

None

Transportation

None

49

HALLSVILLE R-IV SCHOOL DISTRICTSCHEDULE OF PRIOR YEAR AUDIT FINDINGS

Finding 2011-01: Segregation of Duties

Status: This item continues to be a finding and has been addressed on the Schedule of Findings andQuestioned Costs and Summary ofAuditors' Results - Federal Requirements on page 46 item 2012-01.

50

new issue s&p direct deposit program: aa+ book-entry … · materiality or relative importance,...

Documents