Municipal Secondary Market Disclosure Information Cover Sheet
Municipal Secondary Market Disclosure Information Cover Sheet This cover sheet should be sent with all submissions made to the Municipal Securities Rulemaking Board, Nationally Recognized Municipal Securities Information Repositories, and any applicable State Information Depository, whether the filing is voluntary or made pursuant to Securities and Exchange Commission rule 15c2–12 or any analogous state statue. See sec.gov/info/municipal/nrmsir.htm for list of current NRMSIRs and SIDs IF THIS FILING RELATES TO A SINGLE BOND ISSUE: Provide name of bond issue exactly as it appears on the cover of the Official Statement (please include name of state where issuer is located): Provide nine–digit CUSIP* numbers if available, to which the information relates: IF THIS FILING RELATES TO ALL SECURITIES ISSUED BY THE ISSUER OR ALL SECURITIES OF A SPECIFIC CREDIT OR ISSUED UNDER A SINGLE INDENTURE: Issuer’s Name (please include name of state where Issuer is locate): Davis School District, Davis County, Utah Other obligated Person’s Name (if any): (Exactly as it appears on the Official Statement Cover) Provide six–digit CUSIP* number(s), if available, of Issuer: 239019 *(Contact CUSIP’s Municipal Disclosure Assistance Line at 212.438.6518 for assistance with obtaining the proper CUSIP numbers.) TYPE OF FILING: ; Electronic (number of pages attached) 145 If information is also available on the Internet, give URL: Paper (number of pages attached) WHAT TYPE OF INFORMATION ARE YOU PROVIDING? (Check all that apply) A. ; Annual Financial Information and Operating Data pursuant to Rule 15c2–12 (Financial information and operating data should not be filed with MSRB.) Period Covered: January 31, 2009 B. ; Audited Financial Statements or CAFR pursuant to Rule 15c2–12 Fiscal Period Covered: June 30, 2008 C. Notice of Material Event pursuant to Rule 15c2–12 (Check as appropriate) 1. Principal and interest payments 6. Adverse tax opinions or events afdelinquencies fecting the tax–exempt status of 2. Non–payment related defaults the security 3. Unscheduled draws on debt ser7. Modifications to the rights of sevice reserves reflecting financial curity holders difficulties 8. Bond calls 4. Unscheduled draws on credit en9. Defeasances hancements reflecting financial 10. Release, substitution, or sale of difficulties property securing repayment of 5. Substitution of credit or liquidity the securities providers, or their failure to per11. Rating changes form D. Notice of Failure to Provide Annual Financial Information as Required E. Other Secondary Market Information (Specify): I hereby represent that I am authorized by the issuer or obligor or its agent to distribute this information publicly: Issuer Contact: Title Vice President Name Eric Pehrson Employer Zions Bank Public Finance Address One S Main St 18th Fl Telephone 801.844.7373 Email Address [email protected] City SLC State UT Zip Code 84133 Fax 801.844.4484 Issuer Web Site Address: www.zionsbankpf.com Dissemination Agent Contact, if any: Title Name Employer Address Telephone Email Address City__________ State Fax Relationship to Issuer Zip Code Obligor Contact, if any: Title Business Administrator Name Bruce D Williams Employer Davis School District Address 45 E State St Telephone 801.402.5256 Email Address [email protected] City Farmington State UT Fax 801.402.5249 Obligor Web Site Address Investor Relations Contact, if any: Name Telephone Title Email Address ii Zip Code 84025 davis.k12.ut.us Supplemental Continuing Disclosure Memorandum Summary of Debt Structure and Financial Information SEC Rule 15c2–12 For Davis School District Davis County, Utah Filed with DisclosureUSA.org Submitted and dated as of January 15, 2009 (Submission required by January 31, 2009) Table Of Contents Page GENERAL.................................................................................................................................................... 1 Contact Person For The District................................................................................................................ 1 The Issues.................................................................................................................................................. 1 $40,525,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building and Refunding Bonds (Utah School Bond Guaranty Program, Series 1999....................................................................................................................................... 1 $10,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2001 ............... 3 $27,240,000 Board of Education of Davis School District Davis County, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program, Series 2002A ..................... 4 $42,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2002B ............ 5 $38,930,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2003 ............... 6 $55,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2003B ............ 7 $52,200,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2005A ............ 9 $24,905,000 Board of Education of Davis School District Davis County, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program, Series 2005B.................... 10 $47,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2006 ............. 11 $55,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2007 ............. 12 $64,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2008)............ 13 DEBT STRUCTURE OF DAVIS SCHOOL DISTRICT, DAVIS COUNTY, UTAH ................................ 15 Outstanding General Obligation Bonded Indebtedness .......................................................................... 15 Debt Service Schedule of Outstanding General Obligation Bonds By Fiscal Year ................................ 16 Other Financial Considerations; Historical Tax And Revenue Anticipation Note Borrowing................ 17 Overlapping And Underlying General Obligation Debt ......................................................................... 18 Debt Ratios.............................................................................................................................................. 19 General Obligation Legal Debt Limit And Additional Debt Incurring Capacity .................................... 19 FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, DAVIS COUNTY, UTAH.......................................................................................................................................................... 20 Statement of Net Assets .......................................................................................................................... 21 Statement of Activities ............................................................................................................................ 22 Balance Sheet/General Fund................................................................................................................... 23 Statement of Revenues, Expenditures and Changes in Fund Balance/General Fund ............................. 24 Historical Tax Rates ................................................................................................................................ 25 Comparative Total Property Tax Rates Within Davis County ................................................................ 26 Taxable, Fair Market And Market Value Of Property ............................................................................ 26 Historical Summaries of Taxable Value of Property ............................................................................... 27 Tax Collection Record ............................................................................................................................ 28 Some Of The Largest Taxpayers ............................................................................................................. 28 THE DISTRICT’S COMPREHENSIVE ANNUAL FINANCIAL REPORT ............................................ 29 ii GENERAL Contact Person For The District As of the date of this Supplemental Continuing Disclosure Memorandum, the chief contact person for the Board of Education (the “Board”) of Davis School District, Davis County, Utah (the “District”) is: Bruce D. Williams, Business Administrator [email protected] Davis School District Administration Center 45 E State St Farmington UT 84025 801.402.5256 | f 801.402.5249 The Board maintains an internet site that may be accessed at davis.k12.ut.us.The information available at this internet site is provided by the Board in the course of its normal operations and has not necessarily been reviewed for accuracy or completeness. Such information is not a part of this Supplemental Continuing Disclosure Memorandum When used herein the terms “Fiscal Year[s]” or “Fiscal Year[s] End[ed][ing] June 30, 20YY” shall refer to the year ended or ending on June 30 of the year indicated and beginning on July 1 of the preceding calendar year. The Issues The Board of Education (the “Board”) of Davis School District, Davis County, Utah (the “District”) is providing continuing disclosure on the following 11 issues: 1. $40,525,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building and Refunding Bonds (Utah School Bond Guaranty Program, Series 1999 Bonds dated: April 15, 1999—Bonds issued on: May 18, 1999 CUSIP numbers on the Bonds are provided below. The 1999 Bonds, as defined herein, were awarded pursuant to electronic competitive bidding held via the Bloomberg Terminal service on April 20, 1999 to First Security Capital Markets, Inc., Salt Lake City, Utah, as Senior Manager; with First Southwest Company, Dallas, Texas; Harris Trust & Savings Bank, Chicago, Illinois; and NationsBank, Seattle, Washington; as Co–Managers; and other members of a syndicate; at a “true interest rate” of 4.38%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $40,525,000 General Obligation School Building and Refunding Bonds (Utah School Bond Guaranty Program), Series 1999, dated April 15, 1999 (the “1999 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of 1 Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). DTC is acting as securities depository for the 1999 Bonds. Payment Dates. Principal of and interest on the 1999 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank National Association, Corporate Trust Services, in Salt Lake City, Utah (“U.S. Bank”), as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The 1999 Bonds maturing on or prior to June 1, 2009, are not subject to call and redemption prior to maturity. The 1999 Bonds maturing on or after June 1, 2010, are subject to redemption at the option of the District on June 1, 2009, and on any date thereafter prior to maturity in whole or in part, from such maturities or parts thereof as may be selected by the District and by lot within each maturity if less than the full amount of any maturity is to be redeemed, upon not less than 30 days prior notice, at a redemption price equal to 100% of the principal amount of the 1999 Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, but without premium. Current Maturity Schedule. Current principal outstanding: $9,160,000 Original issue amount: $40,525,000 Dated: April 15, 1999 Due June 1 2009……. 2010……. 2011……. CUSIP 239019 RK 0 RL 8 RM 6 Due: June 1, as shown below Principal Amount Original Interest Rate Due June 1 $6,205,000 4.375% 2,955,000 4.375 3,080,000 4.50 2012……. 2013……. CUSIP 239019 RN 4 RP 9 Principal Amount $3,220,000 3,365,000 Original Interest Rate 4.50% 4.50 (Strikethrough) These maturities were refunded by the 2005B Bonds, as hereinafter defined. Not Bank Qualified Obligations. The 1999 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 1999 Bonds are general obligations of the Board payable from the proceeds of ad valorem taxes to be levied annually without limitation as to rate or amount on all of the taxable property in the District, fully sufficient to pay the 1999 Bonds as to both principal and interest. State of Utah Guaranty. Payment of the principal of and interest on the 1999 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State of Utah (the “State”) under the provisions of the Utah School Bond Guaranty Act (the “Guaranty Act”). The Guaranty Act establishes the Utah School Bond Default Avoidance Program (the “Utah School Bond Guaranty Program”). 2 2. $10,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2001 Bonds dated: July 15, 2001—Bonds issued on: August 15, 2001 CUSIP numbers on the Bonds are provided below. The 2001 Bonds, as defined herein, were awarded pursuant to electronic competitive bidding held via the Bloomberg and Parity electronic bidding systems on July 31, 2001 to Hutchinson, Shockey, Erley & Co., Chicago, Illinois, at a “true interest rate” of 4.26%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $10,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2001, dated July 15, 2001 (the “2001 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2001 Bonds. Payment Dates. Principal of and interest on the 2001 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The 2001 Bonds maturing on or before June 1, 2011, are not subject to optional redemption prior to maturity. The 2001 Bonds maturing on or after June 1, 2012, are subject to redemption at the option of the Board on December 1, 2011, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as may be selected by the Board at a redemption price equal to 100% of the principal amount of the 2001 Bonds to be redeemed, plus accrued interest thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $2,420,000 Original issue amount: $10,000,000 Dated: July 15, 2001 Due June 1 2009……. 2010……. 2011……. 2012……. CUSIP 239019 SP 8 SQ 6 SR 4 SS 2 Due: June 1, as shown below Principal Amount $445,000 465,000 480,000 505,000 Original Interest Rate Due June 1 4.25 % 4.25 4.375 4.40 2013……. 2014……. 2015……. 2016……. CUSIP 239019 ST 0 SU 7 SV 5 SW 3 Principal Amount $525,000 550,000 575,000 605,000 Original Interest Rate 5.00% 5.00 5.00 5.00 (Strikethrough) These maturities were refunded by the 2005B Bonds, as hereinafter defined. Not Bank Qualified Obligations. The 2001 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. 3 Security. The 2001 Bonds are general obligations of the Board payable from the proceeds of ad valorem taxes to be levied annually without limitation as to rate or amount on all of the taxable property in the District, fully sufficient to pay the 2001 Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2001 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 3. $27,240,000 Board of Education of Davis School District Davis County, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program, Series 2002A Bonds dated: March 1, 2002—Bonds issued on: April 11, 2002 CUSIP numbers on the Bonds are provided below. The 2002A Bonds, as defined herein, were awarded on March 14, 2002, at a negotiated sale to George K. Baum & Company, Kansas City, Missouri and Wells Fargo Brokerage Services, LLC, San Francisco, California, at a “true interest rate” of 4.22%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $27,240,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2002A, dated March 1, 2002 (the “2002A Bonds), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2002A Bonds. Payment Dates. Principal of and interest on the 2002A Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The 2002A Bonds are not subject to call and redemption prior to maturity. Current Maturity Schedule. Current principal outstanding: $15,595,000 Original issue amount: $27,240,000 Dated: March 1, 2002 Due June 1 2009….... 2010…… 2011…… Due: June 1, as shown below CUSIP 239019 Principal Amount TC 6 TD 4 TE 2 $3,640,000 3,790,000 600,000 Original Interest Rate Due June 1 4.25% 4.50 4.50 2011…… 2012…… 2012…… CUSIP 239019 TG 7 TF 9 TH 5 Principal Amount $3,365,000 1,350,000 2,850,000 Original Interest Rate 5.50% 4.75 5.50 Not Bank Qualified Obligations. The 2002A Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. 4 Security. The 2002A Bonds are general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2002A Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2002A Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 4. $42,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2002B Bonds dated: March 1, 2002—Bonds issued on: April 11, 2002 CUSIP numbers on the 2002B Bonds are provided below. The 2002B Bonds, as defined herein, were awarded pursuant to competitive bidding received by means of the Bloomberg and Parity electronic bidding systems on March 26, 2002 to Wells Fargo Brokerage Services, LLC, San Francisco, California, as Senior Manager; with Banc of America Securities LLC, San Francisco, California, as Co–Manager; at a “true interest rate” of 4.79%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $42,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2002B, dated March 1, 2002 (the “2002B Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2002B Bonds. Payment Dates. Principal of and interest on the 2002B Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Optional Redemption. The 2002B Bonds maturing on or before June 1, 2012, are not subject to optional redemption prior to maturity. The 2002B Bonds maturing on or after June 1, 2013, are subject to redemption at the option of the Board on June 1, 2012, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as shall be selected by the Board at a redemption price equal to 100% of the principal amount of the 2002B Bonds to be redeemed, plus accrued interest thereon to the redemption date. (The remainder of this page has been intentionally left blank.) 5 Current Maturity Schedule. Current principal outstanding: $17,600,000 Original issue amount: $42,000,000 Dated: March 1, 2002 Due June 1 2009….... 2010….... 2011…… 2012….... 2013…… Due: June 1, as shown below CUSIP 239019 Principal Amount TQ 5 TR 3 TS 1 TT 9 TU 6 $2,625,000 2,725,000 2,850,000 3,000,000 3,125,000 Original Interest Rate Due June 1 4.50% 4.50 4.60 4.75 4.75 2014…… 2015….... 2016….... 2017….... CUSIP 239019 TV 4 TW 2 TX 0 TY 8 Principal Amount Original Interest Rate $3,275,000 3,425,000 3,600,000 3,775,000 4.90% 5.00 5.10 5.15 (Strikethrough) These maturities were refunded by the 2005B Bonds, as hereinafter defined. Not Bank Qualified Obligations. The 2002B Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2002B Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2002B Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2002B Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 5. $38,930,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2003 Bonds dated: June 1, 2003—Bonds issued on: June 3, 2003 CUSIP numbers on the2003 Bonds are provided below. The 2003 Bonds, as defined herein, were awarded pursuant to competitive bidding received by means of the Bloomberg and Parity electronic bidding systems on May 6, 2003 to Banc of America Securities LLC, Seattle, Washington; at a “true interest rate” of 3.60%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $38,930,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2003, dated June 1, 2003 (the “2003 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2003 Bonds. 6 Payment Dates. Principal of and interest on the 2003 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Optional Redemption. The 2003 Bonds maturing on or before June 1, 2013, are not subject to optional redemption prior to maturity. The 2003 Bonds maturing on or after June 1, 2014, are subject to redemption at the option of the Board on June 1, 2013, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as shall be selected by the Board at a redemption price equal to 100% of the principal amount of the 2003 Bonds to be redeemed, plus accrued interest thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $26,905,000 Original issue amount: $38,930,000 Dated: June 1, 2003 Due June 1 2009….... 2010….... 2011….... 2012…… 2013….... Due: June 1, as shown below CUSIP 239019 Principal Amount UF 7 UG 5 UH 3 UJ 9 UK 6 $2,180,000 2,265,000 2,380,000 2,500,000 2,625,000 Original Interest Rate Due June 1 4.00% 5.00 5.00 5.00 5.00 2014…… 2015…… 2016….... 2017….... 2018….... Principal Amount Original Interest Rate $2,755,000 2,865,000 2,985,000 3,110,000 3,240,000 4.00% 4.125 4.25 4.25 4.25 CUSIP 239019 UL 4 UM 2 UN 0 UP 5 UQ 3 Not Bank Qualified Obligations. The 2003 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2003 Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2003 Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2003 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 6. $55,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2003B Bonds dated: December 10, 2003—Bonds issued on: December 10, 2003 CUSIP numbers on the2003B Bonds are provided below. The 2003B Bonds, as defined herein, were awarded pursuant to competitive bidding received by means of the Parity electronic bidding system on November 18, 2003 to UBS Financial Services Inc., New York, New York; as Senior Manager; with Citigroup, New York, New York; First Albany Corpora- 7 tion, Albany, New York; and Zions First National Bank, Salt Lake City, Utah; as Co–Managers; at a “true interest rate” of 3.69%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $55,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2003B, dated December 10, 2003 (the “2003B Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2003B Bonds. Payment Dates. Principal of and interest on the 2003B Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Optional Redemption. The 2003B Bonds maturing on or before June 1, 2014, are not subject to optional redemption prior to maturity. The 2003B Bonds maturing on or after June 1, 2015, are subject to redemption at the option of the Board on June 1, 2013, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as shall be selected by the Board at a redemption price equal to 100% of the principal amount of the 2003B Bonds to be redeemed, plus accrued interest thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $41,975,000 Original issue amount: $55,000,000 Dated: December 10, 2003 Due June 1 2009….... 2010….... 2011….... 2012…… 2013….... Due: June 1, as shown below CUSIP 239019 Principal Amount UX 8 UY 6 UZ 3 VA 7 VB 5 $3,550,000 3,650,000 3,750,000 3,900,000 4,050,000 Original Interest Rate Due June 1 3.00% 3.00 4.00 4.00 4.00 2014…… 2015…… 2016….... 2017….... 2018….... CUSIP 239019 VC 3 VD 1 VE 9 VF 6 VG 4 Principal Amount Original Interest Rate $4,255,000 4,400,000 4,600,000 4,800,000 5,050,000 4.00 % 4.50 4.50 4.50 4.125 Not Bank Qualified Obligations. The 2003B Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2003B Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2003B Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2003B Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 8 7. $52,200,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2005A Bonds dated: April 13, 2005—Bonds issued on: April 13, 2005 CUSIP numbers on the2003B Bonds are provided below. The 2005A Bonds, as defined herein, were awarded pursuant to competitive bidding received by means of the Parity electronic bidding system on March 15, 2005 to Merrill Lynch & Co., New York, New York; at a “true interest rate” of 4.05%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $52,200,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2005A, dated April 13, 2005 (the “2005A Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2005A Bonds. Payment Dates. Principal of and interest on the 2005A Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Optional Redemption. The 2005A Bonds maturing on or before June 1, 2015, are not subject to optional redemption prior to maturity. The 2005A Bonds maturing on or after June 1, 2016, are subject to redemption at the option of the Board on June 1, 2015, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as shall be selected by the Board at a redemption price equal to 100% of the principal amount of the 2005A Bonds to be redeemed, plus accrued interest thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $44,870,000 Original issue amount: $52,200,000 Dated: April 13, 2005 Due June 1 2009….... 2010….... 2011….... 2012….... 2013…… 2014….... Due: June 1, as shown below CUSIP 239019 Principal Amount VZ 2 WA 6 WB 4 WC 2 WD 0 WE 8 $2,885,000 3,030,000 3,180,000 3,340,000 3,505,000 3,645,000 Original Interest Rate Due June 1 5.00% 5.00 5.00 5.00 4.00 4.50 2015…… 2016…… 2017….... 2018….... 2019….... 2020…… CUSIP 239019 WF 5 WG 3 WH 1 WJ 7 WK 4 WL 2 Principal Amount Original Interest Rate $3,810,000 3,965,000 4,120,000 4,285,000 4,460,000 4,645,000 4.00 % 4.00 4.00 4.00 4.25 4.375 Not Bank Qualified Obligations. The 2005A Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. 9 Security. The 2005A Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2005A Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2005A Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 8. $24,905,000 Board of Education of Davis School District Davis County, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program, Series 2005B Bonds dated: April 13, 2005—Bonds issued on: April 13, 2005 CUSIP numbers on the 2005B Bonds are provided below. The 2005B Bonds, as defined herein, were awarded on March 15, 2005, at a negotiated sale to George K. Baum & Company, Kansas City, Missouri and Wells Fargo Brokerage Services, LLC, San Francisco, California, at a “true interest rate” of 3.94%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $24,905,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2005B, dated April 13, 2005 (the “2005B Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2005B Bonds. Payment Dates. Principal of and interest on the 2005B Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The 2005B Bonds are not subject to call and redemption prior to maturity. Current Maturity Schedule. Current principal outstanding: $21,605,000 Original issue amount: $27,905,000 Dated: April 13, 2005 Due June 1 2011….... 2012….... 2013….... 2014…… Due: June 1, as shown below CUSIP 239019 Principal Amount VP 4 VQ 2 VR 0 VS 8 $2,975,000 3,130,000 3,285,000 480,000 Original Interest Rate Due June 1 5.00% 5.00 5.00 4.25 2015…… 2016…… 2017…… CUSIP 239019 Principal Amount VT 6 VU 3 VV 1 $3,925,000 4,125,000 3,685,000 Original Interest Rate 5.00% 5.00 5.00 Not Bank Qualified Obligations. The 2005B Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. 10 Security. The 2005B Bonds are general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2005B Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2005B Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 9. $47,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2006 Bonds dated: September 20, 2006—Bonds issued on: September 20, 2006 CUSIP numbers on the 2006 Bonds are provided below. The 2006 Bonds, as defined herein, were awarded on September 5, 2006, via competitive sale over the Parity electronic bid submission system to UBS Investment Bank, New York, New York, at a “true interest rate” of 4.04%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $47,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2006, dated September 20, 2006 (the “2006 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2006 Bonds. Payment Dates. Principal of and interest on the 2006 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The 2006 Bonds maturing on or prior to June 1, 2016, are not subject to optional redemption prior to maturity. The 2006 Bonds maturing on or after June 1, 2017 are subject to redemption at the option of the Board on December 1, 2016, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as will be selected by the Board, upon notice given as provided in the Bond Resolution and described below, at a redemption price equal to 100% of the principal amount of the 2006 Bonds to be redeemed, plus accrued interest thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $44,600,000 Original issue amount: $47,000,000 Dated: September 20, 2006 Due June 1 2009….... 2010….... 2011……. 2012…… 2013…… 2014….... 2015…… CUSIP 239019 WR 9 WS 7 WT 5 WU 2 WV 0 WW 8 WX 6 Principal Amount $2,650,000 2,750,000 2,850,000 2,975,000 3,100,000 3,225,000 3,375,000 Due: June 1, as shown below Original Interest Rate Due June 1 4.00% 4.00 4.00 4.00 4.00 5.00 5.00 2016…… 2017…… 2018…… 2019…… 2020…… 2021…… 11 CUSIP 239019 WY 4 WZ 1 XA 5 XB 3 XC 1 XD 9 Principal Amount $3,550,000 3,700,000 3,850,000 4,025,000 4,175,000 4,375,000 Original Interest Rate 4.25% 4.25 4.25 4.25 4.25 4.25 Not Bank Qualified Obligations. The 2006 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2006 Bonds are general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2006 Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2006 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 10. $55,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2007 Bonds dated: August 1, 2007—Bonds issued on: July 10, 2007 CUSIP numbers on the 2007 Bonds are provided below. The 2007 Bonds, as defined herein, were awarded on July 10, 2007, via competitive sale over the Parity electronic bid submission system to Piper Jaffray, Minneapolis, Minnesota, at a “true interest rate” of 4.37%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $55,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2007, dated August 1, 2007 (the “2007 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2007 Bonds. Payment Dates. Principal of and interest on the 2007 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. Redemption Provisions. The Bonds maturing on or after June 1, 2018 are subject to redemption at the option of the Board on June 1, 2017, and on any date thereafter prior to maturity, in whole or in part, from such maturities or parts thereof as will be selected by the Board, upon notice given as provided in the bond resolution, at a redemption price equal to 100% of the principal amount of the 2007 Bonds to be redeemed, plus accrued interest thereon to the redemption date. (The remainder of this page has been intentionally left blank.) 12 Current Maturity Schedule. Current principal outstanding: $54,150,000 Original issue amount: $55,000,000 Dated: August 1, 2007 Due June 1 CUSIP 239019 2009….... 2010….... 2011……. 2012…… 2013…… 2014….... 2015…… XG 2 XH 0 XJ 6 XK 3 XL 1 XM 9 XN 7 Due: June 1, as shown below Principal Amount $ 100,000 450,000 475,000 500,000 4,300,000 4,475,000 4,675,000 Original Interest Rate Due June 1 CUSIP 239019 Principal Amount 4.00 % 4.00 4.125 4.25 4.25 4.25 4.25 2016…… 2017…… 2018…… 2019…… 2020…… 2021…… 2022…… XP 2 XQ 0 XR 8 XS 6 XT 4 XU 1 XV 9 $4,875,000 5,100,000 5,325,000 5,550,000 5,825,000 6,100,000 6,400,000 Original Interest Rate 4.50% 4.50 4.50 5.00 4.75 4.75 4.75 Not Bank Qualified Obligations. The 2007 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2007 Bonds are general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2007 Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2007 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. 11. $64,000,000 Board of Education of Davis School District Davis County, Utah General Obligation School Building Bonds (Utah School Bond Guaranty Program, Series 2008) Bonds dated: May 7, 2008—Bonds issued on: May 7, 2008 CUSIP numbers on the 2008 Bonds are provided below. The 2008 Bonds, as defined herein, were awarded on April 22, 2008, via competitive sale over the Parity electronic bid submission system to Piper Jaffray, Minneapolis, Minnesota, at a “true interest rate” of 4.24%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. Background Information. The $64,000,000 General Obligation School Building Bonds (Utah School Bond Guaranty Program), Series 2008, dated May 7, 2008 (the “2008 Bonds”), were issued by the Board as fully–registered bonds in book–entry only form, registered in the name of Cede & Co., as nominee for DTC. DTC is acting as securities depository for the 2008 Bonds. Payment Dates. Principal of and interest on the 2008 Bonds (interest payable June 1 and December 1 of each year) are payable by U.S. Bank, as Paying Agent, to the registered owners thereof, currently DTC. 13 Optional Redemption. The 2008 Bonds maturing on and after June 1, 2018 are subject to redemption prior to maturity in whole or in part at the option of the Board on December 1, 2017 or on any date thereafter, from such maturities or parts thereof as shall be selected by the Board at the redemption price of 100% of the principal amount to be redeemed plus accrued interest (if any) thereon to the redemption date. Current Maturity Schedule. Current principal outstanding: $64,000,000 Original issue amount: $64,000,000 Dated: May 7, 2008 Due: June 1, as shown below Due June 1 CUSIP 239019 Principal Amount Original Interest Rate 2009….... 2010….... 2011….... 2012…… 2013…… 2014…… 2015….... 2016…… 2017…… 2018…… XX 5 XY 3 XZ 0 YA 4 YB 2 YC 0 YD 8 YE 6 YF 3 YG 1 $3,100,000 2,220,000 2,275,000 2,350,000 2,425,000 2,500,000 2,600,000 2,675,000 2,800,000 2,925,000 3.00% 3.00 3.00 3.25 3.25 3.50 3.50 3.75 5.00 4.00 Due June 1 CUSIP 239019 Principal Amount Original Interest Rate 2019…… 2020…… 2021…… 2022…… 2023…… 2024…… 2025…… 2026…… 2027…… 2028…… YH 9 YJ 5 YK 2 YL 0 YM 8 YN 6 YP 1 YQ 9 YR 7 XW 7 $3,050,000 3,175,000 3,300,000 3,450,000 3,625,000 3,775,000 3,950,000 4,125,000 4,325,000 5,355,000 4.25 % 4.25 4.50 4.50 4.50 4.625 4.75 4.75 4.75 4.75 Not Bank Qualified Obligations. The 2008 Bonds were not designated as “qualified tax–exempt obligations” pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986, relating to the deductibility of certain financial institutions’ interest expense allocable to tax–exempt interest. Security. The 2008 Bonds are general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2008 Bonds as to both principal and interest. State Guaranty. Payment of the principal of and interest on the 2008 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. (The remainder of this page has been intentionally left blank.) 14 DEBT STRUCTURE OF DAVIS SCHOOL DISTRICT, DAVIS COUNTY, UTAH Outstanding General Obligation Bonded Indebtedness Series (1) Purpose Original Principal Amount 2008 ..................... 2007 ..................... 2006 ..................... 2005B................... 2005A................... 2003B................... 2003 ..................... 2002B (2) ............. 2002A................... 2001 (2) (3) .......... 1999 (2)................ School building School building School building Refunding School building School building School building School building Refunding School building Building and Refunding $64,000,000 55,000,000 47,000,000 24,905,000 52,200,000 55,000,000 38,930,000 42,000,000 27,240,000 10,000,000 40,525,000 Final Maturity Date June 1, 2022 June 1, 2022 June 1, 2021 June 1, 2017 June 1, 2020 June 1, 2018 June 1, 2018 June 1, 2014 (4) June 1, 2012 June 1, 2013 (4) June 1, 2010 (4) Total principal amount of Outstanding Direct Debt (5) ................................................. Current Principal Outstanding $ 64,000,000 54,150,000 44,600,000 21,605,000 44,870,000 41,975,000 26,905,000 17,600,000 15,595,000 2,420,000 9,160,000 $342,880,000 (1) Rated “Aaa” (State of Utah Guaranty; underlying “Aa3”) by Moody’s, as of the date of this SUPPLEMENTAL CONTINUING DISCLOSURE MEMORANDUM. (2) Portions of these bonds were refunded by the 2005B Bonds. (3) Rated “Aaa” (State of Utah Guaranty; underlying “Aa3”) by Moody’s and “AAA” (State of Utah Guaranty; underlying “A+”) by Fitch, as of the date of this SUPPLEMENTAL CONTINUING DISCLOSURE MEMORANDUM. (4) Final maturity date after portions of these bonds was refunded by the 2005B Bonds. (5) For accounting purposes, the outstanding direct debt as shown above is increased by the premium associated with debt issued and reduced by deferred amounts on refundings that are reported in the long–term debt notes of the Board’s financial statements. Thus, for accounting purposes, the total unamortized bond premium was $7,853,771 and the total deferred amount was $868,197 (as of June 30, 2008), and together with current outstanding direct debt of $342,880,000, results in total outstanding direct debt (net) of $349,865,574. (The remainder of this page has been intentionally left blank.) 15 Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Fiscal Year Ending June 30 Series 2008 $64,000,000 Principal 2008…………… $ 0 2009…………… 3,100,000 2010…………… 2,220,000 2011…………… 2,275,000 2012…………… 2,350,000 2013…………… 2,425,000 2014…………… 2,500,000 2015…………… 2,600,000 2016…………… 2,675,000 2017…………… 2,800,000 2018…………… 2,925,000 2019…………… 3,050,000 2020…………… 3,175,000 2021…………… 3,300,000 2022…………… 3,450,000 2023…………… 3,625,000 2024…………… 3,775,000 2025…………… 3,950,000 2026…………… 4,125,000 2027…………… 4,325,000 2028…………… 5,355,000 Totals…… $ 64,000,000 Fiscal Year Ending June 30 (1) Interest $ 0 2,846,127 2,575,244 2,508,644 2,440,394 2,364,019 2,285,206 2,197,706 2,106,706 2,006,394 1,866,394 1,749,394 1,619,769 1,484,831 1,336,331 1,181,081 1,017,956 843,363 655,738 459,800 254,363 $ 33,799,458 Series 2002B $42,000,000 Principal 2008…………… $ 2,525,000 2009…………… 2,625,000 2010…………… 2,725,000 2011…………… 2,850,000 2012…………… 3,000,000 2013…………… 3,125,000 2014…………… 3,275,000 2015…………… 0 2016…………… 0 2017…………… 0 2018…………… – 2019…………… – 2020…………… – 2021…………… – 2022…………… – 2023…………… – 2024…………… – 2025…………… – 2026…………… – 2027…………… – 2028…………… – Totals…… $ 20,125,000 Series 2007 $55,000,000 Interest $ Principal $ Series 2006 $47,000,000 Interest Principal Series 2005B $24,905,000 Series 2005A $52,200,000 Series 2003B $55,000,000 Interest Principal Interest Principal Interest Principal Interest 850,000 100,000 450,000 475,000 500,000 4,300,000 4,475,000 4,675,000 4,875,000 5,100,000 5,325,000 5,550,000 5,825,000 6,100,000 6,400,000 – – – – – – $ 2,087,422 2,470,906 2,466,906 2,448,906 2,429,313 2,408,063 2,225,313 2,035,125 1,836,438 1,617,063 1,387,563 1,147,938 870,438 593,750 304,000 – – – – – – $ 825,000 2,650,000 2,750,000 2,850,000 2,975,000 3,100,000 3,225,000 3,375,000 3,550,000 3,700,000 3,850,000 4,025,000 4,175,000 4,375,000 – – – – – – – $ 1,942,188 1,909,188 1,803,188 1,693,188 1,579,188 1,460,188 1,336,188 1,174,938 1,006,188 855,313 698,063 534,438 363,375 185,938 – – – – – – – $ 3,300,000 0 0 2,975,000 3,130,000 3,285,000 480,000 3,925,000 4,125,000 3,685,000 – – – – – – – – – – – $ 1,222,150 1,076,650 1,076,650 1,076,650 927,900 771,400 607,150 586,750 390,500 184,250 – – – – – – – – – – – $ 2,745,000 2,885,000 3,030,000 3,180,000 3,340,000 3,505,000 3,645,000 3,810,000 3,965,000 4,120,000 4,285,000 4,460,000 4,645,000 – – – – – – – – $ 2,103,194 1,965,944 1,821,694 1,670,194 1,511,194 1,344,194 1,203,994 1,039,969 887,569 728,969 564,169 392,769 203,219 – – – – – – – – $ 3,425,000 3,550,000 3,650,000 3,750,000 3,900,000 4,050,000 4,225,000 4,400,000 4,600,000 4,800,000 5,050,000 – – – – – – – – – – $ $ 55,000,000 $ 26,329,141 $ 45,425,000 $ 16,541,563 $ 24,905,000 $ 7,920,050 $ 47,615,000 $ 15,437,069 $ 45,400,000 $ 12,077,688 Series 2002A $27,240,000 Principal 936,888 $ 2,210,000 823,263 3,640,000 705,138 3,790,000 582,513 3,965,000 451,413 4,200,000 308,913 – 160,475 – 0 (1) – 0 (1) – 0 (1) – – – – – – – – – – – – – – – – – – – – – – – $ 3,968,600 $ 17,805,000 Series 2001 $10,000,000 Interest $ 852,125 758,200 603,500 432,950 220,875 – – – – – – – – – – – – – – – – $ 2,867,650 Principal $ 425,000 445,000 465,000 480,000 505,000 525,000 0 0 0 – – – – – – – – – – – – $ 2,845,000 Series 1999 $40,525,000 Interest $ $ Principal 126,208 $ 5,205,000 108,145 6,205,000 89,233 2,955,000 69,470 0 48,470 0 26,250 0 0 (1) – 0 (1) – 0 (1) – – – – – – – – – – – – – – – – – – – – – – – – – 467,775 $ 14,365,000 Principal and interest were refunded by the $24,905,000 2005B Bonds. 16 Interest Series 2003 $38,930,000 1,785,063 1,682,313 1,575,813 1,466,313 1,316,313 1,160,313 998,313 829,313 631,313 424,313 208,313 – – – – – – – – – – Principal $ Interest 2,095,000 2,180,000 2,265,000 2,380,000 2,500,000 2,625,000 2,755,000 2,865,000 2,985,000 3,110,000 3,240,000 – – – – – – – – – – $ 1,284,619 1,200,819 1,113,619 1,000,369 881,369 756,369 625,119 514,919 396,738 269,875 137,700 – – – – – – – – – – $ 29,000,000 $ 8,181,513 Totals Total Total Total Debt Principal Interest Service $ 12,968,323 15,242,303 13,960,264 12,949,195 11,806,426 10,599,706 9,441,756 8,378,719 7,255,450 6,086,175 4,862,200 3,824,538 3,056,800 2,264,519 1,640,331 1,181,081 1,017,956 843,363 655,738 459,800 254,363 $ 128,749,005 $ 36,573,323 42,622,303 38,260,264 38,129,195 38,206,426 37,539,706 34,021,756 34,028,719 34,030,450 33,401,175 29,537,200 20,909,538 20,876,800 16,039,519 11,490,331 4,806,081 4,792,956 4,793,363 4,780,738 4,784,800 5,609,363 $ 495,234,005 $ 628,469 …………………………………………………… $ 23,605,000 400,750 …………………………………………………… 27,380,000 129,281 …………………………………………………… 24,300,000 0 (1) …………………………………………………… 25,180,000 0 (1) …………………………………………………… 26,400,000 0 (1) …………………………………………………… 26,940,000 – …………………………………………………… 24,580,000 – …………………………………………………… 25,650,000 – …………………………………………………… 26,775,000 – …………………………………………………… 27,315,000 – …………………………………………………… 24,675,000 – …………………………………………………… 17,085,000 – …………………………………………………… 17,820,000 – …………………………………………………… 13,775,000 – …………………………………………………… 9,850,000 – …………………………………………………… 3,625,000 – …………………………………………………… 3,775,000 – …………………………………………………… 3,950,000 – …………………………………………………… 4,125,000 – …………………………………………………… 4,325,000 – …………………………………………………… 5,355,000 $ 1,158,500 …………………………………………………… $ 366,485,000 Other Financial Considerations; Historical Tax And Revenue Anticipation Note Borrowing Other Financial Considerations. In June 1996, the Municipal Building Authority of Farmington City, Utah, issued $4.3 million lease revenue bonds which proceeds were used to construct an office building. These lease revenue bonds were then refunded by the Municipal Building Authority of Farmington City, Utah in 1999. The Board entered into a lease agreement with the Municipal Building Authority of Farmington City to lease the building. Payments are made by the Board to the Municipal Building Authority of Farmington City, who in turn makes the lease payments on the lease revenue bonds. The current principal amount outstanding is $1,570,000, with principal payments occurring every June 15, until the year 2012. This obligation is accounted for in the total capital lease obligations of the District. In June 1994, the Municipal Building Authority of Davis County, Utah, issued $1,165,000 Lease Revenue Bonds. These bond proceeds were used to construct a building for the Head Start program that is administered by the District. The Board entered into a lease agreement with the Municipal Building Authority of Davis County to lease the building. Payments are made by the Board to the Municipal Building Authority of Davis County, who in turn makes the lease payments on the lease revenue bonds. The current principal amount outstanding is $60,000, with principal payments occurring every May 1 and November 1, until the year 2009. This obligation is accounted for in the total capital lease obligations of the District. Historical Tax And Revenue Anticipation Note Borrowing. The Board has issued tax anticipation notes for each of the past five Fiscal Years as follows: Fiscal Year Ending 6–30 Series 2009 (1).................. 2008 ....................... 2007 ....................... 2006 ....................... 2005 ....................... 2008 2007 2006 2005 2004 Amount $30,000,000 30,000,000 30,000,000 25,000,000 25,000,000 Date of Sale June 17, 2008 June 19, 2007 June 20, 2006 June 7, 2005 June 15, 2004 Type of Sale Public Public Public Public Public (1) Principal and interest on these notes are due Tuesday, June 30, 2009. (Source: The District.) (The remainder of this page has been intentionally left blank.) 17 Moody’s Rating MIG 1 MIG 1 MIG 1 MIG 1 MIG 1 Overlapping And Underlying General Obligation Debt Taxing Entity 2008 Taxable Value (1) Board’s Portion of Taxable Value Board’s Percentage Entity’s General Obligation Debt Board’s Portion of G.O. Debt Overlapping: State of Utah ............ $213,234,293,543 $17,019,683,493 8.0% $993,810,000 $ 79,504,800 Davis County ........... 17,019,683,493 17,019,683,493 100.0 22,805,000 22,805,000 Total Overlapping.............................................................................................................. 102,309,800 Underlying: WBWCD (2) (3) ...... $48,965,264,287 $17,019,683,493 34.8 $30,986,402 North Davis Sewer District .................. 8,692,084,169 7,448,143,158 85.7 53,613,000 Clearfield City (3) .... 1,350,632,171 1,350,632,171 100.0 10,575,000 North Salt Lake City (3).................. 1,575,189,512 1,575,189,512 100.0 4,495,000 Farmington City ....... 1,038,841,535 1,038,841,535 100.0 4,369,000 Clinton City (3)........ 765,102,093 765,102,093 100.0 272,000 West Bountiful City (3).................. 450,346,084 450,346,084 100.0 1,035,000 South Davis Rec. District (4)............. 6,620,838,231 6,620,838,231 100.0 16,290,000 Total Underlying ............................................................................................................... 10,783,268 45,946,341 0 0 4,369,000 0 0 16,290,000 77,388,609 Total Overlapping and Underlying General Obligation Debt.................................................. $179,698,409 Total Overlapping General Obligation Debt (Excluding the State) (5) ................................... $ 22,805,000 Total Direct General Obligation Bonded Indebtedness ........................................................... 342,880,000 Total Direct and Overlapping General Obligation Debt (Excluding the State) (5) ................. $365,685,000 This table excludes any additional principal amounts attributable to unamortized original issue bond premium and deferred amount on refunding. (1) 2008 values are preliminary and subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The Weber Basin Water Conservancy District (“WBWCD”) covers all of Morgan County, most of the County and Weber Counties, and portions of Box Elder and Summit Counties. Principal and interest on WBWCD general obligation bonds are paid from sales of water. WBWCD’s outstanding general obligation bonds are limited ad valorem tax bonds. By law, WBWCD may levy a tax rate of up to .000200 to pay, first, for any outstanding general obligation indebtedness, then for operation and maintenance expenses, and then for any other lawful purpose. (3) All or portions of these governmental entities outstanding general obligation debt are supported by user fee revenues from water or sewer. The County’s portion of overlapping general obligation debt has been reduced to the extent that such general obligation debt is supported by “user fee revenues.” (4) South Davis Recreation District members are Bountiful, Centerville, North Salt Lake, Woods Cross, and West Bountiful (5) The State’s general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. 18 Debt Ratios The following table sets forth the ratios of general obligation debt (excluding any additional principal amounts attributable to unamortized original issue bond premium) that is expected to be paid from taxes levied specifically for such debt and not from other revenues over the taxable value of property within the District, the estimated market value of such property and the population of the District. The State’s general obligation debt is not included in the debt ratios because the State currently levies no property tax for payment of general obligation debt. To 2008 Estimated Taxable Value (1) To 2008 Estimated Market Value (2) To 2008 Population Estimate Per Capita (3) Direct General Obligation Debt ...................................... 2.01% 1.28% $1,135 Direct and Overlapping General Obligation Debt .......... 2.15 1.37 1,211 (1) Based on an estimated 2008 Taxable Value of $17,019,683,493, which value excludes the taxable value used to determine uniform fees on tangible personal property. (2) Based on an estimated 2008 Market Value of $26,705,728,948, which value excludes the taxable value used to determine uniform fees on tangible personal property. (3) Based on 2008 population estimate of 301,915 by the Utah Population Estimates Committee. General Obligation Legal Debt Limit And Additional Debt Incurring Capacity The general obligation indebtedness of the Board is limited by State law to 4% of the fair market value of taxable property in the District. The legal debt limit and additional debt incurring capacity of the Board (after the issuance of the Bonds) are based on the estimated fair market value for 2008 and the calculated valuation value from 2007 uniform fees, and are calculated as follows: Estimated 2008 “Fair Market Value” ................................................................................ $26,705,728,948 2007 Valuation from Uniform Fees (1)............................................................................. 1,289,526,308 Estimated 2008 “Fair Market Value for Debt Incurring Capacity”................................... $27,995,255,256 “Fair Market Value for Debt Incurring Capacity” times 4% (the “Debt Limit”) .............. Less: Current Outstanding General Obligation Debt (2) .................................................. $1,119,810,210 (349,865,574) Estimated Additional Debt Incurring Capacity ................................................................. $ 769,944,636 (1) For debt incurring capacity only, in computing the fair market value of taxable property in the District, the value of all motor vehicles and state–assessed commercial vehicles (which value is determined by dividing the uniform fee revenue by 1.5%) will be included as a part of the fair market value of the taxable property in the District. (2) For legal debt limit purposes, the outstanding general obligation debt of the Board must be increased by the premium associated with debt issued and reduced by deferred amounts on refunding. Thus, for accounting purposes, the total unamortized bond premium was $7,853,771 and the total deferred amount was $868,197 (as of June 30, 2008), and together with current outstanding direct debt of $342,880,000, results in total outstanding direct debt (net) of $349,865,574. No Defaulted Obligations The Board has never failed to pay principal of and interest on its financial obligations when due. 19 FINANCIAL INFORMATION REGARDING DAVIS SCHOOL DISTRICT, DAVIS COUNTY, UTAH Five–Year Financial Summaries The summaries contained herein were extracted from the District’s Comprehensive Annual Financial Report for the Fiscal Years 2004 through 2008. The summaries itself have not been audited. (The remainder of this page has been intentionally left blank.) 20 Davis School District Statement of Net Assets Primary Government (This summary has not been audited) 2008 Assets Cash and investments…………………………… $ 142,975,081 Receivables: Property taxes………………………………… 110,245,364 Other local…………………………………… 1,443,469 State of Utah…………………………………… 319,387 Federal government…………………………… 8,909,251 Internal balances………………………………… 41,610 Inventories……………………………………… 7,069,016 1,656,771 Bond issuance costs, net………………………… Capital assets: Land and construction………………………… 66,931,588 Other capital assets, net of depreciation……… 372,348,337 Total assets………………………… 711,939,874 Liabilities: Accounts payable………………………………… 5,666,661 Notes payable…………………………………… 250,000 Accrued interest………………………………… 1,038,995 Accrued salaries………………………………… 58,741,506 Deferred revenue: Federal grants………………………………… – Property tax revenue…………...……………… 103,596,768 Noncurrent liabilities: 29,075,864 Due within one year…………………………… Due in more than one year…………………… 339,692,400 Total liabilities……………………… 538,062,194 Net Assets: 134,624,761 Invested in capital assets, net of related debt…… Restricted for: Debt service…………..……………………… 4,586,918 Capital projects…………..…………………… 28,487,591 7,904,535 State multi–district programs………………… Unrestricted………………...…………………… (1,726,125) Total net assets…………………….. $ 173,877,680 2007 June 30 2006 2005 2004 $ 46,835,727 $ 42,842,410 $ 64,103,183 $ 58,155,305 98,307,595 2,720,228 1,166,127 8,083,093 – 6,857,484 1,367,728 85,409,855 2,892,912 1,583,837 2,634,618 – 6,990,701 1,212,096 81,548,408 3,443,915 1,775,790 15,406,538 – 6,711,482 1,318,082 111,642,273 307,863,895 584,844,150 65,746,451 304,119,470 513,432,350 60,573,010 294,637,599 529,518,007 82,903,234 253,697,841 489,517,072 14,543,632 250,000 906,803 41,444,046 7,644,478 300,000 787,905 34,208,984 5,375,817 250,000 699,941 47,247,374 4,714,112 250,000 578,112 45,185,233 – 93,868,232 31,627 80,361,895 – 76,212,324 – 72,770,204 31,155,531 240,480,216 422,648,460 28,089,580 217,941,294 369,365,763 24,929,249 237,679,326 392,394,031 23,707,174 202,871,909 350,076,744 159,237,527 132,677,347 134,705,100 135,241,562 2,152,675 272,031 242,747 290,709 $ 162,195,689 1,934,476 12,674,267 55,004 (3,274,507) $ 144,066,587 1,486,977 2,442,345 41,954 (1,552,400) $ 137,123,976 (Source: Information taken from the District’s audited basic financial statements. This summary itself has not been audited.) 21 77,996,023 3,103,274 3,658,496 2,802,610 (3,155,005) 9,222,057 1,133,237 1,647,484 3,752,803 178,261 (1,379,782) $ 139,440,328 Davis School District Statement of Activities (1) Primary Government (This summary has not been audited) Net (Expense) Revenue and Changes in Net Assets June 30 2008 Primary government: Governmental activities: Instructional services……………………………………….. $ (237,982,642) Supporting services: (9,378,058) Student…………………………………………………… (13,914,395) Instructional staff………………………………………… (3,222,128) District administration…………………………………… School administration…………………………………… (22,996,197) (10,014,910) Business administration……………..…………………… Operation and maintenance of facilities………………… (38,927,930) Student transportation…………………………………… (5,190,767) (13,534,129) Interest on long–term liabilities……………………………… Total governmental activities……………………… (355,161,156) Business–type activities: 250,614 School food services………………………………………… 505,598 Pioneer Adult Rehabilitation Center………………………… Total business–type activities…………………… 756,212 Total primary government………………………… (354,404,944) General revenues: Property taxes levied for: 20,755,944 Basic levy set by state for K–12 instruction………………… 24,268,903 Board voted leeway for K–12 instruction…………………… 6,067,297 Class size reduction………………………………………… 1,835,310 Reading program…………………………………………… 10,408,239 10% of basic for capital outlay, textbooks, and supplies…… Transportation……………………………………………… 2,335,233 2,950,136 Community recreation……………………………………… General obligation bond debt service……………………… 38,948,551 1,104,479 Capital outlay………………………………………………… – General purposes…………………………………………… Federal and state aid not restricted to specific purposes……… 240,324,714 5,270,686 Interest………………………………………………………… Miscellaneous………………………………………………… 20,191,090 374,460,582 Total general revenues…………………………… 20,055,638 Change in net assets……………………………… 169,088,461 Net assets–beginning………………...……………………………… Net assets–ending……………………..…………………………… $ 189,144,099 2007 2006 2005 2004 $ (182,164,444) $ (173,697,749) $ (164,040,785) $ (153,662,755) (8,272,325) (12,308,323) (3,270,851) (20,674,980) (8,637,547) (35,498,245) (5,500,664) (12,435,282) (288,762,661) (7,928,765) (10,884,849) (2,867,761) (19,307,573) (7,760,912) (34,336,655) (5,951,962) (12,102,047) (274,838,273) (7,159,850) (10,658,172) (2,712,108) (18,310,908) (7,253,409) (31,499,415) (3,639,200) (11,129,849) (256,403,698) (6,854,678) (10,887,312) (2,535,553) (17,229,590) (7,620,143) (28,612,592) (3,888,934) (8,837,120) (240,128,677) 787,690 853,342 1,641,032 (287,121,629) 650,543 474,273 1,124,816 (273,713,457) 114,485 91,981 206,466 (256,197,232) 1,536,895 (71,229) 1,465,666 (238,663,011) 21,240,634 20,033,019 5,004,899 1,516,229 9,915,875 1,959,023 2,804,354 34,497,583 1,046,602 – 195,629,473 5,265,672 6,337,369 305,250,732 18,129,103 144,066,587 22,014,536 19,336,429 4,827,964 1,461,904 9,569,935 1,891,874 2,702,677 31,584,472 1,007,362 – 180,255,595 3,601,913 2,401,407 280,656,068 6,942,611 137,123,976 – – – – – 1,789,916 2,553,765 28,899,586 10,046,025 45,875,875 160,620,652 3,155,007 940,054 253,880,880 (2,316,352) 139,440,328 – – – – – 1,747,691 2,488,801 27,952,903 9,801,214 43,524,583 157,464,947 871,855 34,027 243,886,021 5,223,010 134,217,318 $ 162,195,690 $ 144,066,587 $ 137,123,976 $ 139,440,328 (1) This report is presented is summary format concerning the single item of “Net (Expense) Reveune and Changes in Net Assets” and is not intended to be complete. For a detailed itemized report see “BASIC FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION FOR FISCAL YEAR 2008–Statement of Activities for the Fiscal Year Ended June 30, 2008” below. (Source: Information taken from the District’s audited basic financial statements. This summary itself has not been audited.) 22 Davis School District Balance Sheet—General Fund (This summary has not been audited) Fiscal Year Ended June 30 2007 2006 2005 2008 Assets and other debits Cash and investments…………………………………… $ 49,088,547 Receivables: Property taxes………………………………………… 57,366,237 1,327,652 Other local…………………………………………… 306,062 State of Utah………………………………………… Federal government………………………………… 8,890,879 4,945,000 Due from other funds…………………………………… 3,068,975 Inventories……………………………………………… Total assets and other debits……………… $ 124,993,352 Liabilities, equity and other credits Liabilities: Accounts payable…………………………………… $ 893,548 Notes payable...……………………………………… 250,000 58,741,506 Accrued payroll and withholding…………………… Deferred revenue: Property taxes……………………………………… 55,355,386 – Federal grants……………………………………… Total liabilities…………………………… 115,240,440 Equity and other credits: Fund balances: Reserved for: 3,068,975 Inventories……………………………………… Unreserved: Designated: 300,000 Workers Compensation……………………… 2,500,000 Termination benefits………………………… Undesignated, reported in 3,883,937 General Fund………………………………… 9,752,912 Total fund balances………………………… Total liabilities, equity and other credits… $ 124,993,352 $ 32,155,331 $ 27,811,342 $ 23,499,771 $ 32,258,480 52,663,237 1,307,255 230,585 7,650,317 5,711,348 1,619,498 45,884,024 1,544,124 714,461 2,243,310 7,074,728 1,668,283 45,195,841 2,066,916 1,264,394 15,166,144 8,699,197 1,395,663 43,626,516 2,136,822 3,151,561 2,586,226 8,938,398 819,464 $ 101,337,571 $ 86,940,272 $ 97,287,926 $ 93,517,467 $ 769,418 250,000 41,444,046 $ 2,062,056 300,000 34,208,984 $ $ 51,389,009 – 93,852,473 44,256,193 31,627 80,858,860 43,550,470 – 92,008,318 42,082,350 – 88,320,780 1,619,498 1,668,283 1,395,663 819,464 300,000 1,500,000 300,000 750,000 250,000 – 250,000 – 4,065,600 7,485,098 3,363,129 6,081,412 3,633,945 5,279,608 4,127,223 5,196,687 $ 101,337,571 $ 86,940,272 $ 97,287,926 $ 93,517,467 960,474 250,000 47,247,374 (Source: Information taken from the District’s audited basic financial statements. This summary itself has not been audited.) 23 2004 803,197 250,000 45,185,233 Davis School District Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds–General Fund (This summary has not been audited) 2008 Revenues: Property taxes…………………………………… $ 57,768,398 2,246,225 Interest……….………………………………… 8,133,104 Other local sources……………………………… State of Utah…………………………………… 285,130,055 Federal government…………………………… 26,271,524 Total revenues………………………… 379,549,306 Expenditures: Current: Instruction…………………………………… 262,279,194 Support services: 13,312,679 Students…………………………………… 17,574,702 Instructional staff………………………… District administration…………………… 3,204,530 School administration……………………… 22,712,165 Business administration…………………… 10,946,328 Operation and maintenance of facilities…… 38,100,173 12,138,708 Student transportation services…………… 1,345,800 Debt service (tax anticipation note interest)…… Debt service (capital lease payments)………… 667,213 Total expenditures……………………… 382,281,492 (2,732,186) Revenues over (under) expenditures……………… Other financing sources (uses): 5,000,000 Transfers………………………………………… 5,000,000 Total other financing sources (uses)…… Net change in fund balances…………………… 2,267,814 7,485,098 Fund balances–beginning………………………… Fund balances–ending…………………………… $ 9,752,912 2007 Fiscal Year Ended June 30 2006 2005 2004 $ 52,581,340 1,780,516 12,115,817 239,589,195 26,371,759 332,438,627 $ 52,438,512 1,352,833 6,659,775 222,852,502 24,810,650 308,114,272 $ 50,230,127 3,155,007 5,335,751 203,782,077 25,749,675 288,252,637 $ 47,712,528 871,855 3,607,063 198,984,982 24,355,326 275,531,754 227,618,092 211,904,631 203,008,357 193,677,546 11,782,588 15,202,804 3,253,753 20,512,554 9,428,097 35,542,521 11,153,436 1,373,883 667,213 336,534,941 (4,096,314) 11,362,816 14,165,716 2,851,311 19,052,775 8,584,891 33,694,624 11,033,880 994,611 667,213 314,312,468 (6,198,196) 10,782,609 13,826,643 2,758,154 18,186,049 8,059,917 30,770,797 8,790,782 792,515 293,893 297,269,716 (9,017,079) 10,253,567 13,606,938 2,555,220 17,458,085 7,704,925 29,447,103 8,457,092 419,055 293,893 283,873,424 (8,341,670) 5,500,000 5,500,000 1,403,686 6,081,412 $ 7,485,098 7,000,000 7,000,000 801,804 5,279,608 $ 6,081,412 9,100,000 9,100,000 82,921 5,196,687 $ 5,279,608 8,837,400 8,837,400 495,730 4,700,957 $ (Source: Information taken from the District’s audited basic financial statements. This summary itself has not been audited.) 24 5,196,687 Historical Tax Rates Tax Rate Maximum Tax Rate (1) 2008–09 2007–08 2006–07 2005–06 2004–05 General Fund and Non K–12 Fund: Basic Program (2) ...................................... formula Voted Leeway (3) ...................................... .001600 Board Voted Leeway (4)............................ .000400 K-3 Reading Program ................................ .000121 Special Transportation (5).......................... .000300 Tort Liability (6) ........................................ .000100 Totals............................................................................... .001250 .001430 .000357 .000108 .000138 .000056 .003339 .001311 .001600 .000400 .000121 .000154 .000063 .003649 .001515 .001493 .000373 .000113 .000146 .000068 .003708 .001720 .001574 .000393 .000119 .000154 .000072 .004032 .001800 .001600 .000400 .000121 .000157 .000073 .004151 .000174 .000195 .000209 .000220 .000224 Capital Outlay (8) ...................................... .002400 .000065 10% of Basic Program (9).......................... formula .000615 Totals............................................................................... .000680 .000073 .000688 .000761 .000078 .000739 .000817 .000082 .000779 .000861 .000083 .000792 .000875 Recreation (7) ................................................ none Capital Outlay: Debt Service (general obligation bonds): Debt Service (10) ....................................... none .002571 .002571 .002571 .002571 .002571 Judgment Recovery Levy (11) ...................... none .000000 .000000 .000000 .000000 .000000 Total All Funds................................................................ .006764 .007176 .007305 .007684 .007821 (1) (2) (3) Maximum tax rate where applicable under current State law. Set by law for the District’s portion of the State Minimum School Program. General maintenance and operation revenue. The maximum tax rate for the Voted Leeway Program is .002000. However, when considering the maximum tax rate of .002000, the Board–Approved Leeway Program of .000400 is considered to be part of the Voted Leeway Program. Thus, the effective maximum tax rate for the Voted Leeway Program is .001600. In the early 1980’s, District residents approved a Voted Leeway Program of not to exceed a .000600 tax rate; in 1993, District residents approved an additional .000400 tax rate to the Voted Leeway Program; and in 1997, District residents approved an additional .000600 tax rate to the Voted Leeway Program (which results in a maximum tax rate of .001600). (4) Restricted to class size reduction. (5) Funds purchase of buses, activity trips, and hazardous bus routes. (6) Liability insurance premium. (7) Maintenance of recreational facilities. (8) Construction remodeling projects and purchase of school sites/equipment, etc. (9) Construction remodeling projects and purchase of school sites/equipment, textbooks and supplies. (10) This maximum limitation is not applicable to levies made to provide for payment of the principal of and interest on general obligation bonds authorized by vote of school district electors. (11) A “judgment levy” is levied for the purpose of collecting additional revenues. The Board has the legal right to levy a “Judgment Levy” in the succeeding tax year to make up for any tax revenue shortfall due to tax or revaluation “judgment” circumstances that the Board had no control over. (Source: The District.) 25 Comparative Total Property Tax Rates Within Davis County Total Tax Rate Within Taxing Area Tax Levying Entity (1) 2008 Davis School District: Bountiful City ............................... Centerville City............................. Clearfield City .............................. Clinton City .................................. Farmington City............................ Fruit Heights City ......................... Kaysville City ............................... Layton City ................................... North Salt Lake City..................... South Weber City ......................... Sunset City.................................... Syracuse City ................................ West Bountiful City...................... West Point City............................. Woods Cross City ......................... Unincorporated areas (2) .............. .011213 .011233 .012852 .012127 .011952 .012050 .010954 .011896 .011458 .011045 .011378 .011625 .011286 .012578 .010956 .010994 2007 2006 2005 2004 .011997 .012303 .013782 .013112 .012681 .012761 .011184 .012849 .012429 .011615 .012011 .012302 .012306 .013440 .011918 .011839 .012048 .012184 .013454 .012903 .012544 .012454 .010546 .012566 .012336 .011410 .011582 .011517 .012131 .013257 .011809 .011730 .012865 .012518 .014058 .013620 .013410 .013058 .011667 .013212 .013169 .012048 .012225 .012121 .012837 .013072 .012594 .012464 .012560 .012470 .014235 .013202 .013707 .013244 .011931 .013347 .012828 .012245 .012686 .012298 .012486 .013357 .012278 .012148 (1) These tax rates represent a taxing district within the city or town with the highest combined total tax rates of all overlapping taxing districts. (2) These tax rates represent a taxing district within the unincorporated municipalities within the County with the highest combined total tax rates of all overlapping taxing districts. (Source: Reports from the Utah State Tax Commission.) Taxable, Fair Market And Market Value Of Property Year 2008 (2)....................... 2007 ............................ 2006 ............................ 2005 ............................ 2004 ............................ Taxable Value (1) $17,019,683,493 14,274,512,988 12,009,355,126 10,890,068,690 10,254,421,718 % Change Over Prior Year 19.2% 18.9 10.3 6.2 4.8 Fair Market/ Market Value $26,705,728,948 22,209,228,510 18,486,127,884 16,480,970,097 15,490,290,597 % Change Over Prior Year 20.2% 20.1 12.2 6.4 3.9 This table includes redevelopment agencies valuation. (1) Taxable values were calculated by reducing the fair market/market value of primary residential property by 45%, representing a partial property tax exemption for such property. (2) Preliminary; subject to change. Utah State Tax Commission. See “Historical Summaries Of Taxable Value Of Property” below. 26 Historical Summaries Of Taxable Values Of Property 2008 Taxable Value (1) Set by State Tax Commission (Centrally Assessed) Total centrally assessed……… $ 2007 Taxable Value % of T.V. 372,610,692 2.2 % $ 315,256,143 2006 Taxable Value $ 303,380,332 2005 Taxable Value $ 298,195,675 2004 Taxable Value $ 291,289,244 Set by County Assessor (Locally Assessed) Real property: Primary residential……………… 11,800,000,000 Other residential………………… 69,000,000 Commercial and industrial……… 3,070,000,000 FAA……………………………… 8,000,000 Unimproved non FAA………… 560,000,000 Agricultural……………………… 10,349,656 Total real property…………… 15,517,349,656 Personal property: Primary mobile homes………… 38,500,000 Secondary mobile homes……… 1,223,145 Other business personal………… 1,090,000,000 Total personal property……… 1,129,723,145 Total locally assessed……… 16,647,072,801 Total taxable value………… $ 17,019,683,493 69.3 0.4 18.0 0.0 3.3 0.1 91.2 9,668,556,625 63,279,024 2,604,927,842 6,998,947 547,454,203 8,677,194 12,899,893,835 7,889,970,028 427,277,882 2,399,485,230 7,437,329 111,522,886 10,203,581 10,845,896,936 6,807,588,565 346,896,383 2,502,244,227 8,941,668 92,084,675 18,518,691 9,776,274,209 6,371,529,316 2,423,442,032 285,672,751 8,789,116 80,838,904 19,310,088 9,189,582,207 0.2 0.0 6.4 6.6 97.8 29,429,013 915,042 1,029,018,955 1,059,363,010 13,959,256,845 26,085,565 781,629 833,210,664 860,077,858 11,705,974,794 25,735,377 618,852 789,244,577 815,598,806 10,591,873,015 27,865,980 938,959 744,745,328 773,550,267 9,963,132,474 $ 14,274,512,988 $ 12,009,355,126 $ 10,890,068,690 $ 10,254,421,718 100.0 % (1) Preliminary; subject to change. (Source: Property Tax Division, Utah State Tax Commission.) 27 Tax Collection Record Tax Year End 12/31 (1) Total Taxes Levied (2) Treasurer’s Relief 2007 (4)$99,911,470 $1,620,635 2006 85,572,398 1,188,065 2005 81,303,555 1,092,245 2004 77,963,504 661,706 2003 73,475,271 575,984 Net Taxes Assessed Current Collections $98,290,835 84,384,333 80,211,310 77,301,798 72,899,287 $89,489,553 81,008,796 76,725,383 73,207,446 69,547,848 (3) Deliq., Personal Property and Miscelleous Collections Total Collections % of % of Current Total CollecCollections to tions to Net Taxes Net Taxes Assessed Assessed $5,211,736 $94,701,289 5,452,197 86,460,993 5,664,630 82,390,013 3,983,845 77,191,291 3,634,474 73,182,322 91.0% 96.0 95.7 94.7 95.4 96.3% 102.5 102.7 99.9 100.4 (1) Excludes redevelopment agencies valuation. (2) Treasurer’s Relief includes abatements. These Treasurer’s Relief items are levied against the property, but are never collected and paid to the entity. (3) In addition to the Total Collections indicated above, the District also collected Uniform Fees (fees–in–lieu payments) for tax year 2007 of $12,178,987; for tax year 2006 of $11,549,652; for tax year 2005 of $11,407,865; for tax year 2004 of $11,095,170; and for tax year 2003 of $12,680,328; from tax equivalent property associated with motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. (4) In tax year 2007, the Board’s total tax collections were decreased by approximately $4.5 million due to an “equity adjustment.” This one time equity adjustment was given to certain property taxpayers’ who’s residential and commercial market values were artificially increased due to technical errors. This adjustment lowered the District’s current and total collections percentage ratios. (Source: Information taken from the audited financial report of Davis County for the indicated years.) Some Of The Largest Taxpayers Taxpayer Chevron USA Inc. .................................. Freeport Center Associates ..................... PacifiCorp ............................................... LHM Utah LLC (Layton Hills LLC) ...... Big West Oil .......................................... Smith’s Food and Drug (2) ..................... Qwest Communications .......................... Albertson’s (3) ........................................ Questar Gas............................................. Lifetime Products.................................... Type of Business Petroleum refinery Distribution/warehouse Electrical utility Layton Mall/sales Petroleum refinery Distribution and stores Communication utility Distribution and stores Natural gas utility Manufacturing Totals ................................................................................................. 2007 Taxable Value (1) % of the District’s 2007 Tax Value $171,165,852 155,685,824 91,612,165 90,340,886 74,422,084 70,355,477 65,558,589 51,593,534 48,821,642 43,859,596 1.2% 1.1 0.6 0.6 0.5 0.5 0.5 0.4 0.3 0.3 $863,415,649 6.0% (1) Taxable Value used in this table excludes the taxable value used to determine Uniform Fees on tangible personal property. See “Taxable, Fair Market And Market Value Of Property” above. (2) Includes Smith’s Food King Properties and Smith’s Food and Drug Centers. (3) Includes warehouse and food and drug stores. (Source: County Auditor.) 28 THE DISTRICT’S COMPREHENSIVE ANNUAL FINANCIAL REPORT Included with this supplement is the District’s Comprehensive Annual Financial Report for Fiscal Year 2008. Additionally, the District’s present and historical Comprehensive Annual Financial Reports may be found on the “world wide web” at the State of Utah, State Auditor’s internet site at: sao.state.ut.us (The remainder of this page has been intentionally left blank.) 29 Davis School District Davis County, Utah Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2008 Comprehensive Annual Financial Report OF THE DAVIS SCHOOL DISTRICT 45 East State Street Farmington, Utah 84025 For the Fiscal Year Ended June 30, 2008 Marian H. Storey, President of the Board W. Bryan Bowles, Superintendent Bruce W. Williams, Business Administrator Prepared by: The Accounting Department Reese J. Roberts, CPA Finance Administrator DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2008 Page Title Page Table of Contents i ii-iv INTRODUCTORY SECTION: Letter of Transmittal 1-5 School Board Precinct Boundaries 6 List of Elected and Appointed Officials 7 Organizational Chart 8 GFOA Certificate of Achievement for Excellence in Financial Reporting 9 Model for Public Education 10 FINANCIAL SECTION: Independent Auditor's Report 11-12 Management's Discussion and Analysis 13-22 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet - Governmental Funds 25 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 26 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 29 Statements of Fund Net Assets - Proprietary Funds 30 Statements of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 31 - ii - DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2008 Page FINANCIAL SECTION (Continued): Statements of Fund Cash Flows - Proprietary Funds Notes to the Basic Financial Statements 32 33-48 Individual Fund Statements and Schedules: Comparative Balance Sheet - General Fund 50 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund 51 Comparative Balance Sheet - Major Debt Service Fund 52 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Major Debt Service Fund 53 Comparative Balance Sheet - Major Capital Projects Fund 54 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Major Capital Projects Fund 55 Combining Balance Sheet - Nonmajor Governmental Funds 56 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds 57 Comparative Balance Sheet - Student Activities Fund - Nonmajor Special Revenue Fund 58 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Student Activities Fund - Nonmajor Special Revenue Fund 59 Comparative Balance Sheet - State Mulit-District Program Fund Non-Major Special Revenue Fund 60 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - State Multi-District Program Fund - Non-Major Special Revenue Fund 61 STATISTICAL SECTION (Unaudited): Net Assets by Component 64 Changes in Net Assets 65 Fund Balances - Governmental Funds 66 Changes in Fund Balances - Governmental Funds 67 Assessed Value and Estimated Actual Value of Taxable Property 68 Direct and Overlapping Property Tax Rates 69 Principal Property Tax Payers 70 Property Tax Levies and Collections 71 - iii - DAVIS SCHOOL DISTRICT Table of Contents Year Ended June 30, 2008 Page Ratios of Outstanding Debt 72 Overlapping and Underlying General Obligation Debt 73 General Obligation Legal Debt Limit and Debt Capacity 74 Schedule of Annual Debt Service Requirements 75 STATISTICAL SECTION (Unaudited) (Continued): 76 Debt Service Schedule of Outstanding General Obligation Bonds 76 Demographic and Economic Statistics 77 Labor Market Data 78 Principal Employers 79 District Facilities and Personnel Positions 80 Average Daily Membership and October Enrollment 81 Expenditures by Function - General Fund 82 Expenditures per ADM by Function - General Fund 83 Weighted Pupil Units (WPU's) - Regular WPU's and Other by Formula 84 Student Enrollment Projections 85 American College Test (ACT) Results 86 Advanced Placement Exam Results 87 - iv - Section I Introductory Section DECEMBER 2, 2008 To President Storey, Members of the Board of Education, and the Citizens of the Davis School District: State law requires that school districts publish within five months of the close of each fiscal year a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited by a firm of licensed certified public accountants in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States. Pursuant to that requirement, we hereby issue the comprehensive annual financial report (CAFR) of the Davis School District (District) for the fiscal year ended June 30, 2008. W. Bryan Bowles Superintendent Designed to meet the needs of a broad spectrum of readers of financial statements, this CAFR is divided into three major sections: • Introductory section – Introduces the reader to the report and includes this transmittal letter, a map of School Board precinct boundaries, the list of elected and appointed officials, the organization chart of the District, certificate of excellence in financial reporting, and the District’s model for public education. • Financial section – Consists of the independent auditor’s report, management’s discussion and analysis, the basic financial statements, and combining and individual fund statements and schedules. • Statistical section – Contains substantial financial information, but presents tables that differ from financial statements in that they present non-accounting data, cover several years, and are designed to reflect social and economic data and financial and fiscal trends as well as the fiscal capacity of the District. Internal controls. This report consists of management’s representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the District’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Independent audits. Squire & Company, PC, a firm of licensed certified public accountants, has audited the District’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2008 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion, and that the District’s financial statements for the fiscal year ended June 30, 2008 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report The independent audit of the financial statements of the District was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the District’s separately issued Single Audit Report. Management’s discussion and analysis. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of management’s discussion and analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in connection with it. The District’s MD&A can be found immediately following the report of the independent auditors. District profile. The District is located in the north central part of the state. The boundaries of the District are contiguous with those of Davis County, Utah. Davis County is largely an urban county with high concentrations of residential development. The District is a legally separate and fiscally independent entity enjoying all rights and privileges accorded political subdivisions in the State of Utah. Policymaking and legislative authority are vested in the Board of Education consisting of seven members. The Board of Education is responsible for, among other things, developing policy, adopting the budget, levying taxes, incurring bonded debt, supervising committees, and hiring both the superintendent and business administrator. The superintendent and business administrator are responsible for carrying out the policies of the Board of Education and oversee the day-to-day operations of the District. The Board of Education is elected on a non-partisan basis. Board members serve four-year staggered terms with no more than four board members elected every two years. The major purpose of the District is to provide public education for those who reside within the boundaries of the District. To accomplish this purpose, as of fall 2008, the District operates eight traditional high schools, fourteen junior high schools, and 57 elementary schools. The District also offers three special purpose programs: Pioneer Adult Rehabilitation Center (a community rehabilitation program serving persons with disabilities), the Family Enrichment Center (providing preschool and Head Start programs), and Farmington Bay (a youth correctional facility). In addition, the District operates two alternative high schools, Mountain High and Canyon Heights, and one alternative junior high, Davis Junior High. The District serves 65,014 students based on the October 1, 2008 enrollment report. The District also acts as the fiscal agent for the Davis County School District Foundation (Foundation). The Foundation is a separate legal 501(c)(3) entity, and is reported as a discreetly presented component -2- unit in the District’s financial statements. The Foundation is a not-for-profit entity that solicits financial support of public education through local school communities and community business partners. Budgetary control. The District adopts an annual budget for its funds. This budget acts as the financial operating plan for the entire year. Revisions may be implemented during the year authorizing a larger appropriation of available resources through a public hearing and approval from the Board. All annual appropriations lapse at fiscal year end with the exception of those indicated as a fund balance reserve. During May of each year, the District superintendent submits to the Board a proposed operating budget for the next fiscal year commencing July 1st. This budget includes proposed expenditures and the means of financing them. Included also is a final budget for the current year ending June 30. If the District does not exceed the certified tax rate, a public hearing is held prior to June 22 at which time the budget is legally adopted by resolution of the Board after obtaining taxpayer input. If the District exceeds the certified tax rate the budget is adopted in August after required advertisement of proposed tax rate increases and a public hearing. The level by which expenditures may not exceed appropriations has been interpreted by the State Superintendent of Public Instruction to be the total budgeted expenditures of a given fund. Economic condition and outlook. The economic outlook of the District is tied to and dependent on the economic condition and outlook of the State of Utah since state aid provides 75.1% of general fund revenues. The State of Utah has been able to conclude each fiscal year since fiscal 1988 with a general fund surplus. However, the state’s general fund surplus for fiscal 2002 and 2003 was only achieved by significant cuts in state spending. Although Utah’s economic growth has experienced steady growth since 2004, the State’s economy is showing signs of slowing in response to the overall national economic slowdown. The State is predicting a budgeted revenue shortfall for the current 2009 fiscal year, and has implemented budget cuts to mitigate the shortfall. Public Education is currently being held harmless for fiscal 2009, but faces the prospect of shrinking budget increases for 2010 despite the statewide projection of increasing students. Davis School District projects student growth of over 700 students for 2010. The state increased the value of the weighted pupil unit (WPU) by 1.5% for 2005, 4.5% for 2006, 6.0% for 2007, and 4.0% for 2008. This growth in funding has been indicative of the steady growth in Utah’s economy, and is reflected in the 2.5% growth in the WPU value for 2009. The District was faced with budget reductions for fiscal years 2002, 2003, and 2004, and a few additional reductions were necessary in 2005 to cover increased costs. The increase in state funds for 2006, 2007, 2008, and 2009 allows the District to cover the costs for new teachers and support staff to meet the needs of continued student enrollment growth, and to also cover cost of living increases for current staff. This funding also allows the District to cover inflationary increases in benefit costs, utilities, fuel, and instructional materials. The Utah Foundation reports that during the 1990’s as enrollments in K-12 (kindergarten thru 12th grade) education slowed, so did state budgetary efforts. From 1995 to 2000, K-12 education spending fell from 41.2 percent of state spending to 38.5 percent. If it had remained at 41.2 percent, an additional $137 million would have been appropriated to K-12 schools. Despite a reduction in the percentage of state funding for K-12 education of the later 1990’s, K-12 funding increased and class sizes decreased. These improvements were made possible by a strong economy providing ample revenues at the same time that school enrollment growth slowed and even declined. The current decade is proving to be far -3- more challenging for K-12 education than the 1990’s. A surge in K-12 enrollment is continuing through the decade, the state property tax rate for schools continues to float down, and a smaller percentage of income taxes are flowing to public education. These factors combine to give Utah the lowest per pupil spending, and highest class sizes in the nation. New regulations from the federal government will also require a greater level of achievement from students, teachers and school officials. The District’s taxing authority rests with property taxes on residential and commercial property within the District. District taxable property values in tax year 2007 increased 19.1% compared to an increase of 10.3% in 2006. Local taxation accounts for only 15.2% of general fund revenues, and 23.0% of all governmental fund revenues. Student growth. The state fiscal 2009 school finance program is designed to provide every Utah school district with a basic operation program of $2,577 per weighted pupil unit (WPU) (compared to $2,514 per WPU in fiscal 2008). Based on information from Utah’s Bureau of Vital Records, the District expects the kindergarten enrollment increase to accelerate because of a climb in the birth rate for Davis County. The District also expects net migration into the County to remain positive, but to slow moderately. The District projects an additional 4,906 students over the next five years measured from October 2008 to October 2013. In response to continued student growth, registered voters of Davis County approved in record fashion (89.6%) a $190,000,000 bonding authorization on February 5, 2002. The debt was issued over a four year period to fund construction and renovation of facilities to accommodate student growth. The District went to the taxpayers again on June 20, 2006 for a $230,000,000 bonding authorization. The authorization passed with 79.2% approval, which will provide for facilities for student growth into 2010. The District issued the first $47.0 million of this new authorization on September 6, 2006, another $55.0 million on July 10, 2007, and another $64.0 million on April 22, 2008. Cash management and investments. The District maintains a cash and investment pool that is available for use by all funds. This pool has deposits and other investments with varying maturity dates. Investment earnings for fiscal 2008 remained at a total of $5.3 million, as increasing investment balances were offset by decreasing interest rates. The State of Utah Money Management Act with the State Money Management Council governs the District’s investment policies and provides a measure of depository protection. The Council issues a list of qualified depositories to public treasurers quarterly and monitors the maximum amount of public funds each depository is eligible to hold in accordance with the law and the rules of the Council. State law and Council rules govern the financial reporting requirements of qualified depositories in which public funds may be deposited and prescribe the conditions under which the designation of a depository shall remain in effect. The District considers the rules and actions of the Utah Money Management Council to be necessary and sufficient for adequate protection of its uninsured bank deposits. Risk management. The District is self-insured for workers’ compensation. Unemployment compensation is handled on a cost of benefits reimbursement basis with the State of Utah. The District participates in the Utah State Risk Management system for property and liability insurance. This is a pooled arrangement where the participating entities pay annual premiums, which are designed to pay claims and build sufficient reserves so that the system will be able to protect the participating entities with its own capital. The pool reinsures excess losses to preserve the capital base. -4- Post employment benefits. The District has an early retirement incentive plan which allows employees the option to retire prior to age 65 and receive post employment stipends and healthcare benefits for up to three years, or until Medicare eligibility, whichever comes first. The District finances these benefits as healthcare premiums are paid. The District participated in a state-wide actuarial study to determine the value and nature of post employment benefits. The District’s obligation is considered a “termination benefit” and is accounted for using the guidelines of the Governmental Accounting Standards Board (GASB) Statement No. 47, Accounting for Termination Benefits. The District is now taking steps to designate a portion of the general fund balance over the next four years to fully fund this obligation. Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the District for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2007. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement for Excellence, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. This is the twenty fifth year that the District has received this prestigious award. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowledgments. The efficient and dedicated staff of the business department accomplished the preparation of this report on a timely basis. We would like to express appreciation to all members of the department who assisted in the preparation of this report. Special appreciation is expressed to Reese J. Roberts, Finance Director, and his staff, who did most of the work in preparation of this report, and to David Ayrton, Coordinator of Printing Services, and his staff for printing, layout, and design of the report. We would also like to thank the members of the Board of Education for their interest and support in conducting the financial affairs of the District in a responsible and progressive manner. Respectfully submitted, -5- DAVIS SCHOOL DISTRICT School Board Precinct Boundaries Year Ended June 30, 2008 CLINTON SUNSET HILL AIR SOUTH WEBER WESTPOINT CLEARFIELD 7 6 SYRACUSE LAYTON 4 5 KAYSVILLE FRUIT HEIGHTS FARMINGTON This map of Davis County displays the seven precincts of School Board representation. 3 Precinct 4 Marian H. Storey Board President 7 Tamara Lowe Board Vice-President 1 Barbara A. Smith Board Member 2 William P. Moore Board Member 3 Walter M. Bain Board Member 5 Kathie L. Dalton Board Member 6 Cheryl Werven Board Member CENTERVILLE 2 WEST BOUNTIFUL WOODS CROSS BOUNTIFUL 1 NORTH SALT LAKE -6- DAVIS SCHOOL DISTRICT List of Elected and Appointed Officials Year Ended June 30, 2008 Elected Officials Members of the Board of Education Present Term Began Present Term Expires Initial Appointment Barbara A. Smith Precinct 1 January 2005 January 2009 January 1993 William P. Moore Precinct 2 January 2005 January 2009 January 1997 Walter M. Bain Precinct 3 January 2007 January 2011 January 2003 Marian H. Storey President of the Board Precinct 4 January 2005 January 2009 January 1997 Kathie L. Dalton Precinct 5 January 2007 January 2011 January 1995 Cheryl Werven Precinct 6 January 2007 January 2011 January 2003 Tamara O. Lowe Vice President of the Board Precinct 7 January 2007 January 2011 January 2003 The term of office for a board member is four years, beginning in January following the November election. Appointed Officials Present Term Began Present Term Expires Initial Appointment W. Bryan Bowles Superintendent July 2008 July 2010 July 2002 Bruce D. Williams Business Administrator July 2008 July 2010 January 1996 The term of office for the Superintendent and Business Administrator is two years. -7- DAVIS SCHOOL DISTRICT Organizational Chart Year Ended June 30, 2008 Citizens of Davis County Board of Education Superintendent Assistant Superintendent / Business Administrator Assistant Superintendent Assistant Superintendent Assistant Superintendent School Directors Finance Department Curriculum Facilities Management Special Education Senior High Schools New Construction Student Services Junior High Schools Federal Programs Elementary Schools Accounting Budgeting Career and Technical Education Professional Development Payroll Alternative Ed/K12 Internal Audit Environmental Maintenance Custodial Services Priority Schools Planning Early Childhood Programs Information and Communication Technology Small Learning Communities Printing Services Adult Education Community School Foundation Administration Risk Management / School Security Support Services Nutrition Services Gifted and Talented Human Resources Purchasing / Warehouse Transportation Community Relations P.A.R.C. -8- Research, Assessment and Accountability Policy and School Law -9- Davis School District TIONAL PROC A C ES DU a s B e d ce In an m r o Essential Skills/Knowledge Civic Responsibility Access Career Preparation Personal Development Needs SEP SE P O Goals Assessmen t Open Standards P e PURPOSES OF EDUCATION on cti rf stru S E Model for Public Education Graduation Graduates with Skills, Knowledge, Values, and Commitment to Lifelong Learning... Re t tea ching nrichmen /E Public education has the mandate to develop within the hearts and minds of each new generation the qualities of a moral populace, strong scholars, committed citizens, and active workers. The founding fathers knew that without these qualities, provided through public education, our nation would not long endure. The Davis School District accepts this mandate and focuses its work around the four primary purposes of public education: Essential Learning Skills Civic Responsibility Career Preparation Personal Development Educators collaborate with individual students and their parents to form a plan of action (Student Education Plan and Student Education Occupation Plan) which ties these four primary purposes to the needs and goals of the student through the instructional process. -10- Section II Financial Section AUDIT · TAX · ADVISORY 1329 South 800 East · Orem, Utah 84097-7700 · (801) 225-6900 · Fax (801) 226-7739 · www.squire.com Independent Auditor’s Report Board of Education Davis School District We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the remaining fund information of Davis School District (the District), as of and for the year ended June 30, 2008, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of District management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the remaining fund information of the District as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2008 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management’s discussion and analysis which follows this report is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. - 11 - Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. November 28, 2008 - 12 - Management’s Discussion and Analysis This section of Davis School District’s (District) comprehensive annual financial report presents management’s discussion and analysis of the District’s financial performance during the year ended June 30, 2008. Please read it in conjunction with the transmittal letter found on pages 1 through 5 of this report and the District’s financial statements, which follow this section. Financial Highlights • The District’s total assets exceeded liabilities by $189.2 million at the close of the most recent fiscal year. • During the year, expenses were $19.3 million less than the $469.7 million generated in taxes and other revenues for governmental activities. Last year, expenses were less than revenues by $16.5 million. • Actual expenditures in the general fund were $6.6 million below final budgeted amounts, and resources available for appropriation were $0.7 million below final budgeted amounts. • The District’s fund balance in the general fund increased by $2.3 million. An increase of $1.0 million in fund balance was budgeted for the year. • On June 20, 2006, the registered voters of Davis County passed a bond authorization in the amount of $230.0 million for general obligation school building bonds for new school construction, land acquisitions, renovation of existing school facilities, and related equipment and improvements. The voter authorization passed convincingly with 79.2% in favor. The District issued $47.0 million of the new authorization on September 5, 2006, $55.0 million on July 10, 2007, and another $64.0 million on April 22, 2008. • The District continues various capital projects and added $46.5 million of governmental activity capital assets during the year. Projects in process include the completion of renovations at Clearfield and Woods Cross High Schools (estimated costs of $7.1 million and $8.8 million respectively), and a new elementary in West Layton (estimated cost of $16.0 million), all opening in the fall of 2008. Also underway is a new elementary school in North Salt Lake (estimated cost of $17.0 million), and a new junior high school in West Layton (estimated cost of $36.6 million), both to be completed in 2009. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The District’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the assets and liabilities of the District, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the net assets of the District changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The government-wide financial statements can be found on pages 23 to 24 of this report. - 13 - The government-wide financial statements of the District are divided into three categories: • Governmental activities. Most of the District’s basic services are included here, such as instruction, various support services, district and school administration, operation and maintenance of facilities, student transportation, and interest on long-term liabilities. Property taxes and state and federal grants finance most of these activities. • Business-type activities. The District charges fees to customers and receives specific grants from various local, state, and federal agencies to help cover the costs of certain services it provides. The District’s School Food Services program and the Pioneer Adult Rehabilitation Center are included here. • Component unit. The District includes one other entity in the report, the Davis County School District Foundation. Although legally separate, this “component unit” is included because the District is the fiscal agent for it, and its purpose is to solicit donations to support educational programs of the District. Fund financial statements. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and proprietary funds. • Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Debt Service Fund, and the Capital Projects Fund, each of which are considered to be major funds. Data from the other two governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the governmental funds is provided in the form of combining and individual fund statements and schedules elsewhere in the report. The District adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 25 to 29 of this report. • Proprietary funds. The District maintains two proprietary fund types. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the District’s various functions. The District uses one internal service fund, and it is included within governmental activities in the government-wide financial statements. - 14 - Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for its two enterprise funds (the School Food Services Fund is considered to be a major fund of the District) and for the internal service fund. The basic proprietary fund financial statements can be found on pages 30 to 32 of this report. Notes to the basic financial statements. The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 33 to 48 of this report. Other information. Individual fund statements and schedules are presented immediately following the notes to the basic financial statements. Individual fund statements and schedules can be found on pages 50 to 61 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the District, assets exceeded liabilities by $189.2 million at the close of the most recent fiscal year. DAVIS SCHOOL DISTRICT'S Net Assets June 30, 2008 and 2007 (in millions of dollars) Governmental Activities 2008 2007 Current and other assets Capital assets Total assets Current and other liabilities Long-term liabilities outstanding Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Business-type Activities 2008 2007 Total 2008 2007 $ 272.7 439.3 712.0 $ 160.4 409.6 570.0 $ 6.2 9.4 15.6 $ 4.9 9.9 14.8 $ 278.9 448.7 727.6 $ 165.3 419.5 584.8 169.3 368.8 538.1 150.9 271.4 422.3 0.2 0.1 0.3 0.2 0.1 0.3 169.5 368.9 538.4 151.1 271.5 422.6 9.4 5.9 $ 15.3 9.9 4.6 $ 14.5 144.0 41.0 4.2 $ 189.2 159.2 2.7 0.3 $ 162.2 134.6 41.0 (1.7) $ 173.9 149.3 2.7 (4.3) $ 147.7 Total Change 2007-2008 $ 113.6 29.2 142.8 18.4 97.4 115.8 $ (15.2) 38.3 3.9 27.0 • Net assets of the District’s governmental activities increased 17.7% to $173.9 million. However, all of those net assets are either restricted as to the purposes they can be used for or are invested in capital assets (land, buildings and improvements, equipment, and so on). Consequently, unrestricted net assets showed a $1.7 million deficit at the end of this year. This deficit does not mean that the District does not have resources to pay its bills next year. Rather, it is the result of having long-term commitments that are greater than currently available resources. Specifically, the District did not include in past annual budgets the full amounts needed to finance future liabilities arising from early retirement and to pay for unused employee vacation, personal leave and sick leave days. The District will include these amounts in future years’ budgets as they come due. • The net assets of the District’s business-type activities increased by 5.5% to $15.3 million. Although business-type activities report a positive unrestricted net asset balance of $5.9 million, these resources cannot be used to make up for the net asset deficit in governmental activities. The District can only use these net assets to finance the continuing operations of the school food services program and Pioneer Adult Rehabilitation Center. - 15 - • A portion of the District’s net assets reflects its investment in capital assets less any related debt (general obligation bonds payable and obligations under capital leases less unspent bond proceeds) still outstanding used to acquire those assets. The District uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Although the District’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. • An additional portion of the District’s net assets represents resources that are subject to external restrictions on how they may be used. The majority of the restricted balance is for debt service and capital projects. The District’s total net assets increased by $27.0 million during the current year. This increase was the result of ongoing construction projects to handle the continued influx of students, and increasing fund balances. Of the $20.1 million increase in total net assets, unrestricted net assets increased by $3.9 million, while restricted net assets increased by $38.3 million. The amount investment in capital assets net of related debt decreased by $15.2 million even though capital assets net of depreciation actually increased by $29.2 million. This decrease was due to an increase in related debt of over $44.0 million because the District sold general obligation bonds twice during the fiscal year. The District is still in the process of setting aside resources to fully fund the liability for early retirement benefits over the next four years, and was able to add $1.0 million toward that during this fiscal year. Net assets also increased by $6.9 million when the District reclassified its Student Activities Fund from an agency fund to a special revenue fund. • The District’s total revenues increased 14.3% to $499.0 million. Federal and state aid make up 68.5% of the District’s revenues; property taxes generate 21.8% of the District’s revenues. • The total cost of all programs and services increased by14.6% to $478.9 million. Instruction and support services make up 65.8% and 25.4% respectively, of the District’s expenses - 16 - DAVIS SCHOOL DISTRICT'S Changes in Net Assets Years Ended June 30, 2008 and 2007 (in millions of dollars) Governmental Activities 2008 2007 Revenues: Program revenues: Charges for services Operating grants and contributions General revenues: Property taxes Federal and state aid not restricted to specific purposes Interest Miscellaneous Total revenues Expenses: Instruction Support services: Student Instructional staff District administration School administration Business administration Operation and maintenance of facilities Student transportation Interest on long-term liabilities School food services Pioneer Adult Rehab Center Total expenses Changes in net assets Net assets, beginning Recalssification of student activities fund Net assets, ending $ 6.1 89.2 $ Business-type Activities 2008 2007 Total 2008 2007 $ 23.0 101.6 $ 23.5 92.0 Total Change 2007-2008 7.0 80.3 $ 16.9 12.4 $ 16.5 11.7 $ (0.5) 9.6 108.6 98.0 - - 108.6 98.0 10.6 240.3 5.3 20.2 469.7 195.6 5.3 6.4 392.6 29.3 28.2 240.3 5.3 20.2 499.0 195.6 5.3 6.4 420.8 44.7 13.8 78.2 315.3 253.5 - - 315.3 253.5 61.8 13.4 17.7 3.2 23.4 11.2 11.9 15.3 3.3 21.0 9.7 - - 13.4 17.7 3.2 23.4 11.2 11.9 15.3 3.3 21.0 9.7 1.5 2.4 (0.1) 2.4 1.5 39.4 13.3 13.5 450.4 19.3 147.7 36.5 12.5 12.4 376.1 16.5 131.2 20.8 7.7 28.5 0.8 14.5 18.8 7.8 26.6 1.6 12.9 39.4 13.3 13.5 20.8 7.7 478.9 20.1 162.2 36.5 12.5 12.4 18.8 7.8 402.7 18.1 144.1 2.9 0.8 1.1 2.0 (0.1) 76.2 2.0 18.1 6.9 $ 173.9 $ 147.7 $ 15.3 $ 14.5 6.9 $ 189.2 $ 162.2 6.9 $ 27.0 The narrative that follows considers the operations of governmental and business-type activities separately. Governmental activities. The key elements of the increase in the District’s net assets for the year ended June 30, 2008 are as follows: • Revenues increased $61.5 million or 15.1%, and continue to be primarily from federal and state aid and local property taxes. State aid increased by 7.9% to $249.3 million as a reflection of increased funding for specific programs and growth in student enrollment, while federal aid remained steady at $26.3 million. State aid is based primarily on weighted pupil units (WPUs) and other appropriations. If a student is in membership a full 180 days, the state awards the District one WPU. The state guarantees that if local taxes do not provide money equal to the amount generated by the WPU the state will make up the difference with state funding. The value of the WPU increased by 4.0% during the year ended June 30, 2008 ($2,514 during 2008 as compared to $2,417 in 2007). - 17 - Tax revenues increased by 10.8%. This increase was the result of increases in property taxable values, and because of growth in the overall tax base. Davis School District Revenues by Source Governmental Activities Charges for services, interest, and miscellaneous 7% Operating grants and contributions 19% Property taxes 23% Federal and state aid not restricted to specific purposes 51% • Expenses for governmental activities increased $59.2 million, or 15.1%. The District was able to fund increases in health insurance benefits and contractual increases in personnel costs. Davis School District Expenses by Function Governmental Activities Interest on longterm liabilities 3% Instruction 70% Other supporting services 18% Operation and maintenance of facilities 9% Business-type activities. The key elements of the $0.8 million increase of the District’s net assets for the year ended June 30, 2008, are as follows: • Revenues increased 3.9% while expenses increased 7.1%. With normal increases in operating costs, business activities showed a smaller increase in net assets than last year. - 18 - Financial Analysis of the District’s Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. As the District completed the year, its governmental funds reported a combined fund balance of $101.6 million, $86.0 million more than the previous year. This increase was due primarily to an $81.3 million increase in the capital projects fund balance. General Obligation Bonds were sold twice during the fiscal year resulting in the large fund balance increase. At year end, the District had $52.8 million in unspent bond proceeds. The general fund had a $2.3 million increase in fund balance due to better than expected tax collections, and lower than expected expenditures. The debt service fund had a $1.6 million increase in fund balance due once again to better than expected tax collections. In addition, the following changes in revenues and expenditures should be noted: • Revenues for general District purposes totaled $379.5 million, an increase of 14.2%, during the current fiscal year. Revenues for debt service and capital projects were up 12.0% and 33.3% respectively. State revenues were up 19.0% in the general fund, and 98.0% in the capital projects fund due to increases in state appropriations. Taxes were up 10.0% due to growth in the tax base, and increases in existing taxable values. Federal revenues were down $0.3 million or 1.1% due to changes in some federal grants. • Expenditures for general District purposes totaled $382.3 million, an increase of 13.6% during the current fiscal year. Instruction represents 68.8% of general fund expenditures. Debt service expenditures increased 7.7%, and capital project expenditures were down 10.8%. • General fund salaries totaled $241.6 million while the associated employee benefits of retirement, social security, and insurance (health and accident, industrial, and unemployment) added $91.0 million to arrive at 87.0% of total general fund expenditures. Governmental funds report the differences between their assets and liabilities as fund balance, which is divided into reserved and unreserved portions. Reservations indicate the portion of the District’s fund balances that are not available for appropriation. The unreserved fund balance is, in turn, subdivided between designated and undesignated portions. Designations reflect the District’s self-imposed limitation on the use of otherwise available expendable financial resources in governmental funds. Undesignated balances in the general fund are required by state law to be appropriated in the following year’s budget. Fund balances of debt service, capital projects, and other governmental funds are restricted by state law to be spent for the purpose of the fund and are not available for spending at the District’s discretion. The $9.8 million fund balance of the general fund is partially reserved or designated for inventories and employee benefits, with the remainder reported as unreserved. General Fund Budgetary Highlights During the year, the Board revised the District’s budget. Budget amendments were to reflect changes in programs and related funding. The difference between the original budget and the final amended budget was an increase of $5.7 million or 1.5% in total general fund expenditures. The most significant differences may be summarized as follows: • $3.9 million or 1.5% increase in instruction for staffing and compensation increases, a $1.4 million or 8.6% increase in supporting services – instructional staff services for staffing increases and new material costs for media centers, and a $0.8 million or 7.8% increase in supporting services – business administration for staff increases. During the year, final budgeted revenues were more than original budgetary estimates by $6.2 million or 1.7%, to account for revised estimates for state funding and federal grants. - 19 - Even with these adjustments, actual expenditures were $6.6 million below final budgeted amounts. The most significant positive variances were $3.2 million in instruction, and $1.1 million in supporting services - operation and maintenance of facilities. These variances were due primarily to budgeting for federal and state grants that were not fully expended, and to utility costs being less than expected. Additionally, resources available for appropriation were $0.7 million below the final budgeted amount. Federal and state aid variances primarily result from expenditure-driven federal and state grants that are included in the budgets at their full amounts. Such grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met; unspent grant amounts are carried forward and included in the succeeding year’s budget. Therefore, actual grant revenues and expenditures are normally less than the amounts budgeted. Capital Asset and Debt Administration Capital Assets. The capital projects fund is used to account for the costs incurred in acquiring and improving sites, constructing and remodeling facilities, and procuring equipment necessary for providing educational programs for all students within the District. The District spent $46.5 million in 2007 for capital assets. Projects in process include the completion of renovations at Clearfield and Woods Cross High Schools (estimated costs of $7.1 million and $8.8 million respectively), and a new elementary school in West Layton (estimated cost of $16.0 million), all opening in the fall of 2008. Also underway is a new elementary school in North Salt Lake (estimated cost of $17.0 million), and a new junior high school in West Layton (estimated cost of $36.6 million), both to be completed in 2009. The District continues to experience both growth in total students and a shift in student population to the northwest section of the District. The opening of these new schools and additions and renovations at existing schools help meet some of the needs, but temporary classrooms are still in use to accommodate housing needs until other permanent facilities can be constructed. The District purchased 12 new portable classrooms in 2008 for a total inventory of 308 portable classrooms representing approximately 282,000 square feet. Capital assets at June 30, 2008 and 2007 are outlined below: DAVIS SCHOOL DISTRICT'S Capital Assets June 30, 2008 and 2007 (net of accumulated depreciation in millions of dollars) Governmental Activities 2008 2007 Land Construction in progress Buildings and improvements Furniture and equipment Transportation equipment Total capital assets $ 34.2 32.8 361.0 3.7 7.6 $ 439.3 $ 31.1 80.5 287.8 3.2 7.0 $ 409.6 Business-type Activities 2008 2007 $ $ 8.0 1.4 9.4 $ $ 8.3 1.6 9.9 Total 2008 2007 $ 34.2 32.8 369.0 5.1 7.6 $ 448.7 $ 31.1 80.5 296.1 4.8 7.0 $ 419.5 Total Change 2007-2008 $ $ 3.1 (47.7) 72.9 0.3 0.6 29.2 Additional information on the District’s capital assets can be found in Note 4 to the basic financial statements. Debt Administration. On June 20, 2006, by a 79.2% margin, the public voted to authorize the District to issue $230.0 million of general obligation school building bonds for new school construction, land acquisitions, and renovation of existing school facilities and related equipment and improvements. This debt authorization was sought to cope with the demands of student growth over the next five years, with student migration to the northwest portion of the county, and to help maintain the District’s investment in its capital assets. - 20 - On September 5, 2006, the District issued the first $47.0 million of the new authorization in general obligation bonds. The District issued an additional $55.0 million of the bonding authorization on July 10, 2007, and another $64.0 million on April 22, 2008. The general obligation bonded debt of the District is limited by state law to 4% of the fair market value of the total taxable property in the District. The legal debt limit at June 30, 2008 is $951.2 million. General obligation debt, net of unamortized premiums and deferred amounts on refunding, at June 30, 2008 is $349.9 million, resulting in a legal debt margin of $601.3 million. DAVIS SCHOOL DISTRICT'S Outstanding Debt June 20, 2008 and 2007 Net of Accumulated Ammortization (in millions of dollars) Governmental activities Net general obligation bonds 2008 $ 349.9 2007 $ 252.6 Total Change 2007-2008 $ 97.3 Although it is not unusual for governments to have a 30-year bond payoff schedule, the District maintains an aggressive schedule to retire all of its general obligation bonds by 2028. Additional information on the District’s long-term debt can be found in Note 8 to the basic financial statements. Changing Enrollment within the District The District went through a five-year period of flat growth in student enrollment between 1998 and 2002, but continued to experience a change in school populations due to a migration of students to the northwest section of the District. The District began seeing the beginning of increasing student enrollments in fiscal year 2003 with an increase of 636 students. Student enrollment counts are officially taken on October 1 of each year. The chart below reflects the counts taken between October 1, 2004 and October 1, 2008, and shows a total student growth of 5,007 students over the five year period, an 8.3% increase. DAVIS SCHOOL DISTRICT'S Student Enrollment District fiscal year 2005 2006 2007 2008 2009 October 1st enrollment 60,614 62,349 62,832 64,232 65,014 Total enrollment change 607 1,735 483 1,400 782 Percentage change 1.0% 2.9% 0.8% 2.2% 1.2% Total 5,007 8.3% The District has ongoing planning efforts to analyze and deal with the issues related to new growth. On June 20, 2006 voters approved a $230.0 million general obligation bond authorization, the largest in District history. Resources from this new bonding authorization will be used for construction and renovation of facilities over the next four years. Projects include completion of three more elementary schools and one new junior high school, as well as various school classroom additions and renovations. Planning is underway for the next voter authorization in one to two years in order to meet the ongoing needs of the District’s 20 year capital plan, and to provide continuous cash flows for the necessary capital projects. With bond proceeds as well as ongoing capital funds - 21 - from taxes and state capital equalization, the District expects to meet the demands of projected student growth over both the short-term planning horizon (5 years) as well as the long-term (20+ years). Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, please contact the Davis School District, Office of the Business Administrator, 45 East State Street (P.O. Box 588), Farmington, UT 84025. - 22 - DAVIS SCHOOL DISTRICT Statement of Net Assets June 30, 2008 Primary Government Governmental Business-type Activities Activities Assets: Cash and investments Receivables: Property taxes Other local State of Utah Federal government Internal balances Inventories Bond issuance costs, net of accumulated amortization Capital assets: Land and construction in progress Other capital assets, net of accumulated depreciation Total assets Liabilities: Accounts payable Notes payable Accrued interest Accrued salaries Deferred revenue - property taxes Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Net Assets: Invested in capital assets, net of related debt Restricted for: Debt service Capital projects State multi-district programs Scholarships and awards Unrestricted Total net assets $ 142,975,081 $ 110,245,364 1,443,469 319,387 8,909,251 41,610 7,069,016 2,544,306 1,244,676 858,192 234,565 (41,610) 1,300,461 Component Unit District Foundation Total $ 145,519,387 $ 110,245,364 2,688,145 1,177,579 9,143,816 8,369,477 843,549 5,945 - 1,656,771 - 1,656,771 - 66,931,588 - 66,931,588 - 372,348,337 9,421,174 381,769,511 711,939,874 15,561,764 727,501,638 849,494 5,666,661 250,000 1,038,995 58,741,506 103,596,768 157,984 - 5,824,645 250,000 1,038,995 58,741,506 103,596,768 3,131 - 29,075,864 339,692,400 40,260 97,101 29,116,124 339,789,501 - 538,062,194 295,345 538,357,539 3,131 134,624,761 9,421,174 144,045,935 - 5,845,245 4,586,918 28,487,591 7,904,535 4,119,120 $ 15,266,419 $ 189,144,099 4,586,918 28,487,591 7,904,535 (1,726,125) $ 173,877,680 The notes to basic financial statements are an integral part of this statement. - 23 - 846,363 $ 846,363 DAVIS SCHOOL DISTRICT Statement of Activities Year Ended Y E d d JJune 30 30, 2008 ct t es/ u ct o s Activities/Functions Primary government: Governmental activities: Instruction Supporting services: Student S ude Instructional staff District administration School administration Business administration Operation and maintenance of facilities p Student transportation term liabilities Interest on long long-term pe ses Expenses $ 315,325,500 , , Total governmental activities B i t ti iti Business-type activities: School food services Pioneer Adult Pi Ad lt Rehabilitation R h bilit ti Center C t Total business-type T t lb i typ activities ti iti Total primary governmentt T t lp i yg Component unit: Davis School District Foundation Program Revenues Operating Charges for Grants and Se ces Co t but o s Services Contributions $ , , 5,685,499 $ Net (Expense) Revenue and Changes in Net Assets Component Primary Government Unit Governmental Business-type District Business type ct t es ct t es ota ou dat o Activities Activities Total Foundation , , 71,657,359 $ ((237,982,642) , , ) $ ((237,982,642) , , ) 13,436,051 3, 36,05 17,679,053 17 679 053 , , 3,223,304 23 358 895 23,358,895 11,225,624 , , 39,353,038 39 353 038 , , 13,318,469 13 534 129 13,534,129 401,668 401 668 - 4,057,993 ,05 ,993 3,764,658 3 764 658 , 1,176 362 698 362,698 1,210,714 , , 23,440 23 440 , , 8,127,702 - (9,378,058) (9,3 8,058) (13,914,395) (13 914 395) ((3,222,128) , , ) (22 996 197) (22,996,197) ((10,014,910) , , ) (38,927,930) (38 927 930) ((5,190,767) , , ) (13 534 129) (13,534,129) (9,378,058) (9,3 8,058) (13,914,395) (13 914 395) ((3,222,128) , , ) (22 996 197) (22,996,197) ((10,014,910) , , ) (38,927,930) (38 927 930) ((5,190,767) , , ) (13 534 129) (13,534,129) 450 454 063 450,454,063 6 087 167 6,087,167 89 205 740 89,205,740 (355 161 156) (355,161,156) (355 161 156) (355,161,156) 20 750 195 20,750,195 7,722,053 7 722 053 9 317 741 9,317,741 7,585,887 7 585 887 11 683 068 11,683,068 641,764 641 764 28,472,248 28 472 248 $ 478,926,311 478 926 311 $ $ $ 1,264,138 1 264 138 16,903,628 16 903 628 12,324,832 12 324 832 22,990,795 22 990 795 $ 101,530,572 101 530 572 - $ - $ - 250 614 250,614 505,598 505 598 756,212 756 212 (355 161 156)) ((355,161,156) 756,212 756 212 250 614 250,614 505,598 505 598 756,212 756 212 (354 404 944)) ((354,404,944) 1,284,814 1 284 814 General G l revenues: Property taxes levied for: B i llevy sett b t t ffor K 12 iinstruction t ti Basic by state K-12 K-12 Board voted leeway for K 12 instruction Class size Cl i reduction d ti Reading program T t ti Transportation Community recreation General G l obligation bli ti bond b d debt d bt service i Capital outlay T percentt off basic b i for f capital it l outlay, tl t tb k and d supplies li Ten textbooks Federal and state revenue not restricted to specific purposes Interest I t t Miscellaneous $ 20,676 20 676 20 755 944 20,755,944 24 268 903 24,268,903 6,067,297 6 067 297 1,835,310 1 835 310 2 335 233 2,335,233 2 950 136 2,950,136 38,948,551 38 948 551 1,104,479 1 104 479 10 408 239 10,408,239 240 324 714 240,324,714 5,270,686 5 270 686 20,191,090 20 191 090 - 20 755 944 20,755,944 24 268 903 24,268,903 6,067,297 6 067 297 1,835,310 1 835 310 2 335 233 2,335,233 2 950 136 2,950,136 38,948,551 38 948 551 1,104,479 1 104 479 10 408 239 10,408,239 240 324 714 240,324,714 5,270,686 5 270 686 20,191,090 20 191 090 8,316 8 316 - Total general revenues 374,460,582 374 460 582 - 374,460,582 374 460 582 8,316 8 316 Change in net assets N assets - beginning b gi i g Net 19,299,426 19 299 426 1 4, 8,2 4 154,578,254 756,212 756 212 14, 10,20 14,510,207 20,055,638 20 055 638 169,088,461 169,088,461 28,992 28 992 81 ,3 1 817,371 15,266,419 15,266,419 189,144,099 $ 189,144,099 N assets - ending di g Net 173,877,680 $ 173,877,680 The notes to basic financial statements are an integral part of this statement statement. - 24 - $ $ 846,363 846,363 DAVIS SCHOOL DISTRICT Balance Sheet Governmental Funds June 30, 2008 General Assets: Cash and investments Receivables: Property taxes Other local State of Utah Federal government Due from other funds Inventories $ 49,088,547 Total assets Fund Balances: Reserved for inventories Reserved for construction commitments Unreserved: Designated for: Workers compensation Termination benefits Capital projects Undesignated, reported in: General fund Debt service fund Special revenue funds Total fund balances Total liabilities and fund balances Other Governmental Funds Total Governmental Funds $ 7,935,419 $ 142,975,081 13,325 18,372 - 110,245,364 1,339,921 319,387 8,909,251 4,945,000 3,068,975 $ 271,802,979 $ 84,466,059 57,366,237 1,327,652 306,062 8,890,879 4,945,000 3,068,975 41,759,237 - 11,119,890 12,269 - $ 124,993,352 $ 43,244,293 $ 95,598,218 $ 7,967,116 $ $ $ 62,581 - 115,240,440 $ Capital Projects 1,485,056 Liabilities and fund balances: Liabilities: Accounts payable $ 893,548 Notes payable 250,000 Accrued payroll and withholding 58,741,506 Deferred revenue - property taxes 55,355,386 Total Liabilities Major Funds Debt Service 40,414,311 40,414,311 3,068,975 - - 300,000 2,500,000 - 3,762,231 10,721,800 14,484,031 62,581 - 4,718,360 250,000 58,741,506 106,491,497 170,201,363 - 3,068,975 - 63,474,595 - 63,474,595 - 17,639,592 - 300,000 2,500,000 17,639,592 3,883,937 - 2,829,982 - 9,752,912 2,829,982 81,114,187 $ 124,993,352 $ 43,244,293 $ 95,598,218 - $ 7,904,535 3,883,937 2,829,982 7,904,535 7,904,535 101,601,616 7,967,116 $ 271,802,979 The notes to basic financial statements are an integral part of this statement. - 25 - $ DAVIS SCHOOL DISTRICT Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2008 Total fund balances for governmental funds $ 101,601,616 Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land Construction in progress Buildings and improvements, net of $221,232,313 accumulated depreciation Furniture and equipment, net of $5,460,037 accumulated depreciation Transportation equipment, net of $16,756,757 accumulated depreciation $ 33,513,057 32,769,709 360,150,990 3,220,434 7,653,313 437,307,503 Some of the District's property taxes will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as defered revenue in the funds. 2,894,729 Interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is $936,959 and accrued interest for obligations under capital leases is $102,036. (1,038,995) Bond issuance costs are reported as expenditures in the governmental funds. The cost is $2,264,579 and accumulated amortization is $607,808. 1,656,771 An internal service fund is used by management to charge the costs of warehouse services to individual funds and other school districts. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets. Internal service fund net assets at year-end are: 176,448 Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of net assets. Balances at year-end are: Bonds payable Unamortized premiums Unamortized refunding deferrals Obligations under capital leases Accrued vacation Accrued sick leave Accrued personal leave Early retirement payable (342,880,000) (7,853,771) 868,197 (7,621,136) (3,457,100) (1,619,606) (1,101,358) (5,055,618) Total net assets - governmental activities (368,720,392) $ 173,877,680 The notes to basic financial statements are an integral part of this statement. - 26 - DAVIS SCHOOL DISTRICT Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2008 Major Governmental Funds Debt Capital General Service Projects Revenues: Property taxes Interest Other local sources State of Utah Federal government $ Total revenues $ 379,549,306 Expenditures: Current: Instruction Supporting services: Students Instructional staff District administration School administration Business administration Operation and maintenance of facilities Student transportation Capital outlay Debt service: Tax anticipation note interest Bond principal Bond interest Bond isuance costs Capital lease payments Fees and miscellaneous charges Total expenditures Excess (deficiency) of revenues over (under) expenditures Total other financing sources (uses) Net change in fund balances 11,436,460 3,016,129 825,847 15,795,421 - Total Governmental Funds $ 8,332 16,725,341 2,282,212 51,242 $ 107,842,358 5,270,686 25,684,292 303,207,688 26,322,766 19,067,127 468,327,790 18,298,111 280,577,305 31,073,857 - - 13,312,679 17,574,702 3,204,530 22,712,165 10,946,328 - - 38,100,173 12,138,708 - - - 13,312,679 17,574,702 3,204,530 22,712,165 10,946,328 68,920,760 - 38,100,173 12,138,708 68,920,760 - 1,345,800 23,605,000 12,968,323 425,554 2,208,107 38,285 1,345,800 667,213 - 23,605,000 12,968,323 38,285 425,554 1,540,894 - 382,281,492 36,611,608 70,887,208 2,025,892 (39,813,351) 18,298,111 769,016 508,078,419 (39,750,629) 5,000,000 - 119,000,000 2,364,047 2,617,600 1,743,001 (5,000,000) - 119,000,000 2,364,047 2,617,600 1,743,001 - 5,000,000 - 120,724,648 - 125,724,648 2,025,892 7,485,098 $ $ 262,279,194 2,267,814 Fund balances - beginning 38,637,500 38,637,500 (2,732,186) Other financing sources (uses): General obligation bonds issued General obligations bonds premium Capital leases Sale of capital assets Transfers Fund balances - ending 57,768,398 2,246,225 8,133,104 285,130,055 26,271,524 Other Governmental Funds 9,752,912 80,911,297 804,090 $ 2,829,982 769,016 202,890 $ 81,114,187 $ The notes to basic financial statements are an integral part of this statement. - 27 - 85,974,019 7,135,519 15,627,597 7,904,535 $ 101,601,616 DAVIS SCHOOL DISTRICT Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Government Funds to the Statement of Activities Year Ended June 30, 2008 Net change in fund balances-total governmental funds $ 85,974,019 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, equipment with an initial, individual cost of more than $5,000 and buildings and improvements with an initial, individual cost of more than $100,000 are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlays Gain on sale of capital assets Proceeds from sales of capital assets Depreciation expense $ 46,340,828 593,965 (1,743,001) (15,564,361) 29,627,431 Some capital asset additions are financed through capital leases. In governmental funds, a capital lease arrangement is considered a source of financing, but in the statement of net assets, the lease obligation is reported as a liability. Repayment of capital lease principal is an expenditure in the governmental funds, but repayment reduces the lease obligation in the statement of net assets. Obligations under capital leases Interest expense - capital leases Principal payments of capital leases (2,617,600) 59,551 2,659,814 101,765 The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, governmental funds report the effect of issuance costs and premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: General obligation bond proceeds Bond premium Bond issuance costs Amortization of deferred amounts on refunding Amortization of bond premium Amortization of bond issuance costs Repayment of bond principal Interest expense - general obligation bonds (119,000,000) (2,364,047) 425,554 (134,438) 633,202 (136,511) 23,605,000 (191,743) Property tax revenues received prior to the year for which they are being levied are reported as deferred revenue in the governmental funds. They are, however, recorded as revenues in the statement of activities. Deferred property tax revenues increased this year. (97,162,983) 831,734 In the statement of activities, certain operating expenses - compensated absences (vacation and sick and personal leave) and termination benefits (early retirement) - are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During this year, accruals changed by the following amounts: Accrued vacation Accrued sick and personal leave Early retirement payable (130,141) (28,087) 26,767 Internal service funds are used by the District to charge the costs of warehouse services to individual funds. The change in net assets of the internal service funds is reported with governmental activities. Change in net assets of governmental activities (131,461) 58,921 $ 19,299,426 The notes to basic financial statements are an integral part of this statement. - 28 - DAVIS SCHOOL DISTRICT Statement of Revenues, Revenues Expenditures and Changes in Fund Balances - Budget and Actual General Fund Y Year E d d June Ended J 30 30,, 2008 Budgeted Amounts Original Final Revenues: Property taxes Interest Oth local Other l l sources State of Utah Federal government $ Total revenues Expenditures: Current: Instruction Supporting services: Students Instructional staff District administration School administration Business administration Op Operation and maintenance off facilities f Student transportation Debt service - interest on tax anticipation notes Total expenditures Excess of expenditures over revenues 56,523,400 1 664 000 1,664,000 8,314,200 8,314,200 282,641,003 24 922 163 24,922,163 $ 56,731,500 1 693 600 1,693,600 8,271,200 8,271,200 286,886,202 26 713 544 26,713,544 Actual Amounts $ 57,768,398 2 246 225 2,246,225 8,133,104 8,133,104 285,130,055 26 271 524 26,271,524 Variance with Final Budget g Positive (Negative) $ 1,036,898 552 625 552,625 (138,096)) ((138,096) (1,756,147) (442 020) (442,020) 374 064 766 374,064,766 380 296 046 380,296,046 379 549 306 379,549,306 (746 740) (746,740) 262 196 466 262,196,466 266 111 346 266,111,346 262 946 407 262,946,407 3 164 939 3,164,939 13,414,700 13 414 700 16 686 500 16,686,500 3,043,400 23 150 200 23,150,200 10 123 700 10,123,700 40,573,800 , , 12,576,000 1 400 000 1,400,000 13,701,000 13 701 000 18 113 800 18,113,800 3,465,100 23 298 300 23,298,300 10 911 400 10,911,400 39,196,100 , , 12,699,000 1 400 000 1,400,000 13,312,679 13 312 679 17 574 702 17,574,702 3,204,530 22 712 165 22,712,165 10 946 328 10,946,328 38,100,173 , , 12,138,708 1 345 800 1,345,800 388,321 388 321 539 098 539,098 260,570 586 135 586,135 (34 928) (34,928) 1,095,927 , , 560,292 54 200 54,200 383 164 766 383,164,766 388 896 046 388,896,046 382 281 492 382,281,492 6 614 554 6,614,554 (9 100 000) (9,100,000) (8 600 000) (8,600,000) (2 732 186) (2,732,186) 5 867 814 5,867,814 Other financing sources (uses): Transfers 9 600 000 9,600,000 9 600 000 9,600,000 5 000 000 5,000,000 (4 600 000) (4,600,000) Net change in fund balances 500,000 1,000,000 2,267,814 1,267,814 F db Fund balances l -b beginning gi i g Fund balances - ending 7 485 098 7,485,098 $ 7 985 098 7,985,098 7 485 098 7,485,098 $ 8 485 098 8,485,098 7 485 098 7,485,098 $ 9 752 912 9,752,912 The notes to basic financial statements are an integral part of this statement. - 29 - $ 1 267 814 1,267,814 DAVIS SCHOOL DISTRICT Statements of Fund Net Assets Proprietary Funds June 30, 2008 with comparative totals for 2007 Major Enterprise Fund School Food Services 2008 2007 Assets: Current assets: Cash and investments Receivables: Local State of Utah Federal government Due from other funds Inventories of supplies $ 630 $ Business-type Activities - Enterprise Funds Other Enterprise Fund Pioneer Adult Rehab Center 2008 2007 1,590 $ 2,543,676 $ 1,954,604 $ Governmental Activities Internal Service Fund District Warehouse 2008 2007 Totals 2008 2,544,306 2007 $ 1,956,194 $ - $ - 62,664 798,404 234,565 1,300,461 10,824 767,294 239,900 1,248 1,354,718 1,182,012 59,788 - 1,268,307 59,801 - 1,244,676 858,192 234,565 1,300,461 1,279,131 827,095 239,900 1,248 1,354,718 103,548 41,610 4,000,041 52,867 447,594 3,883,268 Total current assets 2,396,724 2,375,574 3,785,476 3,282,712 6,182,200 5,658,286 4,145,199 4,383,729 Capital assets: Land Buildings and improvements Equipment Accumulated depreciation 6,981,395 4,066,839 (4,501,909) 6,981,395 4,038,739 (4,078,646) 3,660,322 520,401 (1,305,874) 3,516,219 609,113 (1,194,149) 10,641,717 4,587,240 (5,807,783) 10,497,614 4,647,852 (5,272,795) 648,822 1,519,215 1,228,149 (1,423,764) 648,822 1,519,215 1,089,329 (1,303,941) Net capital assets 6,546,325 6,941,488 2,874,849 2,931,183 9,421,174 9,872,671 1,972,422 1,953,425 8,943,049 9,317,062 6,660,325 6,213,895 15,603,374 15,530,957 6,117,621 6,337,154 72,071 20,694 41,610 72,340 19,426 671,454 85,913 19,566 - 58,165 55,132 - 157,984 40,260 41,610 130,505 74,558 671,454 948,301 18,014 4,945,000 703,912 17,346 5,469,620 134,375 763,220 105,479 113,297 239,854 876,517 5,911,315 6,190,878 Total assets Liabilities: Current liabilities: Accounts payable Compensation liability Due to other funds Total current liabilities Long-term liabilities: Compensation liability Total liabilities Net assets: Invested in capital assets Unrestricted Total net assets $ 68,851 64,633 28,250 79,600 97,101 144,233 29,858 28,749 203,226 827,853 133,729 192,897 336,955 1,020,750 5,941,173 6,219,627 6,546,325 2,193,498 6,941,488 1,547,721 2,874,849 3,651,747 2,931,183 3,089,815 9,421,174 5,845,245 9,872,671 4,637,536 1,972,422 (1,795,974) 1,953,425 (1,835,898) 8,739,823 $ 8,489,209 $ 6,526,596 $ 6,020,998 $ 15,266,419 $ The notes to basic financial statements are an integral part of these statements. - 30 - 14,510,207 $ 176,448 $ 117,527 DAVIS SCHOOL DISTRICT Statements of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2008 with comparative totals for 2007 Major Enterprise Fund School Food Services 2008 2007 Operating revenues: Charges for services Lunch sales Interest Other local $ Total operating revenues Operating expenses: Cost of food sold Salaries and benefits Depreciation Indirect charges Other Total operating expenses Operating income (loss) Nonoperating income: Federal subsidies Contributed food commodities State subsidies Total nonoperating income Change in net assets Total net assets - beginning Total net assets - ending 8,598,987 718,754 $ 7,913,990 647,605 $ 7,340,193 245,694 $ 7,964,686 3,745 $ Governmental Activities Internal Service Fund District Warehouse 2008 2007 Totals 2008 7,340,193 8,598,987 964,448 2007 $ 7,964,686 7,913,990 651,350 $ 1,658,067 - $ 1,665,544 - 9,317,741 8,561,595 7,585,887 7,968,431 16,903,628 16,530,026 1,658,067 1,665,544 9,667,714 8,235,967 423,263 501,458 1,921,793 8,880,653 7,296,538 394,519 448,938 1,817,695 5,849,882 151,950 271,100 1,449,121 5,907,769 147,274 161,410 1,572,071 9,667,714 14,085,849 575,213 772,558 3,370,914 8,880,653 13,204,307 541,793 610,348 3,389,766 1,161,168 119,822 318,156 1,307,597 91,303 230,882 20,750,195 18,838,343 7,722,053 7,788,524 28,472,248 26,626,867 1,599,146 1,629,782 (11,432,454) (10,276,748) (136,166) 179,907 (11,568,620) (10,096,841) 58,921 35,762 7,358,251 1,387,387 2,937,430 7,021,630 1,367,064 2,675,744 641,764 673,435 7,358,251 1,387,387 3,579,194 7,021,630 1,367,064 3,349,179 - - 11,683,068 11,064,438 641,764 673,435 12,324,832 11,737,873 - - 250,614 787,690 505,598 853,342 756,212 1,641,032 58,921 35,762 8,489,209 $ Business-type Activities - Enterprise Funds Other Enterprise Fund Pioneer Adult Rehab Center 2008 2007 8,739,823 7,701,519 $ 8,489,209 6,020,998 $ 6,526,596 5,167,656 $ 6,020,998 14,510,207 $ 15,266,419 12,869,175 $ The notes to basic financial statements are an integral part of these statements. - 31 - 14,510,207 117,527 $ 176,448 81,765 $ 117,527 DAVIS SCHOOL DISTRICT Statements of Fund Cash Flows Proprietary Funds Year Ended June 30, 2008 with comparative totals for 2007 Major Enterprise Fund School Food Services 2008 2007 Cash flows from operating activities: Receipts from interfund services provided Receipts from customers Payments to suppliers Payments to employees $ Net cash provided (used) by operating activities Cash flows from noncapital financing activities: Receipt of federal subsidies Receipt of state subsidies Net cash provided by noncapital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets 9,240,126 (11,278,186) (8,230,481) Total adjustments $ 7,672,195 (1,692,473) (5,936,798) $ 7,967,499 (1,743,442) (5,809,021) $ Totals 2008 16,912,321 (12,970,659) (14,167,279) 2007 $ 16,615,229 (12,658,517) (13,110,284) $ 1,488,750 (190,540) (1,159,391) $ 42,924 415,036 (10,225,617) (9,153,572) 7,358,251 2,937,430 7,021,630 2,675,744 641,764 673,435 7,358,251 3,579,194 7,021,630 3,349,179 - - 10,295,681 9,697,374 641,764 673,435 10,937,445 10,370,809 - - (128,706) (960) 1,590 $ 630 $ (11,432,454) $ (77,615) 1,248 54,257 (269) 5,486 (629,844) 1,163,913 Net cash provided (used) by operating activities $ (10,268,541) Noncash investing, capital, and financing activities Contributed food commodities none (123,716) (128,706) (138,819) (191,433) 589,072 1,088,471 588,112 1,088,531 - - 1,530 1,954,604 866,133 1,956,194 867,663 - - 1,590 $ $ 2,543,676 (136,166) 394,519 1,367,064 151,950 - 86,135 (1,248) (9,034) (67,239) (4,725) (1,057,332) 86,308 27,748 (86,916) - 708,140 $ - 191,433 60 $ (10,276,748) 423,263 1,387,387 (95,616) 138,819 1,687,623 (190,621) (1,305,569) (9,568,608) (28,100) Cash and cash equivalents - beginning Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense Donated food commodities Changes in operating assets and liabilities: Accounts receivable Due from other funds Inventories Accounts payable Compensation liability Due to other funds 8,647,730 (10,915,075) (7,301,263) Governmental Activities Internal Service Fund District Warehouse 2008 2007 (10,268,541) Net increase in cash and cash equivalents Cash and cash equivalents - ending (displayed as cash and investments on the statements of fund net assets) $ Business-type Activities - Enterprise Funds Other Enterprise Fund Pioneer Adult Rehab Center 2008 2007 (9,568,608) none $ 1,954,604 $ 179,907 147,274 (932) (9,961) 98,748 - 179,090 $ 42,924 none 235,129 $ 415,036 none $ 2,544,306 $ (11,568,620) 8,693 1,248 54,257 27,479 (81,430) (629,844) 1,343,003 $ (10,225,617) none 1,956,194 $ (10,096,841) 575,213 1,387,387 The notes to basic financial statements are an integral part of these statements. - 32 - $ $ - $ - $ 58,921 $ 35,762 541,793 1,367,064 119,822 - 85,203 (1,248) (9,034) (77,200) 94,023 (1,057,332) (50,681) 405,984 (116,773) 244,389 1,777 (524,620) 943,269 $ (9,153,572) none 91,303 28,814 1,281,192 93,466 (53,205) 2,028 (1,287,927) 79,898 $ 138,819 none 155,671 $ 191,433 none DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Davis School District (District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to local government units. The Governmental Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the District are described below. Reporting entity – The Board of Education, comprised of seven elected individuals, is the primary governing authority for the District. As required by GAAP, these financial statements present the District and its component unit, Davis School District Foundation, a legally separate organization for which the District is considered to be financially accountable. Due to the relationship between the District and the Foundation, it would be misleading to exclude the financial information of the Foundation from this report. The Foundation exclusively services the District. The District makes all personnel decisions for the Foundation and pays for all operating costs of the Foundation. The Foundation is reported as a separate column in the District’s government-wide financial statements as a discretely presented component unit; the Foundation is reported as a governmental fund type. Complete financial statements for the Foundation may be obtained at the District’s administrative office. Government-wide and fund financial statements – The government-wide financial statements (the statement of net assets and the statement of changes in net assets) display information about the primary government (the District) and its component unit. These statements include the financial activities of the overall government. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions occur only when the elimination of such activity would distort the expenses and revenues reported by function. These statements distinguish between the governmental and business-type activities of the District. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for each function of the District’s governmental activities. Direct expenses are those that are specifically associated with a function and, therefore, are clearly identifiable to a particular function. Depreciation expense for capital assets that can specifically be identified with a function are included in its direct expenses. Depreciation expense for “shared” capital assets (for example, a school building is used primarily for instruction, school administration, and operation and maintenance of facilities) are ratably included in the direct expenses of the appropriate functions. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Interest on general long-term liabilities is considered an indirect expense and is reported in the statement of activities as a separate line. Program revenues include 1) fees and charges paid by students and other recipients of goods or services offered by a given function, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Revenues that are not classified as program revenues, including property taxes, are presented as general revenues. The fund financial statements provide information about the District’s funds. Separate statements for each fund category (governmental and proprietary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The remaining governmental fund is reported as a nonmajor fund. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party - 33 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Operating expenses result from transactions directly associated with the fund’s principal services. The District reports the following major governmental funds: • The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. • The Debt Service Fund accounts for resources accumulated and payments made for principal and interest on general obligation school building bonds. • The Capital Projects Fund account for resources accumulated and payments made for the acquisition and improvement of sites, construction and remodel of facilities, and procurement of equipment necessary for providing educational programs for all students within the District. The District reports the School Food Services Fund which accounts for revenues, subsidies and expenses related to supplying meals to students and faculty as a major enterprise fund. Additionally, the District reports the District Warehouse Internal Service Fund (a proprietary fund) which accounts for warehouse services provided to other funds of the District on a cost-reimbursement basis. The Student Activities Fund was reclassified from a fiduciary fund to a special revenue fund as of July 1, 2007. As a result of this change, the beginning net asset balance was increased by $6,892,772. Measurement focus, basis of accounting, and financial statement presentation – The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the District receives value without directly giving equal value in exchange, include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Property taxes and interest are considered to be susceptible to accrual. All other revenue items are considered to be measurable and available only when the District receives cash. Expenditures generally are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, early retirement, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the District funds certain programs by a combination of specific costreimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the - 34 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued District’s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. All governmental and business-type activities and enterprise funds of the District follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. Budgetary Data – The District operates within the budget requirements for school districts as specified by State Law and as interpreted by the Utah State Superintendent of Public Instruction. Budgets are presented on the modified accrual basis of accounting for all governmental funds. All annual appropriations lapse at fiscal year-end with the exception of those indicated as a fund balance reserve. The following procedures are used in establishing the budgetary data reflected in the financial statements. • By June 1 of each year, the District business administrator prepares a proposed annual budget (for the fiscal year beginning July 1) for all applicable funds. The budget is presented to the Board of Education by the superintendent. This budget includes proposed expenditures and the means of financing them. Also included is a final budget for the current fiscal year ending June 30th. • Copies of the proposed budget are made available for public inspection and review by the District's patrons. • If the District does not exceed the certified tax rate, a public hearing is held prior to June 22 at which time the budget is legally adopted by resolution of the Board after obtaining taxpayer input. If the District exceeds the certified tax rate, the budget is adopted in August when data is available to set the rates. • Once adopted, the budget can be amended by subsequent Board action. The Board upon recommendation of the superintendent can approve reductions in appropriations, but increases in appropriations by fund require a public hearing prior to amending the budget. In accordance with Utah state law, interim adjustments may be made by administrative transfer of money from one appropriation to another within any given fund. • Certain interim adjustments in estimated revenue and expenditures during the year ended June 30, 2008, have been included in the final budget approved by the Board, as presented in the financial statements. • Expenditures may not legally exceed budgeted appropriations at the fund level. Deposits and Investments – The cash balances of substantially all funds are pooled and invested by the District for the purpose of increasing earnings through investment activities and providing efficient management of temporary investments. Investments for the District, as well as for its component unit, are reported at fair value. Changes in the fair value of investments are recorded as investment earnings. Earnings on pooled funds are apportioned and paid or credited to the funds based on the average balance of each participating fund. The Utah Public Treasurers’ Investment Fund (PTIF) operates in accordance with appropriate state laws and regulations. The reported value of the PTIF is approximately the same as the fair value of the PTIF shares. - 35 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Cash and Cash Equivalents – The District considers cash and cash equivalents in proprietary funds to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition, including investments in the PTIF. Receivables and Payables – Activity between funds that are representative of lending/borrowing arrangements outstanding at year-end are referred to as either “due to/from other funds” (i.e., current portion of interfund loans). Any residual balances outstanding between governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Inventories – Inventories are valued at cost or, if donated, at fair value when received, stated at the lower of average cost or market. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Donated food commodities are reported in the School Food Services Fund as revenue when received. Capital Assets – Capital assets, which include land, buildings and improvements, furniture and equipment, and transportation equipment are reported in the government-wide financial statements and proprietary fund financial statements. The District defines capital assets as assets with an initial, individual cost of more than $5,000 for land, furniture and equipment, and transportation equipment and $100,000 for buildings and improvements and an estimated useful life in excess of two years. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction is not capitalized. Buildings and improvements and furniture and equipment of the District are depreciated using the straightline method over the following estimated useful lives: Assets Buildings Building improvements and portable classrooms Kitchen equipment appliances Maintenance and applied technology equipment School buses Furniture and office equipment Heavy trucks Audio visual equipment Light trucks Copiers and printers Other equipment and accessories Passenger vehicles Computer equipment and software Years 40 20 15 15 10 10 7 6 6 5 5 5 3 Compensated Absences – Under terms of association agreements, twelve-month or full-year employees earn vacation and sick leave in amounts varying with tenure and classification. Nine-month full-time employees earn sick leave and personal leave in amounts varying with tenure and classification. In the event of termination or death, an employee is reimbursed for the current value of accumulated vacation days to a maximum of 30 days, and is reimbursed for unused personal leave days at an appropriate substitute rate. Upon retirement, employees are compensated for accumulated sick leave at 21.5% of the current - 36 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued value. All vacation pay, personal leave pay, and an estimated potential amount for sick leave pay, are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Compensated absences will be paid by the fund in which the employee worked. Long-term Obligations – In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable statement of net assets. Bond premiums and discounts, as well as issuance and refunding costs, are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of unamortized bond premiums or discounts and refunding costs. In the fund financial statements, governmental fund types recognize bond premiums and discounts and refunding costs, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. Fund Equity – In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a restricted purpose. Designations of fund balance represent tentative plans for future use of financial resources that are subject to change. Comparative Data – Comparative data for the prior year has been presented in certain sections of the accompanying basic financial statements in order to provide an understanding of changes in the District's financial position and operations. 2. DEPOSITS AND INVESTMENTS Deposits and investments are carried at fair value. A reconciliation of cash and investments at June 30, 2008, as shown on the financial statements is as follows: Carrying amount of deposits Carrying amount of investments $ 33,416,255 112,946,681 Total cash and investments $ 146,362,936 Governmental funds cash and investments Enterprise funds cash and investments Primary government Component unit cash and investments Total cash and investments $ 142,975,081 2,544,306 145,519,387 843,549 $ 146,362,936 The District complies with the State Money Management Act (Utah Code Section 51, Chapter 7) (Act) and related Rules of the Money Management Council (Council) in handling its depository and investing transactions. District funds are deposited in qualified depositories as defined by the Act. The Act also authorizes the District to invest in the Utah Public Treasurers’ Investment Fund (PTIF), certificates of deposit, US Treasury obligations, US agency issues, high-grade commercial paper, banker’s acceptances, - 37 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued repurchase agreements, corporate bonds, money market mutual funds, and obligations of governmental entities within the State of Utah. The PTIF is authorized and makes investments in accordance with the Act. The Council provides regulatory oversight for the PTIF. Participant accounts with the PTIF are not insured or otherwise guaranteed by the State of Utah. Participants in the PTIF share proportionally in the income, costs, gains and losses from investment activities. The degree of risk of the PTIF depends upon the underlying portfolio. The Act and Council rules govern the financial reporting requirements of qualified depositories in which public funds may be deposited and prescribe the conditions under which the designation of a depository shall remain in effect. The District considers the actions of the Council to be necessary and sufficient for adequate protection of its uninsured bank deposits. Rules of the Council allow Davis School District Foundation to invest private grants, contributions, and endowments in any deposit or investment authorized by the Act and certain investment funds, equity securities, fixed-income securities, and investment strategies with institutions that meet certain restrictions. All of the District’s investments are with the PTIF. The Foundation has deposits separate from the District and invests private funds through a broker. Deposits – At June 30, 2008, the District and the Foundation have the following deposits with financial institutions: Davis County School District Davis School District Foundation Total deposits • Carrying Amount Bank Balance Amount Insured $ 32,836,375 579,880 $ 34,084,499 579,880 $ 100,000 100,000 $ 33,416,255 $ 34,664,379 $ 200,000 Custodial credit risk – Custodial credit risk for deposits is the risk that, in the event of a bank failure, a government’s deposits may not be returned to it. The District does not have a formal deposit policy for custodial credit risk. At June 30, 2008, the uninsured amount of the District’s and Foundation’s bank deposits was uncollateralized. Investments – At June 30, 2008, the District has $112,683,012 invested in the Utah Public Treasurers’ Investment Fund; the PTIF’s credit rating is not rated. The Davis School District Foundation has $163,670 invested in bond mutual funds which are also unrated. The District and the Foundation have the following investments summarized by investment type and maturities: - 38 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Investment Maturities (in Years) Investment Type Davis County School District: Utah Public Treasurers' Investment Fund (PTIF) Davis School District Foundation, a component unit of the District: Mutual funds investing in: Corporate bonds Other investments Total Foundation Total investments Fair Value Less Than 1 $ 112,683,011 $ 112,683,011 163,670 100,000 163,670 100,000 - - - 263,670 263,670 - - - $ 112,946,681 $ 112,946,681 1-5 $ $ More Than 10 5-10 - - $ $ - - $ $ - - • Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District manages its exposure to interest rate risk by complying with the Act, which requires that the remaining term to maturity of investments to not exceed the period of availability of the funds invested. Except for endowments, the Act further limits the remaining term to maturity on all investments in commercial paper and bankers’ acceptances to 270 days or less and fixed-income securities to 365 days or less. In addition, variable-rate securities may not have a remaining term to final maturity exceeding two years. The Foundation can invest private funds in fixed-income securities with a dollar-weighted average maturity not to exceed ten years. The District has no investment policy that would further limit its interest rate risk. • Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District’s policy for reducing its exposure to credit risk is to comply with the Act and related rules. The Act and related rules limit investments in commercial paper to a first tier rating and investments in fixed-income and variable-rate securities to a rating of A or higher as rated by Moody’s Investors Service, Inc. or by Standard and Poor’s Corporation. The District has no investment policy that would further limit its investment choices. • Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The District’s policy for managing this risk is to comply with the Act and related rules. The Act limits investments in commercial paper and or corporate obligations to 5% of the District’s total portfolio with a single issuer. The District places no other limits on the amount it may invest in any one issuer. The Foundation can invest private funds in certain equity and fixed-income securities provided no more than 5% of all funds are invested in any one issuer and no more than 25% of all funds are invested in a particular industry. Also, for the Foundation’s investments in private funds, no more than 75% may be invested in equity securities and no more than 5% in collateralized mortgage obligations. - 39 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued • 3. Custodial Credit Risk – Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The District’s policy for managing this risk is to comply with the Act and related rules. The District places no other limit on the amount of investments to be held by counterparties. The Act requires the Foundation’s public treasurer to have custody of all securities purchased or held or deposit these securities with a bank or trust company to be held in safekeeping by that custodian. The Foundation’s investments held in a brokerage account are covered by Securities Investor Protection Corporation up to $500,000. PROPERTY TAXES The property tax revenue of the District is collected and distributed by the Davis County treasurer as an agent of the District. Utah statutes establish the process by which taxes are levied and collected. The county assessor is required to assess real property as of January 1 (the legal lien date) and complete the tax rolls by May 15. By July 21, the county auditor is to mail assessed value and tax notices to property owners. A taxpayer may then petition the County Board of Equalization between August 1 and August 15 for a revision of the assessed value. The county auditor makes approved changes in assessed value by November 1 and on this same date the county auditor is to deliver the completed assessment rolls to the county treasurer. Tax notices are mailed with a due date of November 30. Beginning January 1, 1992, an annual uniform fee based on the value of motor vehicles was levied in lieu of an ad valorem tax on motor vehicles. This uniform fee was 1.5% of the fair market statewide value of the property, as established by the State Tax Commission. Effective January 1, 1999, legislation required motor vehicles be subject to an “age-based” fee that is due each time a vehicle is registered. The revenues collected in each county from motor vehicle fees is distributed by the county to each taxing entity in which the property is located in the same proportion in which revenue collected from ad valorem real property tax is distributed. The District recognizes motor vehicle fees as property tax revenue when collected. As of June 30, 2008, property taxes receivable by the District includes uncollected taxes assessed as of January 1, 2008 or earlier. It is expected that all assessed taxes (including delinquencies plus accrued interest and penalties) will be collected within a five-year period, after which time the county treasurer may force sale of property to collect the delinquent portion. The property taxes receivable and property taxes deferred revenue accounts in the governmental funds at June 30, 2008 are summarized as follows: Debt Service General Property taxes - receivable: Levied for current and prior years collected during July and August 2008 Levied for current and prior years (delinquent) Levied for future year Property taxes - deferred revenue: Levied for future year Levied for current and prior years (delinquent) Deferred property tax revenue - governmental funds, balance sheet Capital Projects Total $ 2,010,851 1,550,619 53,804,767 $ 57,366,237 $ 1,344,926 1,037,124 39,377,187 $ 41,759,237 $ 398,090 306,986 10,414,814 $ 11,119,890 3,753,867 2,894,729 103,596,768 $ 110,245,364 $ 53,804,767 1,550,619 $ 39,377,187 1,037,124 $ 10,414,814 306,986 $ 103,596,768 2,894,729 $ 55,355,386 $ 40,414,311 $ 10,721,800 $ 106,491,497 - 40 - $ DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 4. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2008 is as follows: Beginning Balance Governmental activities: Capital assets, not being depreciated Land Construction in progress $ 31,080,073 80,562,200 Total capital assets, not being depreciated Increases $ 4,230,842 38,770,866 Ending Balance Decreases $ (1,149,036) (86,563,357) $ 34,161,879 32,769,709 111,642,273 43,001,708 (87,712,393) 66,931,588 496,373,871 8,910,254 22,904,379 86,563,357 1,326,949 2,150,991 (34,710) (328,583) (645,300) 582,902,518 9,908,620 24,410,070 528,188,504 90,041,297 (1,008,593) 617,221,208 208,615,774 5,717,475 15,864,031 13,311,513 834,645 1,538,026 (34,710) (328,583) (645,300) 221,892,577 6,223,537 16,756,757 Total accumulated depreciation 230,197,280 15,684,184 (1,008,593) 244,872,871 Total capital assets, being depreciated, net 297,991,224 74,357,113 Governmental activity capital assets, net $ 409,633,497 $ 117,358,821 $ (87,712,393) $ 439,279,925 Business-type activities: Capital assets, being depreciated: Buildings and improvements Furniture and equipment $ 10,641,717 4,503,749 $ $ (42,000) $ 10,641,717 4,587,240 Capital assets, being depreciated: Buildings and improvements Furniture and equipment Transportation equipment Total capital assets, being depreciated Accumulated depreciation for: Buildings and improvements Furniture and equipment Transportation equipment Total capital assets, being depreciated Accumulated depreciation for: Buildings and improvements Furniture and equipment Total accumulated depreciation Business-type activity capital assets, net $ 125,491 - 372,348,337 15,145,466 125,491 (42,000) 15,228,957 2,314,473 2,958,322 270,402 304,811 (40,225) 2,584,875 3,222,908 5,272,795 575,213 (40,225) 5,807,783 9,872,671 - 41 - $ (449,722) $ (1,775) $ 9,421,174 DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued For the year ended June 30, 2008, depreciation expense was charged to functions of the District as follows: Governmental activities: Instruction Supporting services: Students Instructional staff District administration School administration Business administration Operation and maintenance of facilities Student transportation Capital assets held by the District's internal service fund are charged to the various functions based on their usage of the assets $ 11,959,214 123,372 104,351 18,774 646,729 1,252,866 1,179,760 279,296 119,822 Total depreciation expense, governmental activities $ 15,684,184 Business-type activities: School Food Services Pioneer Adult Rehabilitation Center Total depreciation expense, business-type activities $ 423,262 151,951 $ 575,213 The District is obligated at June 30, 2008, under construction commitments as follows: Project Authorized Project Elem #57 Buffalo Point Elem #58 New Jr High #15 Additions and renovations at various locations Total $ 13,503,451 14,781,036 30,799,572 Costs to Date $ 37,160,245 $ 96,244,304 9,815,484 14,875 5,538,460 Costs to Complete $ 17,400,890 $ 32,769,709 3,687,967 14,766,161 25,261,112 19,759,355 $ 63,474,595 A reservation of the fund balances of the Capital Projects Fund is set aside to finance the costs to complete these projects. 5. RETIREMENT PLANS Defined Benefit Plans – The District contributes to the State and School Contributory Retirement System and State and the School Noncontributory Retirement System (collectively, the Systems) which are costsharing multiple-employer defined benefit pension plans administered by the Utah Retirement Systems (URS). URS provides refunds, retirement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement statutes. The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code Annotated 1953, as amended. The Utah State Retirement Act in Chapter 49 provides for the administration of the URS and plans under the direction of the Utah State Retirement Board whose members are appointed by the Governor. The Systems issue a publicly available financial report that includes financial statements and required supplementary information for the Systems. A copy of the report may be obtained by writing - 42 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued to the Utah Retirement Systems, 540 East 200 South, Salt Lake City, UT 84102 or by calling 1-800-3658772. Plan members in the State and School Contributory Retirement System are required to contribute 1.00% of annual covered salary, and the District contributes 14.73% of annual covered salary. For employees participating in the State and School Noncontributory System, the District contributes 14.22% of annual covered salary. The contribution rates are the actuarially determined rates. The contribution requirements of the Systems are authorized by statute and specified by the Utah State Retirement Board. The District’s contributions to the State and School Contributory Retirement System for the years ended June 30, 2008, 2007, and 2006 are $400,419, $374,834, and $350,355, respectively, and employee contributions were $27,184, $25,447, and $25,224, respectively. The District’s contributions to the State and School Noncontributory Retirement System for the years ended June 30, 2008, 2007, and 2006 are $31,233,964, $25,228,033, and $22,114,627, respectively. The contributions were equal to the required contributions for each year. Defined Contribution Plans – The District also participates in a defined contribution plan under Internal Revenue Code Section 401(k) to supplement retirement benefits accrued by participants in the Systems. Employees covered by the State and School Noncontributory Retirement System have a contribution of 1.5% of covered salaries automatically made by the District. Employees participating in the Systems can make additional contributions to the 401(k) plan up to specified limits. Contributions and earnings may be withdrawn by the employee upon termination or may be used as supplemental income upon retirement. The employer 401(k) contributions for the years ended June 30, 2008, 2007, and 2006 are $3,958,753, $3,140,291, and $2,777,978, respectively; the employee contributions for the years ending June 30, 2008, 2007, and 2006 are $4,129,344, $3,546,065, and $3,426,509, respectively. The 401(k) plan funds are fully vested to the participants at the time of deposit. Plan assets are administered and held by URS and the URS has the authority to establish or amend contribution requirements and other plan provisions. The District also offers its employees a deferred compensation plan created in accordance with Internal Revenue Service Code Section 457. The plan, available to all full-time employees, permits them to defer a portion of their salary until future years. Employees are eligible to voluntarily participate from the date of employment and are vested immediately upon participating. Employee contributions to the Section 457 plan totaled $480,263, $419,528, and $457,541, for the years ended June 30, 2008, 2007, and 2006, respectively. The assets of the plan are administered and held by URS and the URS has the authority to establish or amend the plan. Early Retirement Incentive – The District provides an early retirement incentive program. Eligibility is restricted to those employees with a minimum of ten years of service in the District, and who meet the eligibility requirements for and will be receiving Utah State Retirement System benefits. Eligible retirees will receive a contribution of 16% of their annual salary per year, for up to three consecutive years, into a qualified 401(a) and/or 403(b) plan, or until they become eligible to receive unreduced social security benefits, whichever occurs first. Employees who retire under the incentive program will continue to be enrolled in group medical and dental programs until they become eligible for Medicare, or for 10 consecutive years following retirement, whichever comes first. Enrollment is contingent upon the retiree contributing the same premium as required of active employees for the first 3 years and the full premium for the following 7 years. The District's direct payments to retirees in the years ended June 30, 2008 and 2007 are $2,469,506 and $1,945,622, respectively. Future retirement payments of employees who have elected early retirement are recognized on an accrual basis as an expense in the government-wide statements in the year of retirement. This liability is paid from the fund from which the employee retires. - 43 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 6. RISK MANAGEMENT The District also maintains insurance coverage for general, automobile, personal injury, errors and omissions, employee dishonesty, and malpractice liability up to $10 million per occurrence through policies administered by the Utah State Risk Management Fund (Fund). The District also insures its buildings, including those under construction, and contents against all insurable risks of direct physical loss or damage with the Fund. Property physical damage is insured to replacement value with a $1,000 deductible; automobile physical damage is insured to actual value with a $350 deductible; other liability is limited to the lesser of $10 million or the statutory limit. The Fund is a public entity risk pool operated by the State for the benefit of the State and local governments within the State. The District pays annual premiums to the Fund; the Fund obtains independent coverage for insured events, up to $25 million per location. This is a pooled arrangement where the participants’ pay experience rated annual premiums, which are designed to pay claims and build sufficient reserves so that the pool will be able to protect the participating entities with its own capital. The pool reinsures excess losses to preserve the capital base. Insurance coverage by major category of risk has remained relatively constant as compared to the prior fiscal year. Insurance settlements have not exceeded insurance coverage for the past three years. Unemployment compensation is handled on a cost of benefits reimbursement basis with the State of Utah. The District is self-insured for worker’s compensation claims up to $250,000 per incident. Worker’s compensation claims are processed by a third party administrator. The District has not established a reserve for either claims outstanding or for claims incurred but not reported (IBNR) because management believes the amount to be immaterial to the financial statements. During the year ended June 30, 2007, the District paid claims in the amount of $524,908. A co-insurance policy will provide for individual claims in excess of $250,000. - 44 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued 7. LONG-TERM DEBT Long-term liability activity for the year ended June 30, 2008 is as follows: Beginning Balance Governmental activities: Bonds payable: General obligation bonds Deferred amounts for issuance premium Deferred amounts on refunding $ Obligations under capital leases Accrued vacation Accrued sick leave Accrued personal leave Early retirement payable Business-type activities: Accrued vacation Accrued sick leave Accrued personal leave Total business-type activity long-term liabilities $ 6,122,926 (1,002,635) Total bonds payable, net Total governmental activity long-term liabilities 247,485,000 Additions 119,000,000 Ending Balance Reductions $ (23,605,000) $ 342,880,000 Due Within One Year $ 27,380,000 2,364,047 - (633,202) 134,438 7,853,771 (868,197) - 252,605,291 121,364,047 (24,103,764) 349,865,574 27,380,000 7,663,350 3,368,832 1,617,185 1,079,914 5,082,385 2,617,600 2,600,831 209,266 589,176 2,442,739 (2,659,814) (2,468,773) (202,763) (567,732) (2,469,506) 7,621,136 3,500,890 1,623,688 1,101,358 5,055,618 2,131,837 2,565,549 203,578 579,006 840,894 $ 368,768,264 $ 33,700,864 $ 271,416,957 $ 129,823,659 $ (32,472,352) $ 136,561 53,830 28,399 $ 113,408 6,592 30,941 $ (175,456) (25,541) (31,373) $ 74,513 34,881 27,967 $ 23,556 9,807 6,897 $ 218,790 $ 150,941 $ (232,370) $ 137,361 $ 40,260 General Obligation Bonds – The District issues general obligation bonds to provide funds for the construction of new facilities, acquisition of property, renovation and improvement of facilities, and procurement of other equipment. General obligation bonds are direct obligations and pledge the full faith and credit of the District. Payments on the general obligation bonds are made by the Debt Service Fund from property taxes. The annual requirements to amortize all general obligation bonds outstanding as of June 30, 2008, including interest payments are listed as follows: - 45 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued Year Ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 Total Principal $ 27,380,000 24,300,000 25,180,000 26,400,000 26,940,000 128,995,000 62,155,000 21,530,000 $ 342,880,000 Interest $ 15,242,303 13,960,264 12,949,196 11,806,427 10,599,707 36,024,301 54,577,371 3,231,219 $ 158,390,787 Total $ 42,622,303 38,260,264 38,129,196 38,206,427 37,539,707 165,019,301 116,732,371 24,761,219 $ 501,270,787 The general obligation bonded debt of the District is limited by state law to 4% of the fair market value of the total taxable property in Davis County. The legal debt limit at June 30, 2008 is $951,175,527, with general obligation debt outstanding, net of deferred amounts for issuance premiums and on refundings, of $349,865,574, resulting in a legal debt margin of $601,309,953. General obligation school building bonds payable at June 30, 2008, with their outstanding balance are comprised of the following individual issues: Bond Series 1999 - GO Refunding Bonds - original issue of $40,525,000 with interest rates ranging from 4.0% to 4.5% Bond Series 2001 - GO Bonds - original issue of $10,000,000 with interest rates ranging from 3.5% to 5.0% Bond Series 2002A - GO Refunding Bonds - original issue of $27,240,000 with interest rates ranging from 3.25% to 5.5% Bond Series 2002B - GO Bonds - original issue of $42,000,000 with interest rates ranging from 4.0% to 5.15% Bond Series 2003 - GO Bonds - original issue of $38,930,000 with interest rates ranging from 2.0% to 5.0% Bond Series 2003B - GO Bonds - original issue of $55,000,000 with interest rates ranging from 2.0% to 4.5% Bond Series 2005A- GO Bonds - original issue of $52,200,000 with interest rates ranging from 3.0% to 5.0% Bond Series 2005B - GO Refunding Bonds - original issue of $24,905,000 with interest rates ranging from 3.5% to 5.0% Bond Series 2006 - GO Bonds - original issue of $47,000,000 with interest rates ranging from 4.0% to 5.0% Bond Series 2007 - GO Bonds - original issue of $55,000,000 with interest rates ranging from 4.0% to 5.0% Bond Series 2008 - GO Bonds - original issue of $64,000,000 with interest rates ranging from 4.0% to 5.0% $ 9,160,000 2,420,000 15,595,000 17,600,000 26,905,000 41,975,000 44,870,000 21,605,000 44,600,000 54,150,000 64,000,000 $ 342,880,000 Defeased Bonds – In prior years, the District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old - 46 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District’s financial statements. At June 30, 2008, $38,045,000 of bonds outstanding are considered defeased. Bond Issuance – On July 10, 2007 the District issued $55,000,000 of general obligation bonds. The bonds were issued at an effective interest rate of 4.37% (annual rates range between 4.00% and 5.00%) and will mature on June 1, 2022. On May 7, 2008 the District issued $64,000,000 of general obligation bonds. The bonds were issued at an effective interest rate of 4.24% (annual rates range between 4.00% and 5.00%) and will mature on June 1, 2028. Capital Leases – During the years ended June 30, 2008, 2007, and 2006, the District purchased $2,617,600, $3,064,491, and $1,455,276, respectively, of capital equipment through capital leasing arrangements in the Capital Projects Fund. The capital equipment, consisting of computers and other instructional equipment, telecommunication and maintenance equipment, is used throughout the District to enhance learning and the learning environment. Lease payments for the years ended June 30, 2008 and 2007 totaled $3,017,019 and $2,387,277, respectively. At June 30, 2008, the District has $7,621,136 in outstanding capital leases. Future minimum lease obligations as of June 30, 2008, are as follows: Year Ending June 30, 2009 2010 2011 2012 2013 2014-2018 General Fund $ Total minimum lease payments Amount representing interest $ 668,199 (29,346) Present value of minimum lease payments 8. 668,199 - Capital Projects Fund $ 638,853 2,155,923 1,496,925 1,565,081 1,600,181 311,425 408,816 Total $ 7,538,351 (556,068) $ 6,982,283 2,824,122 1,496,925 1,565,081 1,600,181 311,425 408,816 8,206,550 (585,414) $ 7,621,136 INTERFUND BALANCES AND ACTIVITY The composition of interfund balances as of June 30, 2008 is as follows: Receivable Fund General Internal Service - District Warehouse Payable Fund Internal Service - District Warehouse Enterprise - School Food Services Amount $ 4,945,000 41,610 The amount payable to the general fund relates to working capital advances made to the internal service fund. None of the balance is scheduled to be collected in the subsequent year. The amount payable to the - 47 - DAVIS SCHOOL DISTRICT Notes to Basic Financial Statements Continued internal service fund results from the time lag between the date when amounts are billed and collected between the funds. These amounts are expected to be collected in the subsequent year. During the year, the Capital Projects Fund transferred $5,000,000 to the General Fund. This represents taxes levied and collected under the ten percent of basic tax levy which by state law is allowed to be used for capital projects, non general obligation debt service, purchase of buses, supplies, textbooks, and other equipment. 9. LITIGATION AND LEGAL COMPLIANCE There are several lawsuits pending in which the District is involved. The District's counsel and insurance carriers estimate that the potential claims against the District, not covered by insurance, resulting from such litigation would not materially effect the financial statements of the District. All fund balances are positive at June 30, 2008. Fund expenditures are within amounts budgeted for the year. 10. GRANTS The District receives significant financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the District's independent auditors and other governmental auditors. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable fund. The District is currently investigating potential losses within the federal Title I program. District administration is working with various agencies in identifying the amounts of potential losses, resolving questioned costs within the federal Title I program, and recovering identified losses. Accordingly, no liability has been recognized in the financial statements at June 30, 2008 for the questioned costs. - 48 - Individual Fund Statements And Schedules Major Governmental Funds: General Fund – The General Fund is used to account for all financial resources applicable to the general operations of the District which are not required to be accounted for in another fund. Utah law defines the General Fund as the Maintenance and Operations Fund. Debt Service Fund – The Debt Service Fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources. Financing is provided by an annual property tax levy for General Obligation Debt as authorized by Utah Code 11-14-19. Capital Projects Fund – The Capital Projects Fund is used to account for the resources used in acquiring and improving sites, constructing and remodeling facilities, and procuring equipment for the education programs for all students within the District. Financing is provided by an annual property tax levy not to exceed .0024 and an additional levy to generate an amount not to exceed 10% of the cost of the basic program as authorized by Utah Code 53 A-16-107 and 53 A-17a-145. Also, State funds can be obtained by qualifying under guidelines established for districts determined to be in critical need for construction building aid. Nonmajor Governmental Funds: Student Activity Fund - The Student Activity Fund is used to account for revenues and expenditures from school-based operations. The revenues include interest earnings, gate receipts, fundraisers, and student fees. Expenditures support school curricular and extra-curricular activities. State Multi-District Program Fund – The State Multi-District Program Fund is used to account for resources provided by the State for operation of state-wide or regional public education programs. - 49 - DAVIS SCHOOL DISTRICT Comparative Balance Sheets General Fund June 30, 2008 and 2007 Assets: Cash and investments Receivables: Property taxes Other local State of Utah Federal government Due from other funds Inventories Total assets Liabilities and fund balances: Liabilities: Accounts payable Notes payable Accrued payroll and withholding Deferred revenue - property taxes Total liabilities Fund balances: Reserved for inventories Unreserved: Designated for workers compensation Designated for termination benefits Undesignated Total fund balances Total liabilities and fund balances - 50 - 2008 2007 $ 49,088,547 $ 32,155,331 57,366,237 1,327,652 306,062 8,890,879 4,945,000 3,068,975 $ 124,993,352 52,663,237 1,307,255 230,585 7,650,317 5,711,348 1,619,498 $ 101,337,571 $ $ 893,548 250,000 58,741,506 55,355,386 115,240,440 769,418 250,000 41,444,046 51,389,009 93,852,473 3,068,975 1,619,498 300,000 2,500,000 3,883,937 9,752,912 $ 124,993,352 300,000 1,500,000 4,065,600 7,485,098 $ 101,337,571 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund Year Ended June 30, 2008 With Comparative Totals for 2007 2008 Final Budgeted Amounts Revenues: Property taxes Interest Other local sources State of Utah Federal government Total revenues $ Expenditures: Current: Instruction Supporting services: Students Instructional staff District administration School administration Business administration Operation and maintenance of facilities Student transportation Debt service - interest on tax anticipation notes Total expenditures Excess of expenditures over revenues Other financing sources (uses): Transfers Net change in fund balances Fund balance - beginning Fund balance - ending 56,731,500 1,693,600 8,271,200 286,886,202 26,713,544 380,296,046 Actual Amounts $ $ 1,036,898 552,625 (138,096) (1,756,147) (442,020) (746,740) Actual Amounts $ 52,581,340 1,780,516 12,115,817 239,589,195 26,371,759 332,438,627 266,111,346 262,946,407 3,164,939 228,285,305 13,701,000 18 113 800 18,113,800 3,465,100 23,298,300 10,911,400 39,196,100 12,699,000 1,400,000 388,896,046 (8,600,000) 13,312,679 17 574 702 17,574,702 3,204,530 22,712,165 10,946,328 38,100,173 12,138,708 1,345,800 382,281,492 (2,732,186) 388,321 539 098 539,098 260,570 586,135 (34,928) 1,095,927 560,292 54,200 6,614,554 5,867,814 11,782,588 15 202 804 15,202,804 3,253,753 20,512,554 9,428,097 35,542,521 11,153,436 1,373,883 336,534,941 (4,096,314) 9,600,000 1,000,000 $ 57,768,398 2,246,225 8,133,104 285,130,055 26,271,524 379,549,306 2007 Variance with Final Budget Positive (Negative) 7,485,098 8,485,098 - 51 - 5,000,000 2,267,814 $ 7,485,098 9,752,912 (4,600,000) 1,267,814 $ 1,267,814 5,500,000 1,403,686 $ 6,081,412 7,485,098 Comparative Balance Sheets Debt Service Fund June 30, 2008 and 2007 2008 Assets: Cash and investments Receivables - property taxes Total assets $ Liabilities and fund balances: Liabilities: Accounts payable Deferred revenue - property taxes Total Liabilities Fund balances: Unreserved: Total fund balances Total liabilities and fund balances 1,485,056 41,759,237 $ 43,244,293 383 35,193,321 $ 35,193,704 $ $ 40,414,311 40,414,311 2,829,982 2,829,982 $ 43,244,293 - 52 - 2007 $ 32,657 34,356,957 34,389,614 804,090 804,090 $ 35,193,704 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Debt Service Fund Year Ended June 30, 2008 With Comparative Totals for 2007 2008 Final Budgeted Amounts Revenues: Property taxes $ 37,943,900 Actual Amounts $ 38,637,500 Expenditures: Debt service: Bond principal Bond interest Bond issuance costs Other 23,605,000 12,968,400 821,200 23,605,000 12,968,323 Total expenditures Excess of revenues over expenditures Fund balance - beginning Fund balance - ending $ 2007 Variance with Final Budget Positive (Negative) $ 693,600 Actual Amounts $ 38,285 77 782,915 22,880,000 11,194,210 277,190 46,851 37,394,600 36,611,608 782,992 34,398,251 549,300 2,025,892 1,476,592 114,547 804,090 804,090 1,353,390 - 53 - $ 2,829,982 - 34,512,798 $ 1,476,592 689,543 $ 804,090 DAVIS SCHOOL DISTRICT Comparative Balance Sheets Capital Projects Fund June 30, 2008 and 2007 Assets: Cash and investments Receivables: Property taxes Other local Total assets Liabilities and fund balances: Liabilities: Accounts payable Deferred revenue - property taxes Total Liabilities Fund balances: Unreserved: Designated for capital projects Total fund balances Total liabilities and fund balances - 54 - 2008 2007 $ 84,466,059 $ 12,723,819 11,119,890 12,269 $ 95,598,218 10,451,037 80,975 $ 23,255,831 $ 3,762,231 10,721,800 14,484,031 $ 12,867,680 10,185,261 23,052,941 81,114,187 81,114,187 $ 95,598,218 202,890 202,890 $ 23,255,831 DAVIS SCHOOL DISTRICT S h d l off R E p dit d Changes Ch g in i Fund F d Balances B l B dg t and d Actual A t l Schedule Revenues, Expenditures and - Budget Capital Projects Fund Year Ended June 30, 2008 With Comparative C ti Totals T t l for f 2007 2008 Revenues: Local sources: Property p y taxes Earnings on investments Other local revenue re en e Final B d t d Budgeted Amounts $ 11,231,200 3 500 000 3,500,000 1,000,000 1 000 000 A t l Actual Amounts $ 11,436,460 3 016 129 3,016,129 825,847 825 847 2007 Variance with Final Budget P iti Positive (Negative) $ 205,260 (483 871) (483,871) (174,153) (174 153) A t l Actual Amounts $ 10,967,311 3 485 156 3,485,156 1,012,341 1 012 341 Total local sources State building g aid Other state grants 15,731,200 15 731 200 15,737,561 , , - 15,278,436 15 278 436 15,737,561 , , 57,860 57 860 (452,764) (452 764) 57,860 57 860 15,464,808 15 464 808 7,949,575 , , 30,000 30 000 Total revenues 31 468 761 31,468,761 31 073 857 31,073,857 (394 904) (394,904) 23 444 383 23,444,383 , , 80,366,158 10 096 200 10,096,200 10 106 403 10,106,403 , , 56,546,997 10 128 102 10,128,102 425 554 425,554 1 540 894 1,540,894 2 245 661 2,245,661 , , 23,819,161 (31 902) (31,902) (425 554) (425,554) (1 540 894) (1,540,894) 7 860 742 7,860,742 , , 65,793,618 10 202 913 10,202,913 1 540 894 1,540,894 1 485 380 1,485,380 100,568,761 100 568 761 70,887,208 70 887 208 29,681,553 29 681 553 79,022,805 79 022 805 (69,100,000) (69 100 000) (39,813,351) (39 813 351) 29,286,649 29 286 649 (55,578,422) (55 578 422) 119 000 000 119,000,000 300 000 300,000 (9,600,000) 119 000 000 119,000,000 2,364,047 , , 1 743 001 1,743,001 2 617 600 2,617,600 (5,000,000) 2,364,047 , , 1 443 001 1,443,001 2 617 600 2,617,600 4,600,000 47 000 000 47,000,000 1,062,080 , , 260 299 260,299 3 064 491 3,064,491 (5,500,000) 109,700,000 120,724,648 11,024,648 45,886,870 40,600,000 0,600,000 80,911,297 80,9 , 9 40,311,297 0,3 , 9 (9,691,552) (9,69 ,55 ) Expenditures: E pendit res g and improvements p Buildings Equipment B d iissuance costs Bond t Capital lease payments Other capital outlay Total expenditures Excess of expenditures over revenues Other Financing Sources (Uses): General obligation bonds issued General obligation g bonds premium p Sale of capital assets C it l leases Capital l Transfers Total other financing sources (uses) Net e change c a ge in fund u d balances ba a ces Fund balance - beginning g g Fund balance - ending F db l di g 202,890 , $ 40,802,890 40 802 890 - 55 - 202,890 , $ 81,114,187 81 114 18 $ 40,311,297 40 311 29 9,894,442 , , $ 202,890 202 890 DAVIS SCHOOL DISTRICT Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2008 Special Revenue State Student Multi-District Activities Program Fund Fund Assets: Cash and investments Receivables: State of Utah Federal government Total assets Liabilities and fund balances: Liabilities: Accounts payable Due to other funds Total liabilities Fund balances: Designated for student activities Designated for state multi-district programs Total fund balances Total liabilities and fund balances $ 7,357,402 $ 7,357,402 $ $ 56 - 7,357,402 7,357,402 7,357,402 $ 578,017 $ 13,325 18,372 609,714 $ $ 62,581 62,581 547,133 547,133 609,714 Total Nonmajor Governmental Funds $ 7,935,419 $ 13,325 18,372 7,967,116 $ $ 62,581 62,581 7,357,402 547,133 7,904,535 7,967,116 DAVIS SCHOOL DISTRICT Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2008 Special Revenue State Student Multi-District Activities Program Fund Fund Revenues: Local sources: Earnings on investments Student fees Other local revenue State sources Federal sources $ Total revenues 8,332 16,592,228 104,000 - $ 29,113 2,282,212 51,242 Total Nonmajor Governmental Funds $ 8,332 16,592,228 133,113 2,282,212 51,242 16,704,560 2,362,567 19,067,127 Expenditures: Salaries and benefits Purchased services Supplies and equipment 51,347 42,446 16,146,137 141,487 1,840,700 75,994 192,834 1,883,146 16,222,131 Total expenditures 16,239,930 2,058,181 18,298,111 464,630 304,386 769,016 6,892,772 242,747 7,135,519 Net change in fund balances Fund balances - beginning Fund balances - ending $ 7,357,402 57 $ 547,133 $ 7,904,535 DAVIS SCHOOL DISTRICT Comparative Balance Sheets Student Activities Fund Nonmajor Special Revenue Fund June 30, 2008 and 2007 2008 Assets: Cash and investments Total assets $ $ Liabilities and fund balances: Liabilities: Accounts payable Total liabilities $ Fund balances - designated for student activities Total fund balances Total liabilities and fund balances 7,357,402 7,357,402 - $ $ - $ - 7,357,402 7,357,402 $ 58 2007 7,357,402 $ - DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Student Activities Fund Nonmajor Special Revenue Fund Year Ended June 30, 2008 With Comparative Totals for 2007 2008 Final Budgeted Amounts Revenues: Earnings on investments Student fees Other local revenue $ Total revenues Actual Amounts 10,000 18,246,000 104,000 $ 8,332 16,592,228 104,000 2007 Variance with Final Budget Positive (Negative) $ (1,668) (1,653,772) - Actual Amounts $ - 18,360,000 16,704,560 (1,655,440) - Expenditures: Salaries and benefits Purchased services Supplies and equipment 60,000 50,000 18,250,000 51,347 42,446 16,146,137 8,653 7,554 2,103,863 - Total expenditures 18,360,000 16,239,930 2,120,070 - 464,630 464,630 - Net change in fund balances - Fund balances - beginning Fund balances - ending 6,892,772 $ 6,892,772 6,892,772 $ 7,357,402 $ 464,630 $ Note: The District converted its Student Activities Fund from an agency fund to a special revenue fund effective July 1, 2007. The June 30, 2007 obligation balance of the agency fund became the July 1, 2007 fund balance for the special revenue fund. 59 - DAVIS SCHOOL DISTRICT Comparative Balance Sheets State Multi-District Program Fund Nonmajor Special Revenue Fund June 30, 2008 and 2007 2008 Assets: Cash and investments Receivables: State of Utah Federal government Total assets Liabilities and fund balances: Liabilities: Accounts payable Due to other funds Total liabilities $ 578,017 $ 13,325 18,372 609,714 $ Fund balances: Designated for state multi-district programs Total fund balances Total liabilities and fund balances $ - 60 - 62,581 62,581 547,133 547,133 609,714 2007 $ $ $ $ 108,447 192,876 301,323 39,460 19,116 58,576 242,747 242,747 301,323 DAVIS SCHOOL DISTRICT Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual State Multi-District Program Fund Nonmajor Special Revenue Fund Year Ended June 30, 2008 With Comparative Totals for 2007 2008 Final Budgeted Amounts Revenues: Local revenue State grants Federal grants $ Total revenues Actual Amounts 100,000 2,500,000 - $ 29,113 2,282,212 51,242 2007 Variance with Final Budget Positive (Negative) $ (70,887) (217,788) 51,242 Actual Amounts $ 116,362 1,709,281 242,876 2,600,000 2,362,567 (237,433) 2,068,519 Expenditures: Salaries and benefits Purchased services Supplies and equipment 119,000 2,641,247 82,500 141,487 1,840,700 75,994 (22,487) 800,547 6,506 119,845 1,641,511 119,420 Total expenditures 2,842,747 2,058,181 784,566 1,880,776 (242,747) 304,386 547,133 187,743 242,747 242,747 Net change in fund balances Fund balances - beginning Fund balances - ending $ - $ - 61 - 547,133 $ 547,133 55,004 $ 242,747 THIS PAGE INTENTIONALLY LEFT BLANK - 62 - Section III Statistical Section STATISTICAL SECTION (Unaudited) This part of the Davis School District's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District's overall financial health. Page Contents Financial Trends These schedules contain trend information to help the reader understand how the District's financial performance and well-being have changed over time. 64 - 67 Revenue Capacity These schedules contain information to help the reader assess the District's most significant local revenue source, the property tax. 68 - 71 Debt Capacity These schedules present information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future. 72 - 76 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial activities take place. 77 - 80 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs. 81 - 87 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The District implemented GASB Statement 34 with the fiscal year beginning July 1, 2001; therefore, schedules presenting government-wide information include information for the years June 30, 2002 to the present - 63 - DAVIS SCHOOL DISTRICT Net Assets by Component Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year 2008 2007 2006 2005 2004 2003 2002 28,961,669 $ 149,364,856 $ 122,391,589 $ 124,199,055 $ 124,238,028 $ 116,182,367 $ 111,503,452 146,642,136 2,667,453 14,663,747 3,971,276 5,578,548 7,314,576 4,113,544 (4,346,827) (5,857,924) (2,772,659) (1,896,086) (2,148,750) (3,817,263) Governmental activities: Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets $ (1,726,125) 173,877,680 147,685,482 131,197,412 125,397,672 127,920,490 121,348,193 111,799,733 9,421,174 9,872,671 10,285,758 10,506,045 11,003,534 9,840,343 6,485,597 Business activities Invested in capital assets, net of related debt Restricted Unrestricted Total business activities net assets - - - - - - - 5,845,245 4,637,536 2,583,417 1,220,259 516,304 213,829 3,004,322 15,266,419 14,510,207 12,869,175 11,726,304 11,519,838 10,054,172 9,489,919 Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets 38,382,843 159,237,527 132,677,347 134,705,100 135,241,562 126,022,710 117,989,049 146,642,136 2,667,453 14,663,747 3,971,276 5,578,548 7,314,576 4,113,544 4,119,120 290,709 (3,274,507) (1,552,400) (1,379,782) (1,934,921) $ 189,144,099 $ 162,195,689 $ 144,066,587 $ 137,123,976 Note: The District began to report accrual information when it implemented GASB Statement 34 in Fiscal Year 2002. - 64 - $ 139,440,328 $ 131,402,365 (812,941) $ 121,289,652 DAVIS SCHOOL DISTRICT Changes in Net Assets Last Seven Fiscal Years (accrual basis of accounting) Expenses 2008 2007 2006 2005 2004 2003 2002 Governmental activities: Instruction $ 315,325,500 $ 253,530,785 $ 239,681,284 $ 230,210,116 $ 216,235,269 $ 207,796,373 $ 210,974,901 Supporting services: Student 13,436,051 11,887,545 11,482,626 10,904,832 10,340,410 10,068,576 10,472,963 Instructional staff 17,679,053 15,303,396 14,268,236 13,928,829 14,172,015 12,560,334 13,648,104 District administration 3,223,304 3,272,516 2,871,469 2,779,347 2,576,429 2,582,947 2,512,169 School administration 23,358,895 21,054,535 19,637,675 18,781,192 17,870,998 16,711,711 16,995,486 Business administration 11,225,624 9,659,034 8,842,764 8,332,384 8,432,651 7,726,503 7,915,053 Operation and maintenance of facilities 39,353,038 36,471,202 34,719,958 31,546,601 28,782,093 26,660,315 27,990,051 8,272,928 Student transportation Interest on long-term liabilities Total governmental activities expenses 13,318,469 12,437,899 12,048,701 9,691,248 9,409,323 8,677,925 13,534,129 12,435,282 12,102,047 11,129,849 8,837,120 8,877,188 6,527,105 450,454,063 376,052,194 355,654,760 337,304,398 316,656,308 301,661,872 305,308,760 20,750,195 18,838,343 17,914,642 16,939,064 15,980,327 15,683,848 15,715,232 7,722,053 7,788,524 7,629,873 7,597,058 7,407,741 6,689,259 6,537,058 28,472,248 26,626,867 25,544,515 24,536,122 23,388,068 22,373,107 22,252,290 Business-type activities: School nutrition services Pioneer Adult Rehabilitation Center Total business-type activities expenses Total primary government expenses $ 478,926,311 $ 402,679,061 $ 381,199,275 $ 361,840,520 $ 340,044,376 $ 324,034,979 $ 327,561,050 $ 5,685,499 $ 6,101,367 $ 5,110,542 $ 6,099,398 $ 3,960,580 $ 5,546,152 $ 6,070,774 Program Revenues Governmental activities: Charges for services: Instruction Supporting services Operating grants and contributions Total governmental activities program revenues 401,668 924,952 98,718 115,825 106,215 88,902 122,680 89,205,740 80,263,213 75,607,227 59,393,900 72,457,836 52,317,066 75,575,261 95,292,907 87,289,532 80,816,487 65,609,123 76,524,631 57,952,120 81,768,715 Business-type activities: Charges for services: School food services 9,317,741 8,561,595 8,049,391 7,653,133 7,122,428 7,060,491 7,293,361 Pioneer adult reahb center 7,585,887 7,968,431 7,425,563 6,991,536 6,609,824 6,351,109 5,829,414 Operating grants and contributions 12,324,832 11,737,873 11,212,432 10,097,919 11,121,482 9,525,760 8,346,096 29,228,460 28,267,899 26,687,386 24,742,588 24,853,734 22,937,360 21,468,871 Total business-type activities program revenues Total primary government program revenues $ 124,521,367 $ 115,557,431 $ 107,503,873 $ 90,351,711 $ 101,378,365 $ 80,889,480 $ 103,237,586 $ (355,161,156) $ (288,762,662) $ (274,838,273) $ (271,695,275) $ (240,131,677) $ (243,709,752) $ (223,540,045) Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense 756,212 1,641,032 1,142,871 206,466 1,465,666 564,253 (783,419) $ (354,404,944) $ (287,121,630) $ (273,695,402) $ (271,488,809) $ (238,666,011) $ (243,145,499) $ (224,323,464) $ 52,927,454 $ 47,794,781 $ 47,640,833 $ 45,875,875 $ 43,524,583 $ 41,255,388 $ 39,089,614 General Revenues and Other Changes in Net Assets Governmental activities: Property taxes levied for: General purposes Transportation 2,335,233 1,959,023 1,891,874 1,789,916 1,747,691 1,554,397 1,476,989 Recreation 2,950,136 2,804,354 2,702,677 2,553,765 2,488,801 1,554,397 1,476,989 Debt service 38,948,551 34,497,583 31,584,472 28,899,586 27,952,903 27,372,285 26,009,161 Capital outlay 11,512,718 10,962,477 10,577,297 10,046,025 9,801,214 9,283,793 8,831,582 240,324,714 195,629,473 180,255,595 177,206,976 157,464,947 169,013,017 154,090,572 5,270,686 5,265,672 3,583,858 3,155,007 871,855 1,399,845 2,257,609 20,191,090 6,337,369 2,401,407 34,027 1,825,090 2,230,122 Federal and state reveune not restricted to specific purposes Interest Miscellaneous Total primary government general revenues (354,693) $ 374,460,582 $ 305,250,732 $ 280,638,013 $ $ 19,299,426 $ 16,488,070 $ 5,799,740 $ 269,172,457 $ 243,886,021 $ 253,258,212 $ 235,462,638 $ 3,754,344 $ 9,548,460 $ 11,922,593 $ 11,139,174 Change in Net Assets Governmental activities Business-type activities Total primary government 756,212 $ 20,055,638 1,641,032 $ 1,142,871 18,129,102 $ 6,942,611 Note: The District began to report accrual information when it implemented GASB Statement 34 in Fiscal Year 2002. - 65 - (2,522,818) 206,466 $ (2,316,352) 1,465,666 $ 5,220,010 564,253 $ 10,112,713 (783,419) DAVIS SCHOOL DISTRICT Fund Balances - Governmental Funds Last Seven Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 20, 2002 through 2008 2008 2007 2006 2005 2004 2003 2002 General Fund: Reserved $ 3,068,975 $ 1,619,498 $ 1,668,283 $ 1,395,663 $ 819,464 $ 878,232 $ 1,263,609 Unreserved, designated 2,800,000 1,800,000 1,050,000 250,000 250,000 250,000 250,000 Unreserved, undesignated 3,883,937 4,065,600 3,363,129 3,633,945 4,127,223 3,572,725 1,732,964 Total fund balances $ 9,752,912 $ 7,485,098 $ 6,081,412 $ 5,279,608 $ 5,196,687 $ 4,700,957 $ 3,246,573 Debt Service Fund: Reserved $ Unreserved, designated Unreserved, undesignated Total fund balances - $ 2,404,428 $ - 2,404,428 $ - 804,090 $ - 804,090 $ - 689,543 $ - 689,543 $ - $ - (27,606) $ - $ 24,229 $ 229,727 $ - 229,727 (27,606) - - 3,374,601 $ 3,374,601 2,584,709 $ 2,584,709 Capital Projects Fund: Reserved $ Unreserved, designated Unreserved, undesignated Total fund balances - $ 81,539,741 $ 81,539,741 - $ 202,890 $ 202,890 - $ 9,894,442 36,614,833 $ 9,894,442 - $ 22,009,309 - - $ 19,245,177 - 30,965,675 - - $ 36,639,062 $ 22,009,309 $ 19,245,177 $ 30,965,675 $ $ $ $ Special Revenue Fund: Reserved $ Unreserved, designated Unreserved, undesignated Total fund balances - $ 7,904,535 * $ - $ 242,747 55,004 - - 7,904,535 $ 242,747 $ 3,068,975 $ 1,619,498 $ 41,954 - 55,004 $ 1,668,283 $ 178,261 - 41,954 $ 1,419,892 $ 192,335 - 178,261 $ 819,464 $ 561 425,873 - 192,335 $ 878,232 $ 426,434 Total Governmental Funds: Reserved Unreserved, designated Unreserved, undesignated Total fund balances $ 92,244,276 2,245,637 6,288,365 $ 101,601,616 $ 10,999,446 36,906,787 22,437,570 19,687,512 1,264,170 31,641,548 4,869,690 4,052,672 3,606,339 4,356,950 6,947,326 4,317,673 8,734,825 $ 16,720,401 $ 41,933,018 $ 27,613,984 $ 27,513,070 $ 37,223,391 Note: The District began to report accrual information when it implemented GASB Statement 34 in Fiscal Year 2002. * Note: The Student Activities Fund was reclassified from an agency fund to a special revenue fund effective July 1, 2007. As a result of this change, the beginning net asset balance was increased by $6,892,772. Prior years have not been restated. - 66 - DAVIS SCHOOL DISTRICT Changes in Fund Balances - Governmental Funds Last Seven Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 20, 2002 through 2008 2008 2007 2006 2005 2004 2003 2002 $ 107,842,358 $ 98,061,449 $ 94,764,236 $ 89,175,738 $ 85,466,645 $ 81,232,455 $ 76,529,731 5,270,686 5,265,672 3,583,858 3,155,007 871,855 1,399,845 2,257,609 25,684,292 13,244,520 7,440,822 5,860,530 4,103,822 7,460,144 8,423,576 303,207,688 249,278,051 230,993,884 210,841,419 205,417,364 199,381,451 208,211,100 Revenues: Property taxes Interest Other local sources State of Utah Federal government Total revenues 26,322,766 26,614,635 24,868,938 25,759,457 24,505,419 21,948,632 21,454,733 468,327,790 392,464,327 361,651,738 334,792,151 320,365,105 311,422,527 316,876,749 280,577,305 229,498,868 213,582,956 204,179,277 194,750,658 189,907,872 192,381,062 Expenditures: Current: Instruction Supporting services: Students 13,312,679 11,782,588 11,362,816 10,782,609 10,253,567 9,986,622 10,392,710 Instructional staff 17,574,702 15,202,804 14,165,716 13,826,643 13,606,938 12,437,559 13,528,553 District administration 3,204,530 3,253,753 2,851,311 2,758,154 2,555,220 2,564,213 2,498,619 School administration 22,712,165 20,512,554 19,052,775 18,186,049 17,458,085 16,166,539 15,954,407 Business administration 10,946,328 9,428,097 8,584,891 8,059,917 7,704,925 7,501,076 7,695,701 27,231,882 Operation and maintenance of facilities Student transportation Capital outlay 38,100,173 35,542,521 33,694,624 30,770,797 29,447,103 25,739,092 12,138,708 11,153,436 11,033,880 8,790,782 8,457,092 7,751,334 7,383,557 68,920,760 77,481,911 41,118,011 47,246,910 61,892,934 63,777,728 30,857,791 Debt service: Tax anticipation note interest 1,345,800 1,373,883 994,611 792,515 419,055 731,250 735,417 Bond principal 23,605,000 23 605 000 22,880,000 22 880 000 19,940,000 19 940 000 18,995,000 18 995 000 22,780,000 22 780 000 17,925,000 17 925 000 17,020,000 17 020 000 Bond interest 12,968,323 11,194,210 11,009,634 9,921,781 7,898,464 7,939,123 5,355,615 Advance funding escrow Bond issuance costs Capital lease payments Fees and miscellaneous charges Total expenditures Excess of expenditures over revenues - - - 618,000 - - - 406,544 280,544 256,544 748,143 569,670 425,554 277,190 2,208,107 2,208,107 1,483,838 1,298,521 1,491,306 1,206,855 1,507,312 38,285 46,851 40,512 240,138 419,313 297,973 76,345 508,078,419 451,836,773 388,915,575 376,873,637 379,415,204 364,188,780 333,936,784 (39,750,629) (59,372,446) (27,263,837) (42,081,486) (59,050,099) (52,766,253) (17,060,035) 119,000,000 47,000,000 - 52,200,000 55,000,000 38,930,000 52,000,000 2,364,047 1,062,080 - 1,082,905 1,327,852 2,028,833 - 24,905,000 Other financing sources (uses): General obligation bonds issued General obligation bonds premium Refunding bond issued - - - - Refunding bond premium - - - 1,894,757 - - Payment to refunded bond escrow agent - - - (26,020,216) - - 431,538 27,240,000 632,330 (27,781,957) Capital leases 2,617,600 3,064,491 1,455,276 1,964,780 951,000 1,808,860 Sale of capital assets 1,743,001 260,299 595,944 373,294 1,872,161 288,239 244,955 125,724,648 51,386,870 2,051,220 56,400,520 59,151,013 43,055,932 52,766,866 85,974,019 (7,985,576) (25,212,617) 14,319,034 100,914 (9,710,321) 35,706,831 Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending 15,627,597 * $ 101,601,616 $ - 16,720,401 41,933,018 27,613,984 27,513,070 37,223,391 1,516,560 8,734,825 $ 16,720,401 $ 41,933,018 $ 27,613,984 $ 27,513,070 $ 37,223,391 9.3% 9.4% 10.1% 9.1% 8.3% Debt service as a percentage of noncapital expenditures 8.8% 9.8% Note: The District began to report accrual information when it implemented GASB Statement 34 in Fiscal Year 2002. * Note: The Student Activities Fund was reclassified from an agency fund to a special revenue fund effective July 1, 2007. As a result of this change, the beginning net asset balance was increased by $6,892,772. Prior years have not been restated. - 67 - DAVIS SCHOOL DISTRICT Assessed Value and Estimated Actual Value of Taxable Property Last Ten Tax Years December 31, 1998 through 2007 Assessed Total Taxable Tax Commercial & Year 2007 Residential $ 9,955,671,253 Industrial $ 3,141,846,380 Agriculture $ 123,379,683 Personal $ 1,059,363,010 $ Total Estimated Value as a Assessed Direct Actual Percentage of Value Tax Rate Value Actual Value 14,280,260,326 0.007176 $ 22,432,352,520 63.7% 2006 8,026,810,761 2,998,155,808 129,163,796 860,077,858 12,014,208,223 0.007305 18,457,991,962 65.1% 2005 7,154,484,948 3,589,684,479 119,545,034 26,354,229 10,890,068,690 0.007684 17,135,120,877 63.6% 2004 6,718,404,694 3,398,273,977 108,938,108 28,804,941 10,254,421,720 0.007821 15,667,356,241 65.5% 2003 6,578,592,182 3,076,474,603 100,213,529 31,431,844 9,786,712,158 0.007731 14,509,725,213 67.4% 2002 5,949,628,780 2,919,479,838 499,450,603 32,116,988 9,400,676,209 0.007610 14,205,806,672 66.2% 2001 5,624,543,333 2,927,006,146 529,958,250 35,042,915 9,116,550,644 0.007600 13,920,405,974 65.5% 2000 5,317,235,364 2,444,372,417 404,279,043 37,530,785 8,203,417,609 0.007513 12,789,345,628 64.1% 1999 5,014,935,540 2,238,909,906 383,402,090 36,286,799 7,673,534,335 0.007370 12,092,080,432 63.5% 1998 4,692,012,310 2,115,807,994 377,425,210 37,303,845 7,222,549,359 0.007393 11,406,243,914 63.3% - 68 - DAVIS SCHOOL DISTRICT Direct and Overlapping Property Tax Rates Last Ten Tax Years December 31, 1998 through 2007 (rate per $1 of assessed value) Tax Rates for the Tax Year Ended December 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Davis School District direct rates: General 0.003432 0.003494 0.003806 0.003921 0.003825 0.003803 0.003792 0.003690 0.003438 0.003294 Capital Outlay & Debt Service 0.003332 0.003388 0.003432 0.003446 0.003450 0.003443 0.003444 0.003454 0.003553 0.003717 Tort Liability 0.000063 0.000068 0.000072 0.000073 0.000073 0.000072 0.000072 0.000073 0.000075 0.000076 Special Transportation 0.000154 0.000146 0.000154 0.000157 0.000158 0.000146 0.000146 0.000148 0.000152 0.000153 Recreation 0.000195 0.000209 0.000220 0.000224 0.000225 0.000146 0.000146 0.000148 0.000152 0.000153 0.007176 0.007305 0.007684 0.007821 0.007731 0.007610 0.007600 0.007513 0.007370 0.007393 County Funds 0.002189 0.001739 0.001921 0.001948 0.001954 0.001650 0.001664 0.001710 0.001833 0.002648 County Library 0.000375 0.000403 0.000426 0.000432 0.000434 0.000431 0.000431 0.000435 0.000287 0.000298 Average Cities and Towns 0.001361 0.001423 0.001641 0.001666 0.001661 0.001579 0.001481 0.001562 0.001633 0.001679 Miscellaneous Taxing Districts 0.000390 0.000414 0.000842 0.000800 0.000818 0.000835 0.001059 0.000831 0.000584 0.000412 Total direct rate Overlapping Rates: - 69 - DAVIS SCHOOL DISTRICT Principal Property Tax Payers Current Year and Nine Years Ago December 31, 2007 and 1998 December 31, 2007 Taxable Taxpayer Type of Business Chevron U.S.A. Inc Petroleum Refinery Freeport Center Associates Distribution / Warehouse PacifiCorp Value $ Rank December 31, 1998 Percent of Percent of District's Total District's Total Taxable Taxable Value Value $ Taxable Rank Value 171,165,852 1 1.20% 83,024,106 1 1.15% 155,685,824 2 1.09% 71,117,434 3 0.98% Electrical Distribution 91,612,165 3 0.64% 64,203,055 5 0.89% Layton Hills L L C Real Estate (Mall) 90,340,886 4 0.63% 48,385,537 7 0.67% Big West Oil Petroleum Petroleum Distribution 74,422,084 5 0.52% - - - Smith’s Food and Drug Distribution / Retail sales 70,355,447 6 0.49% 67,358,725 4 0.93% Qwest Communications Communication 65,558,589 7 0.46% 82,518,066 2 1.14% Albertson’s Distribution / Retail sales 51,593,534 8 0.36% 48,644,704 6 0.67% Questar Gas Natural Gas Utility 48,821,642 9 0.34% 31,189,052 9 0.43% 43,859,596 Lifetime Products Manufacturing 10 0.31% - - - Phillips 66 Petroleum Refinery - - n/a 31,263,312 8 0.43% Union Pacific R.R. Railroad Company - - n/a 29,014,228 10 0.40% Totals $ 863,415,619 Source: Davis County Auditor's Office - 70 - 6.04% $ 556,718,219 7.69% DAVIS SCHOOL DISTRICT Property Tax Levies and Collections Last Ten Tax Years December 31, 1998 through 2007 Property Taxes Property Taxes Collected within Tax Year Levied the Calendar Year of the Levy Ended For The December 31, Calendar Year 2007 $ 99,911,471 Amount $ Total Property Tax Collections Percentage in Subsequent of Levy Years 89,489,555 89.57% * $ - Collections to Date Percentage $ Amount of Levy 89,489,555 89.57% 2006 85,572,399 81,008,796 94.67% 3,935,480 84,944,276 99.27% 2005 81,303,555 76,725,383 94.37% 4,360,079 81,085,462 99.73% 2004 77,870,844 73,207,446 94.01% 4,576,127 77,783,573 99.89% 2003 75,661,072 71,635,764 94.68% 3,982,871 75,618,635 99.94% 2002 71,539,146 67,537,541 94.41% 4,001,605 71,539,146 100.00% 2001 69,285,785 64,854,449 93.60% 4,431,336 69,285,785 100.00% 2000 61,632,277 58,246,198 94.51% 3,386,079 61,632,277 100.00% 1999 56,553,948 53,850,951 95.22% 2,702,997 56,553,948 100.00% 1998 53,396,308 51,169,904 95.83% 2,226,404 53,396,308 100.00% * In 2007, there was a tax abatement of $5,698,691. Were it not the case, the collection rate would have been 94.99%. Source: Davis County Treasurer's Office (excludes fee-in-lieu and age-based collections on motor vehicles). This schedule recognizes collections on a calendar year (tax year) cash basis, whereas property tax collections reported in the basic financial statements are on a fiscal year modified accrual basis of accounting. - 71 - DAVIS SCHOOL DISTRICT Ratios of Outstanding Debt Last Ten Fiscal Years Fiscal Outstanding Net General Net Net Debt As Year General Bonded Debt As Bonded Bonded Percentage Debt Ended Obligation Percentage of Debt Per Debt Per Capital Total of Taxable Per Per June 30, Bonds Taxable Value Capita Student Leases Debt Value Capita Student 2008 $ 342,880,000 2.40% $ 1,158 $ 5,312 2007 247,485,000 2.06% 864 3,939 2006 223,365,000 2.05% 795 2005 243,305,000 2.49% 2004 210,890,000 2003 $ 350,501,136 2.45% $ 1,184 $ 5,430 7,663,350 255,148,350 2.12% 891 4,061 3,582 6,698,472 230,063,472 2.11% 819 3,690 904 4,014 6,783,640 250,088,640 2.56% 930 4,126 2.24% 824 3,514 5,815,045 216,705,045 2.31% 847 3,611 178,670,000 1.96% 720 3,001 6,110,176 184,780,176 2.03% 745 3,104 2002 157,665,000 1.92% 646 2,677 5,601,209 163,266,209 1.99% 669 2,772 2001 122,695,000 1.60% 513 2,088 6,794,542 129,489,542 1.69% 542 2,204 2000 138,475,000 1.92% 584 2,349 5,618,588 144,093,588 2.00% 608 2,444 1999 154,145,000 2.37% 690 2,621 6,407,025 160,552,025 2.47% 719 2,730 - 72 - 7,621,136 $ Debt DAVIS SCHOOL DISTRICT Overlapping and Underlying General Obligation Debt June 30, 2008 District's 2007 Estimated Entity's District's Estimated General Estimated Taxable Portion of District's Obligation Portion of Value (1) Taxable Value Percentage Debt Debt State of Utah $ 190,009,782,730 $ 14,280,260,326 7.5% $ 1,161,510,000 Davis County 14,280,260,326 14,280,260,326 Taxing Entity Overlapping: 100.0% $ 23,745,000 87,113,250 23,745,000 Total Overlapping 110,858,250 Underlying: 36,688,101,003 14,280,260,326 38.9% 33,806,619 13,150,775 North Davis Sewer District WBWCD (2) (3) 7,469,095,340 6,166,694,969 82.6% 56,022,000 46,274,172 Clearfield City (3) 1,140,970,470 1,140,970,470 100.0% 11,175,000 North Salt Lake City (3) - 1,196,850,522 1,196,850,522 100.0% 5,325,000 Farmington City 930,945,540 930,945,540 100.0% 4,745,000 Clinton City (3) 607,986,120 607,986,120 100.0% 526,000 - West Bountiful City (3) 312,596,187 312,596,187 100.0% 1,415,000 - 5,414,640,100 5,414,640,100 100.0% 17,590,000 South Davis Rec. District (4) 4,745,000 17,590,000 Total Underlying 81,759,947 Total Overlapping and Underlying General Obligation Debt $ Total Overlapping General Obligation Debt (Excluding the State) (5) $ Total Direct General Obligation Bonded Indebtedness 192,618,197 23,745,000 342,880,000 Total Direct and Overlapping General Obligation Debt (Exluding the State) (5) $ 366,625,000 __________________ (1) 2006 values are preliminary and subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The Weber Basin Water Conservancy District ("WBWCD") covers all of Morgan County, most of the County and Weber County, and portions of Box Elder and Summit Counties. Principal and interest on WBWCD general obligation bonds are paid from sales of water. WBWCD's outstanding general obligation bonds are limited ad valorem tax bonds. By law, WBWCD may levy a tax rate of up to .000200 to pay, first, for any outstanding general obligation indebtedness, then for operation and maintenance expenses, and then for any other lawful purpose (3) All or portions of these governmental entities' outstanding general obligation debt are supported by user fee revenues from water or sewer. The County's portion of overlapping general obligation debt has been reduced to the extent that such general obligation debt is supported by "user fee revenues". (4) South Davis Recreation District members are Bountiful, Centerville, North Salt Lake, Woods Cross, and West Bountiful. (5) The State's general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. - 73 - DAVIS SCHOOL DISTRICT General Obligation Legal Debt Limit and Debt Capacity Last Ten Years Fiscal Year Estimated Fair Debt Limit Estimated Market Value for (4% of Fair General Debt Deferred Additional Percentage of Debt Ended Estimated Fair Value from Debt Incurring Market Obligation Issuance Amounts on Debt To Debt June 30, Market Value Uniform Fees Capacity Value) Debt Premiums Refunding Capacity Limit 2008 $ 22,432,352,520 2007 $ 1,347,035,643 $ 23,779,388,163 $ 951,175,527 601,309,953 36.78% 18,457,991,962 1,277,851,892 19,735,843,854 789,433,754 247,485,000 6,122,926 1,002,635 536,828,463 32.00% 2006 17,135,120,877 1,237,153,267 18,372,274,144 734,890,966 223,365,000 5,602,338 1,137,073 507,060,701 31.00% 2005 14,509,725,213 1,201,209,533 15,710,934,746 628,437,390 243,305,000 6,084,164 1,271,511 380,319,737 39.48% 2004 14,205,806,672 1,377,761,676 15,583,568,348 623,342,734 210,890,000 3,506,743 349,846 409,295,837 34.34% 2003 13,920,405,974 1,180,455,311 15,100,861,285 604,034,451 178,670,000 2,398,243 401,990 423,368,198 29.91% 2002 12,789,345,628 1,083,696,821 13,873,042,449 554,921,698 157,665,000 409,450 454,134 397,301,382 28.40% 2001 12,092,080,432 977,107,275 13,069,187,707 522,767,508 122,695,000 - - 400,072,508 23.47% 2000 11,406,243,914 1,012,630,371 12,418,874,285 496,754,971 138,475,000 - - 358,279,971 27.88% 1999 11,406,243,914 989,686,341 12,395,930,255 495,837,210 138,475,000 - - 357,362,210 27.93% - 74 - $ 342,880,000 $ 7,853,771 $ 868,197 $ DAVIS SCHOOL DISTRICT Schedule of Annual Debt Service Requirements Years Ending June 30, 2009 to 2028 Year Ending Total June 30, 2009 Principal $ 27,380,000 Interest $ 15,242,305 Payment $ 42,622,305 2010 24,300,000 13,960,266 38,260,266 2011 25,180,000 12,949,197 38,129,197 2012 26,400,000 11,806,429 38,206,429 2013 26,940,000 10,599,709 37,539,709 2014 24,580,000 9,441,758 34,021,758 2015 25,650,000 8,378,720 34,028,720 2016 26,775,000 7,255,451 34,030,451 2017 27,315,000 6,086,177 33,401,177 2018 24,675,000 4,862,201 29,537,201 2019 17,085,000 3,824,539 20,909,539 2020 17,820,000 3,056,800 20,876,800 2021 13,775,000 2,264,519 16,039,519 2022 9,850,000 1,640,331 11,490,331 2023 3,625,000 1,181,081 4,806,081 2024 3,775,000 107,956 3,882,956 2025 3,950,000 843,363 4,793,363 2026 4,125,000 655,737 4,780,737 2027 4,325,000 459,800 4,784,800 2028 5,355,000 254,362 5,609,362 $ 342,880,000 $ - 75 - 114,870,701 $ 457,750,701 DAVIS SCHOOL DISTRICT Debt Service Schedule of Outstanding General Obligation Bonds Years Ending June 30, 2009 to 2028 PRINCIPAL 1999 2001 40,525,000 10,000,000 $ 445,000 $ 2002A 2002B 27,240,000 42,000,000 3,640,000 $ 2003 2,625,000 38,930,000 $ 2,180,000 $ 2003B 2005A 2005B 55,000,000 52,200,000 24,905,000 3,550,000 $ 2,885,000 $ 2006 - 2007 47,000,000 $ 2,650,000 2008 55,000,000 $ 100,000 64,000,000 $ 3,100,000 Total 2009 $ 6,205,000 $ 27,380,000 2010 2,955,000 465,000 3,790,000 2,725,000 2,265,000 3,650,000 3,030,000 - 2,750,000 450,000 2,220,000 24,300,000 2011 - 480,000 3,965,000 2,850,000 2,380,000 3,750,000 3,180,000 2,975,000 2,850,000 475,000 2,275,000 25,180,000 2012 - 505,000 4,200,000 3,000,000 2,500,000 3,900,000 3,340,000 3,130,000 2,975,000 500,000 2,350,000 26,400,000 2013 - 525,000 - 3,125,000 2,625,000 4,050,000 3,505,000 3,285,000 3,100,000 4,300,000 2,425,000 26,940,000 2014 - - - 3,275,000 2,755,000 4,225,000 3,645,000 480,000 3,225,000 4,475,000 2,500,000 24,580,000 2015 - - - - 2,865,000 4,400,000 3,810,000 3,925,000 3,375,000 4,675,000 2,600,000 25,650,000 2016 - - - - 2,985,000 4,600,000 3,965,000 4,125,000 3,550,000 4,875,000 2,675,000 26,775,000 2017 - - - - 3,110,000 4,800,000 4,120,000 3,685,000 3,700,000 5,100,000 2,800,000 27,315,000 2018 - - - - 3,240,000 5,050,000 4,285,000 - 3,850,000 5,325,000 2,925,000 24,675,000 2019 - - - - - - 4,460,000 - 4,025,000 5,550,000 3,050,000 17,085,000 2020 - - - - - - 4,645,000 - 4,175,000 5,825,000 3,175,000 17,820,000 2021 - - - - - - - - 4,375,000 6,100,000 3,300,000 13,775,000 2022 - - - - - - - - - 6,400,000 3,450,000 9,850,000 2023 - - - - - - - - - - 3,625,000 3,625,000 2024 - - - - - - - - - - 3,775,000 3,775,000 2025 - - - - - - - - - - 3,950,000 3,950,000 2026 - - - - - - - - - - 4,125,000 4,125,000 2027 - - - - - - - - - - 4,325,000 4,325,000 2028 Total - - - - - - - - - - 5,355,000 5,355,000 $ 9,160,000 $ 2,420,000 $ 15,595,000 $ 17,600,000 $ 26,905,000 $ 41,975,000 $ 44,870,000 $ 21,605,000 $ 44,600,000 $ 54,150,000 $ 64,000,000 $ 342,880,000 INTEREST 1999 2001 $ 2002A 108,145 $ 2002B 758,200 $ 2003 823,263 $ 2003B 1,200,819 $ 2005A 1,682,313 $ 2005B 1,965,944 $ 2006 1,076,650 $ 2007 1,909,188 $ 2008 2,470,906 $ 2,846,127 Total 2009 $ 400,750 $ 15,242,305 2010 129,281 89,233 603,500 705,138 1,113,619 1,575,813 1,821,694 1,076,650 1,803,188 2,466,906 2,575,244 13,960,266 2011 - 69,470 432,950 582,513 1,000,369 1,466,313 1,670,194 1,076,650 1,693,188 2,448,906 2,508,644 12,949,197 2012 - 48,470 220,875 451,413 881,369 1,316,313 1,511,194 927,900 1,579,188 2,429,313 2,440,394 11,806,429 2013 - 26,250 - 308,913 756,369 1,160,313 1,344,194 771,400 1,460,188 2,408,063 2,364,019 10,599,709 2014 - - - 160,475 625,119 998,313 1,203,994 607,150 1,336,188 2,225,313 2,285,206 9,441,758 2015 - - - - 514,919 829,313 1,039,969 586,750 1,174,938 2,035,125 2,197,706 8,378,720 2016 - - - - 396,738 631,313 887,569 390,500 1,006,188 1,836,437 2,106,706 7,255,451 2017 - - - - 269,875 424,313 728,969 184,250 855,313 1,617,063 2,006,394 6,086,177 2018 - - - - 137,700 208,313 564,169 - 698,063 1,387,562 1,866,394 4,862,201 2019 - - - - - - 392,769 - 534,438 1,147,938 1,749,394 3,824,539 2020 - - - - - - 203,219 - 363,375 870,437 1,619,769 3,056,800 2021 - - - - - - - - 185,938 593,750 1,484,831 2,264,519 2022 - - - - - - - - - 304,000 1,336,331 1,640,331 2023 - - - - - - - - - - 1,181,081 1,181,081 2024 - - - - - - - - - - 107,956 107,956 2025 - - - - - - - - - - 843,363 843,363 2026 - - - - - - - - - - 655,737 655,737 2027 - - - - - - - - - - 459,800 459,800 2028 Total $ 530,031 $ 341,568 $ 2,015,525 $ 4,398,200 $ 3,031,715 - - - $ 6,896,896 $ 10,292,630 $ 13,333,878 $ 3,380,819 $ - - - 254,362 254,362 6,697,900 $ 14,599,381 $ 24,241,719 $ 32,889,458 $ 114,870,701 TOTAL PAYMENT 1999 2001 2009 $ 6,605,750 $ 2002A 553,145 2002B $ 2003 3,448,263 2003B $ 2005A 5,232,313 $ 2005B 4,850,944 $ 2006 1,076,650 $ 2007 4,559,188 $ 2008 2,570,906 $ 5,946,127 Total $ 42,622,305 2010 3,084,281 554,233 4,393,500 3,430,138 3,378,619 5,225,813 4,851,694 1,076,650 4,553,188 2,916,906 4,795,244 38,260,266 2011 - 549,470 4,397,950 3,432,513 3,380,369 5,216,313 4,850,194 4,051,650 4,543,188 2,923,906 4,783,644 38,129,197 2012 - 553,470 4,420,875 3,451,413 3,381,369 5,216,313 4,851,194 4,057,900 4,554,188 2,929,313 4,790,394 38,206,429 2013 - 551,250 - 3,433,913 3,381,369 5,210,313 4,849,194 4,056,400 4,560,188 6,708,063 4,789,019 37,539,709 2014 - - - 3,435,475 3,380,119 5,223,313 4,848,994 1,087,150 4,561,188 6,700,313 4,785,206 34,021,758 2015 - - - - 3,379,919 5,229,313 4,849,969 4,511,750 4,549,938 6,710,125 4,797,706 34,028,720 2016 - - - - 3,381,738 5,231,313 4,852,569 4,515,500 4,556,188 6,711,437 4,781,706 34,030,451 2017 - - - - 3,379,875 5,224,313 4,848,969 3,869,250 4,555,313 6,717,063 4,806,394 33,401,177 2018 - - - - 3,377,700 5,258,313 4,849,169 - 4,548,063 6,712,562 4,791,394 29,537,201 2019 - - - - - - 4,852,769 - 4,559,438 6,697,938 4,799,394 20,909,539 2020 - - - - - - 4,848,219 - 4,538,375 6,695,437 4,794,769 20,876,800 2021 - - - - - - - - 4,560,938 6,693,750 4,784,831 16,039,519 2022 - - - - - - - - - 6,704,000 4,786,331 11,490,331 2023 - - - - - - - - - - 4,806,081 4,806,081 2024 - - - - - - - - - - 3,882,956 3,882,956 2025 - - - - - - - - - - 4,793,363 4,793,363 2026 - - - - - - - - - - 4,780,737 4,780,737 2027 - - - - - - - - - - 4,784,800 4,784,800 2028 Total - - - - - - - - - - 5,609,362 5,609,362 $ 9,690,031 $ 2,761,568 $ 17,610,525 $ 20,631,715 $ 33,801,896 $ 52,267,630 $ 58,203,878 $ 28,302,900 $ 59,199,381 $ 78,391,719 $ 96,889,458 $ 457,750,701 - 76 - DAVIS SCHOOL DISTRICT Demographic and Economic Statistics For the years 1998 - 2007 School District County Personal Per Capita Unemployment October 1 Year Population (1) Income (2,4) Income (2) Births (3) Deaths (3) Rate (2) Enrollment 2007 296,029 9,320.0 $31,483 2,949 1,163 2.6% 64,551 2006 286,500 8,725.0 $30,455 3,139 1,096 3.1% 62,832 2005 281,000 8,157.0 29,027 3,002 1,084 3.7% 62,349 2004 269,000 7,344.0 27,302 2,974 1,666 4.4% 60,614 2003 256,000 6,897.0 26,943 2,890 1,072 5.2% 60,007 2002 248,000 6,200.0 25,002 2,840 1,038 5.2% 59,536 2001 244,000 6,278.0 25,730 2,967 963 3.9% 58,900 2000 238,994 5,831.0 24,400 2,781 943 3.0% 58,754 1999 237,000 5,041.0 21,270 2,755 910 3.5% 58,947 1998 230,000 4,738.0 20,600 2,641 866 3.5% 58,767 52.8% 11.7% 34.3% -25.7% 9.8% Percentage increase from 1998 to 2007 28.7% 96.7% (1) Davis County Department of Community & Economic Development. (2) Utah Department of Workforce Services (3) Davis County Health Department - Vital Statistics. - 77 - DAVIS SCHOOL DISTRICT Labor Market Data Davis County For Years 1999 to 2008 Total civilian work force Employed 2008 (1) 2007 2006 2005 2004 2003 2002 2001 2000 1999 146,678 141,462 138,772 134,942 132,341 128,938 124,715 121,492 119,528 124,570 141,948 137,772 134,782 129,573 126,167 122,368 118,461 116,578 115,797 120,511 4,730 3,690 3,990 5,369 6,174 6,570 6,254 4,914 3,731 Unemployed Unemployment rate Total non-agricultural employment 3.2% 2.6% 2.9% 105,150 104,615 137 116 9,236 10,658 Mining Contract construction Manufacturing Trade, transportation and utilities 4,059 4.0% 4.7% 5.1% 5.0% 4.0% 3.1% 3.3% 100,547 95,963 93,284 89,722 88,886 87,579 84,846 82,234 558 137 118 62 59 95 89 71 9,447 8,287 7,492 6,861 6,718 7,115 7,064 7,034 9,828 10,164 10,632 10,591 10,461 10,363 10,073 9,925 10,125 10,381 20,895 20,494 19,458 19,063 19,450 18,383 18,638 18,798 18,517 17,477 Information 1,021 975 903 882 883 893 915 752 714 730 Financial services 2,854 4,089 4,078 3,906 3,832 3,556 3,197 3,304 3,217 3,319 13,273 11,880 10,534 9,221 8,220 7,739 7,647 6,926 6,284 5,874 9,920 9,377 9,004 8,637 8,319 8,003 7,630 7,566 7,245 6,884 10,218 9,744 8,948 8,503 8,304 8,013 7,880 7,845 7,695 7,398 3,144 3,122 3,033 2,734 2,771 2,673 2,641 2,425 2,258 2,174 24,624 23,989 24,338 24,002 23,434 23,162 23,488 22,828 21,638 20,893 Professional and business services Education and health services Leisure and hospitality Other services Government (1) Preliminary data through September 2008. (Source: Utah Department of Workforce Services.) - 78 - DAVIS SCHOOL DISTRICT Principal Employers Current Year and Nine Years Ago 2007 Business 1998 Percent Percent of County of County Employees Rank Employment Employees Rank Employment 10,000 - 14,999 1 10.8% 15,000 - 19,999 1 17.2% Davis School District 5,000 - 6,999 2 5.0% 5,000 - 6,999 2 6.0% Lagoon Inc. 1,000 - 1,999 3 1.4% 500 - 999 9 0.9% Lifetime Products, Inc. 1,000 - 1,999 4 1.4% 500 - 999 11 0.9% Smith's Distribution Center 1,000 - 1,999 5 1.4% 250 - 499 3 0.4% Walmart 1,000 - 1,999 6 1.4% 250 - 499 33 0.4% Albertson's 500 - 999 7 0.7% 500 - 999 3 0.9% Citicorp Credit Services 500 - 999 8 0.7% n/a n/a n/a Davis County 500 - 999 9 0.7% 500 - 999 5 0.9% Davis Hospital and Medical Center 500 - 999 10 0.7% 500 - 999 6 0.9% Lakeview Hospital 500 - 999 11 0.7% 500 - 999 10 0.9% Lofthouse Bakery Products 500 - 999 12 0.7% 500 - 999 13 0.9% Management & Training Corp 500 - 999 13 0.7% n/a n/a n/a South Davis Community Hospital Inc 500 - 999 14 0.7% n/a n/a n/a State of Utah 500 - 999 15 0.7% n/a n/a n/a Hill Air Force Base Totals 23,000-37,987 27.0% Source: Davis County Auditor's Office - 79 - 25,500-37,988 32.8% DAVIS SCHOOL DISTRICT District Facilities and Personnel Positions Years Ended June 30, 1999 to 2008 2008 2007 2006 2005 Elementary Schools 56 54 53 53 Junior High Schools 14 14 14 14 8 7 7 7 Facilities Operated: High Schools Special Purpose Schools 6 6 6 6 84 81 80 80 Administrators, Managers 56.4 56.4 56.4 56.4 School Principals 83.0 80.0 79.0 79.0 School Assistant Principals / Interns 94.0 91.0 90.0 90.0 Elementary Classroom Teachers 1,419.0 1,383.0 1,351.0 1,332.0 Secondary Classroom Teachers 1,115.0 1,085.0 1,075.0 1,072.0 Guidance Personnel 121.8 118.8 117.8 117.0 Special Education 486.0 473.0 462.0 452.0 Librarians / Media Specialists 76.8 73.8 72.8 72.8 Supervisors of Instruction 35.5 35.5 34.5 35.5 Other Professional Staff 171.6 170.6 169.2 169.0 Teacher Assistants 768.4 760.2 756.5 756.0 Secretarial 213.2 207.0 205.0 205.0 Office Assistants 183.1 177.2 175.0 175.0 Custodial 365.2 357.0 355.0 355.0 Maintenance 130.7 129.7 129.7 128.5 Nutrition Services 237.4 229.2 225.6 225.0 Transportation 226.5 224.5 222.0 222.0 35.9 35.9 35.9 35.0 5,819.5 5,687.8 5,612.4 5,577.2 Total Number of School Buildings Full-Time Equivalent Positions of the District: Warehouse Total number of District positions FTE Source: District Budget Office - 80 - DAVIS SCHOOL DISTRICT Average Daily Membership and October Enrollment Years Ended June 30, 1999 to 2008 Fiscal Year Ending June 30, Average Daily Membership Annual Increase/ (Decrease) October 1st Enrollment Annual Increase/ (Decrease) 2008 60,004 1,366 64,551 1,719 2007 58,638 909 62,832 483 2006 57,729 1,700 62,349 1,735 2005 56,029 378 60,614 607 2004 55,651 148 60,007 471 2003 55,503 101 59,536 636 2002 55,402 9 58,900 146 2001 55,393 (232) 58,754 (193) 2000 55,625 27 58,947 180 1999 55,598 55,598 58,767 (45) Average Daily Membership equals total aggregate days of membership of all students divided by 180 days of school. Enrollment is taken each October 1st for that school year, and is a headcount of all students, including all kindergarten even though in membership for only half days. Source: District Budget Office - 81 - DAVIS SCHOOL DISTRICT Expenditures by Function - General Fund Last Ten Fiscal Years Fiscal Year Ended June 30, Function 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 $262,946,407 $228,285,305 $212,571,844 $203,302,250 $193,971,439 $189,170,366 $191,788,228 $175,320,271 $164,920,217 $159,435,286 68.78% 67.83% 67.62% 68.38% 68.34% 69.54% 69.18% 67.98% 68.36% 69.67% 13,312,679 11,782,588 11,362,816 10,782,609 10,253,567 9,986,622 10,392,710 9,849,285 7,935,472 6,678,789 3.48% 3.50% 3.62% 3.63% 3.61% 3.67% 3.75% 3.82% 3.29% 2.92% 17,574,702 15,202,804 14,165,716 13,826,643 13,606,938 12,437,559 13,528,553 12,825,054 11,403,582 10,498,428 4.60% 4.52% 4.51% 4.65% 4.79% 4.57% 4.88% 4.97% 4.73% 4.59% 3,204,530 3,253,753 2,851,311 2,758,154 2,555,220 2,564,213 2,498,619 2,510,053 2,217,041 2,031,158 0.84% 0.97% 0.91% 0.93% 0.90% 0.94% 0.90% 0.97% 0.92% 0.89% 22,712,165 20,512,554 19,052,775 18,186,049 17,458,085 16,166,539 15,954,407 15,102,521 14,353,927 13,068,719 5.94% 6.10% 6.06% 6.12% 6.15% 5.94% 5.76% 5.86% 5.95% 5.71% 10,946,328 9,428,097 8,584,891 8,059,917 7,704,925 7,501,076 7,695,701 6,797,796 6,448,382 5,852,052 2.86% 2.80% 2.73% 2.71% 2.71% 2.76% 2.78% 2.64% 2.67% 2.56% Operation & maintenance of facilities 38,100,173 35,542,521 33,694,624 30,770,797 29,447,103 25,739,092 27,231,882 26,985,100 25,971,933 23,858,572 9.97% 10.56% 10.72% 10.35% 10.37% 9.46% 9.82% 10.46% 10.77% 10.43% Student transportation 12,138,708 11,153,436 11,033,880 8,790,782 8,457,092 7,751,334 7,383,557 7,478,060 7,465,336 6,833,635 3.18% 3.31% 3.51% 2.96% 2.98% 2.85% 2.66% 2.90% 3.09% 2.99% 1,345,800 1,373,883 994,611 792,515 419,055 731,250 735,417 1,029,583 530,115 558,917 0.35% 0.41% 0.32% 0.27% 0.15% 0.27% 0.27% 0.40% 0.22% 0.24% $382,281,492 $336,534,941 $314,312,468 $297,269,716 $283,873,424 $272,048,051 $277,209,074 $257,897,723 $241,246,005 $228,815,556 Instruction Supporting services: Students Instructional staff District administration School administration Business administration Tax anticipation note interest Total Expenditures - 82 - DAVIS SCHOOL DISTRICT Expenditures Per ADM by Function - General Fund Last Ten Fiscal Years Fiscal Year Ended June 30, Function 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 $4,382 $3,893 $3,682 $3,629 $3,485 $3,408 $3,462 $3,165 $2,965 $2,868 Students 222 201 197 192 184 180 188 178 143 120 Instructional staff 293 259 245 247 245 224 244 232 205 189 District administration 53 55 49 49 46 46 45 45 40 37 School administration 379 350 330 325 314 291 288 273 258 235 Business administration 182 161 149 144 138 135 139 123 116 105 Operation & maintenance of facilities 635 606 584 549 529 464 492 487 467 429 Student transportation 202 190 191 157 152 140 133 135 134 123 22 23 17 14 8 13 13 19 10 10 $6,371 $5,739 $5,445 $5,306 $5,101 $4,902 $5,004 $4,656 $4,337 $4,116 Instruction Supporting services: Tax anticipation note interest Total Expenditures per ADM - 83 - DAVIS SCHOOL DISTRICT Weighted Pupil Units (WPU'S) Regular WPU'S and Other by Formula Years Ended June 30, 1999 to 2008 WPU TYPE 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Regular Grades K-12 60,225 58,201 57,774 56,204 55,792 55,909 55,402 55,393 55,625 55,139 5,782 5,587 5,546 5,339 5,285 5,190 5,017 4,900 4,885 4,848 16 16 16 16 16 16 16 16 16 16 4 - - - - - - - - - Special Education 8,568 8,127 7,994 8,022 7,767 7,037 6,654 6,827 6,814 6,787 Career and Technical Ed 3,297 2,923 2,731 2,682 2,532 2,672 2,644 2,000 2,190 2,200 Adult High School - - - - - - - 273 280 292 Accelerated Learning - - - - - - - 408 391 388 At-Risk Students - - - - - - - 769 885 816 Career Ladders - - - - - - - 2,981 2,911 2,922 3,925 3,647 3,737 3,649 3,618 3,624 3,589 3,581 3,636 3,216 - - - - - - - 1,409 1,417 1,413 21,592 20,300 20,023 19,708 19,218 18,539 17,920 23,164 23,425 22,898 Other WPU's by Formula Professional staff Administrative Cost Foreign Exch Students Class-Size Reduction Local Program Total other WPU's TOTAL ALL WPU'S 81,817 78,501 77,797 75,912 75,010 74,448 73,322 78,557 79,050 78,037 The decrease in WPU's in 2002 was due to a change in the State funding formula. Categories previously funded by WPU's were moved to block grants. Weighted Pupil Units 90,000 80,000 70,000 Other WPU's 60,000 Regular WPU's 50,000 40,000 2008 2007 2006 2005 2004 - 84 - 2003 2002 2001 2000 1999 DAVIS SCHOOL DISTRICT Student Enrollment Projections For the next twenty years 90,000 Total Projected Enrollment 80,000 70,000 60,000 50,000 Elementary Enrollment 40,000 30,000 Junior High 20,000 High School 10,000 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 0 These projections are based upon the State of Utah's Economic and Demographic Projections, from the Governor's Office of Planning and Budget. Information pertaining to Davis County is extracted, then adjusted for local birth rates and "in" and "out" migration factors to arrive at the final estimate. - 85 - DAVIS SCHOOL DISTRICT American College Test (ACT) Results Years Ended June 30, 1999 to 2008 AVERAGE SCORES on a 36 point scale Year English Math Reading Science Reasoning Composite District Composite State Composite Nation 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 22.1 21.9 21.8 21.8 21.6 21.1 21.2 21.6 21.4 21.7 22.2 22.1 21.9 21.8 21.8 21.4 21.6 21.5 21.6 21.6 23.0 22.6 22.9 22.7 22.5 22.4 22.6 22.4 22.4 22.6 22.2 22.0 22.1 21.9 21.8 21.7 22.0 22.0 21.8 21.8 22.5 22.2 22.3 22.2 22.0 21.8 22.0 22.0 21.9 22.1 21.8 21.7 21.7 21.5 21.5 21.3 21.4 21.4 21.5 21.4 21.1 21.2 21.1 20.9 20.9 20.8 20.8 21.0 21.0 21.0 Comparison by Course - Davis District 23.5 23.0 22.5 22.0 21.5 21.0 20.5 1999 2000 2001 2002 2003 English 2004 Math 2005 Reading 2006 2007 2008 2007 2008 Science Composite Score Comparison 23.5 23.0 22.5 22.0 21.5 21.0 20.5 1999 2000 2001 2002 2003 Davis 2004 State 2005 2006 Nation 75% of seniors in the District take the American College Test (ACT) as their college entrance requirement. The ACT has measured the impact of students who prepare for success. Students taking a rigorous basic curriculum score significantly higher than those who complete minimum requirements. - 86 - DAVIS SCHOOL DISTRICT Advanced Placement Exam Results Years Ended June 30, 1999 to 2008 The score scale is 1-5. Scores of 3, 4, or 5 are "Passing". 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 942 998 952 942 940 914 807 787 704 688 2 3 2 2 4 17 18 17 26 32 English 1,002 942 928 987 1,044 949 901 910 900 919 Science 378 366 390 331 317 330 281 384 405 492 1,308 1,481 1,574 1,304 1,336 1,292 1,203 1,172 1,152 1,167 250 261 286 240 218 169 180 140 162 178 15 26 15 20 46 27 28 28 17 26 3,897 4,077 4,147 3,826 3,905 3,698 3,418 3,438 3,366 3,502 Exams Passed 2,767 3,047 3,030 2,792 2,785 2,664 2,559 2,534 2,433 2,545 PERCENTAGE PASSING 71.00% 74.74% 73.06% 72.97% 71.32% 72.04% 74.87% 73.71% 72.28% 72.67% Mathematics Computer Science Social Studies Fine Arts Foreign Languages Total Exams Attempted Advanced Placement Exams Attempted and Passed 4,500 Total # of Exams 4,000 3,500 3,000 2,500 2,000 1,500 2008 2007 2006 2005 2004 Total Exams Attempted 2003 2002 2001 2000 1999 Exams Passed All District high schools offer advanced placement classes to college-bound students. These classes are college-level courses. Each test successfully passed is worth 12 hours of college credit. There was an 1.7% decrease in the number of exams taken, yet there was a .5% increase in the number of exams passed compared to the previous year. One of the District's goals is to maximize the number of students who will successfully complete these courses and accumulate college credit, and the trend lines indicate real success in this effort. - 87 - THIS PAGE INTENTIONALLY LEFT BLANK - 88 - DAVIS SCHOOL DISTRICT SINGLE AUDIT AND STATE OF UTAH LEGAL COMPLIANCE REPORTS Year Ended June 30, 2008 TABLE OF CONTENTS Page Schedule of Expenditures of Federal Awards 1 Notes to Schedule of Expenditures of Federal Awards 2 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 3 Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 5 Summary Schedule of Prior Audit Findings 7 Schedule of Findings and Questioned Costs 8 Independent Auditor’s Report on Legal Compliance in Accordance with the State of Utah Legal Compliance Audit Guide 9 Letter to Management 11 DAVIS SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2008 Federal Grantor/Pass Through Grantor/Program Title CFDA Number USOE Revenue Code District's Program Number U.S. DEPARTMENT OF AGRICULTURE: Passed Through Utah State Office of Education: Food Donation School Breakfast Program National School Lunch Program Special Milk Program for Children Child and Adult Care Food Program Summer Food Service Program for Children Fresh Fruit and Vegetable Program 10.550 10.553 10.555 10.556 10.558 10.559 10.582 44 42/43 41 47 48 51 8000 8000 8000 8000 7365 8000 8000 U.S. DEPARTMENT OF DEFENSE: Direct Programs: National Flagship Language Program Grants to U.S. Institutions of Higher Education U.S. DEPARTMENT OF EDUCATION: Direct Programs: Impact Aid Indian Education - Grants to Local Educational Agencies JAVITS Gifted and Talented Students Education Grant Program Fund for the Improvement of Education Passed Through Utah State Office of Education: Adult Education - State Grant Program Title I Grants to Local Educational Agencies Migrant Education - State Grant Program Title I Program for Neglected and Delinquent Children Special Education - Grants to States Career and Technical Education Basic Grants to States Special Education - Preschool Grants Safe and Drug-Free Schools and Communities State Grants Education for Homeless Children and Youth Tech-Prep Education Twenty-First Century Community Learning Centers State Grants for Innovative Programs Education Technology State Grants Advanced Placement Progam Comprehensive School Reform Demonstration Reading First State Grants English Language Acquisition Grant Improving Teacher Quality State Grants Hurricane Education Recovery Passed Through Weber State University: Special Education - Grants for Infants and Families U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: Passed Through Utah State Department of Health: Maternal and Child Health Passed Through State Office of Education: Child Care and Development Block Grant Based Programs Direct Programs: Head Start (Deferral) Receivable June 30, 2007 $ 18,621 81,281 139,998 - Received $ 1,387,387 1,262,927 5,823,296 1,527 52,385 257,625 18,211 Expended $ 1,387,387 1,260,822 5,811,287 1,527 52,586 266,404 18,211 (Deferral) Receivable June 30, 2008 $ 16,516 69,272 201 148,777 - 239,900 8,803,358 8,798,224 234,766 12.550 7326 13,868 159,351 164,483 19,000 84.041 84.060 0015 7322 9,797 1,133,093 96,404 1,133,093 95,620 9,013 84.206 84.215 7373 7358/7374/7375/7372 21,440 202,033 105,520 1,391,158 101,685 1,330,599 17,605 141,474 84.002 84.010 84.011 84.013 84.027 33 08 15 13 19 1610 5202/7511 7548 7511 1200/1290/7551/7556 764,933 63,779 3,587,813 228,355 4,455,415 91,979 34,000 8,701,140 228,355 4,130,788 75,857 34,000 10,242,351 440,306 47,657 5,129,024 84.048 84.173 21 52 6900/6910/6938/8933 1290 614,462 138,798 614,462 297,671 655,652 318,679 655,652 159,806 84.186 84.196 84.243 84.287 84.298 84.318 84.330 84.332 84.357 84.365 84.367 84.938 09 28 26 60 90 07 89 27 72 73 74 92 5520/7602 5272 6910/8933 7654/7365 7512 5820/5821 8940 7659/8955 7543 7628 5238/7626 7511 14,990 30,000 152,773 451,096 11,394 16,897 20,000 279,835 109,526 229,239 326 14,990 60,000 152,773 567,255 101,389 16,897 20,000 336,222 18,697 115,884 1,435,335 326 145,710 30,000 7,404 319,988 89,995 48,577 56,387 18,697 199,970 1,522,236 - 145,710 7,404 203,829 48,577 193,612 316,140 - 84.181 1299 180,301 420,268 341,419 101,452 6,899,432 20,409,233 21,127,062 7,617,261 93.110 1293 - 93.575 5655 - 93.600 7314/7320 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE: Passed Through Utah State Office of Education: Learn and Serve America - School and Community Based Programs 94.004 53 6907 Total federal awards -1- 26,846 - 73,245 126,800 53,555 532,701 3,764,320 3,772,974 541,354 532,701 3,864,411 3,926,620 594,909 3,000 $ The accompanying notes are and integral part of this schedule. 26,846 7,688,901 3,000 $ 33,239,353 $ 34,016,389 $ 8,465,936 DAVIS SCHOOL DISTRICT NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Note 1. General The schedule of expenditures of federal awards presents the activity of all federal award programs of Davis School District (District). The District reporting entity is defined in Note 1 to the District's financial statements. All federal awards received directly from federal agencies as well as federal awards passed through from other government agencies are included on the schedule. Note 2. Basis of Accounting The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting for awards received by governmental funds and the accrual basis of accounting for proprietary funds as described in Note 1 to the District's financial statements. Most of the federal awards are expenditure-driven grants. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met; grants received in advance are recorded as deferred revenue until earned. Donated food commodities are recorded at fair value in the School Food Services Fund as an inventory asset and federal revenue when received. Donated food commodity inventories are recorded as expenses/expenditures when they are transferred to schools for consumption. Note 3. Relationship to District's Financial Statements Federal awards expended on the schedule of expenditures of federal awards for the year ended June 30, 2008 are reported in the District's financial statements as federal government revenues as follows: General Fund (Governmental Fund) School Food Services Fund (Proprietary Fund) State Multi-District Programs Fund (Special Revenue Fund) $ Total amount reported in the financial statements 35,068,404 Service provider contracts not included on schedule Total federal revenue reported on the Schedule of Expenditures of Federal Awards (SEFA) -2- 26,271,524 8,745,638 51,242 (1,052,015) $ 34,016,389 1329 South 800 East · Orem, Utah 84097-7700 · (801) 225-6900 · Fax (801) 226-7739 · www.squire.com Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Board of Education Davis School District We have audited the financial statements of the governmental activities, the business-type activities, each major fund, the discretely presented component unit, and the remaining fund information of Davis School District (the District) as of and for the year ended June 30, 2008, which collectively comprise the District’s basic financial statements and have issued our report thereon dated November 28, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects an entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by an entity’s internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. -3- We noted certain matters that we have reported to management of the District in a separate letter dated November 28, 2008. This report is intended solely for the information and use of the audit committee, management, the Board, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 28, 2008 -4- 1329 South 800 East · Orem, Utah 84097-7700 · (801) 225-6900 · Fax (801) 226-7739 · www.squire.com Independent Auditor’s Report on Compliance With Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 Board of Education Davis School District Compliance We have audited the compliance of Davis School District (the District) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2008. The District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the District’s management. Our responsibility is to express an opinion on the District’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the District’s compliance with those requirements. In our opinion, Davis School District complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2008. Internal Control Over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the District's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal over compliance. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a -5- federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the remaining fund information of Davis School District, as of and for the year ended June 30, 2008, and have issued our report thereon dated November 28, 2008. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise Davis School District’s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the audit committee, management, the Board, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 28, 2008 -6- DAVIS SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Year Ended June 30, 2008 DEPARTMENT OF EDUCATION FINDING 2005-1: Title I Grants to Local Educational Agencies - CFDA No. 84.010 – US Department of Education program passed through to the District from the Utah State Office of Education: Condition: The District is required to establish adequate internal controls over federal programs, including safeguarding funds against loss from unauthorized use or disposition. During the year ended June 30, 2005, the District brought to our attention that certain controls may have been circumvented; the potential problem was isolated to many small purchases within the Title I program. Recommendation: It was recommended that purchasing policies and procedures be updated to ensure proper approval of transactions, segregation of duties, supervisory review of vendor activities, and validation of goods received. Management has updated and implemented new purchasing policies and procedures as recommended. Current Status: The finding was reported directly to the pass-through grantor agency (Utah State Office of Education); the matter remains unresolved. -7- DAVIS SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2008 I. Summary of auditor’s results: Financial Statements: Type of auditor’s report issued: unqualified Internal control over financial reporting: yes -Material weaknesses identified? X no -Significant deficiencies identified that are not considered to be material weaknesses? yes X none reported Noncompliance material to financial statements noted? yes Federal Awards: X no Internal control over major programs: yes -Material weaknesses identified? X no -Significant deficiencies identified that are not considered to be material weaknesses? yes X none reported Type of auditor’s report issued on compliance for major programs: unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of yes X no Circular A-133? Identification of major programs: CFDA Number(s) Name of Federal Program 84.010 Title I Grants to Local Educational Agencies 84.041 Impact Aid 84.048 Career and Technical Education – Basic Grants to States 84.181 Special Education – Grants for Infants and Families 84.215 Fund for the Improvement of Education Special Education Cluster: 84.027 Special Education – Grants to States 84.173 Special Education – Preschool Grants Dollar threshold used to distinguish between type A and type B programs: yes Auditee qualified as low-risk auditee? II. Financial statement findings: No matters were reported. III. Federal award findings and questioned costs: No matters were reported. -8- X no $ 1,020,492 1329 South 800 East · Orem, Utah 84097-7700 · (801) 225-6900 · Fax (801) 226-7739 · www.squire.com Independent Auditor’s Report on Legal Compliance in Accordance with the State of Utah Legal Compliance Audit Guide Board of Education Davis School District We have audited the financial statements of Davis School District (District) as of and for the year ended June 30, 2008 and have issued our report thereon dated November 28, 2008. As part of our audit, we have audited the District's compliance with the requirements governing types of services allowed or unallowed; eligibility; matching, level of effort, or earmarking; and special tests and provisions applicable to each of its major state assistance programs as required by the State of Utah Legal Compliance Audit Guide for the year ended June 30, 2008. The District received the following major state assistance programs from the State of Utah (each passed through the State Office of Education): Minimum School Program School Building Program Driver Education Other State Appropriations The District also received nonmajor state grants, which are not required to be audited for specific compliance requirements; however, these grants were subject to test work as part of the audit of the District’s financial statements. Our audit also included test work on the District's compliance with those general compliance requirements identified in the State of Utah Legal Compliance Audit Guide including: Public Debt Purchasing Requirements Truth in Taxation and Property Tax Limitations Utah Retirement System Compliance Cash Management Budgetary Compliance Other General Compliance Issues The management of the District is responsible for the District's compliance with all compliance requirements identified above. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures disclosed instances of noncompliance with requirements referred to above, which are described in the accompanying letter to management. We considered these instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. -9- In our opinion, Davis School District complied, in all material respects, with the general compliance requirements identified above and the requirements governing types of services allowed or unallowed; eligibility; matching, level of effort, or earmarking; reporting; and special tests and provisions that are applicable to each of its major state assistance programs for the year ended June 30, 2008. November 28, 2008 -10- 1329 South 800 East · Orem, Utah 84097-7700 · (801) 225-6900 · Fax (801) 226-7739 · www.squire.com Letter to Management November 28, 2008 Board of Education Davis School District In planning and performing our audit of the financial statements of Davis School District for the year ended June 30, 2008, we noted certain matters for your consideration. This letter summarizes our comments and suggestions regarding those matters. This letter does not affect our report dated November 28, 2008, on the financial statements of the District. Also, significant deficiencies and material weaknesses, if any, are included in our reports dated November 28, 2008, in accordance with Government Auditing Standards; the provisions of Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and the State of Utah Legal Compliance Audit Guide. Purchasing – We tested 30 purchasing transactions during the year ended June 30, 2008. We observed that certain purchasing practices may need to be modified or established policies should be more closely followed: Purchase orders should be prepared as part of the approval process and prior to ordering and receiving the applicable goods and services. In six instances, we noted the purchase order being prepared after the purchasing process was complete. Exceptions to purchasing policies should be carefully evaluated and decisions should be documented. We noted that one instance occurred where no bid documentation was available. Views of Responsible Officials – District Purchasing Policy requires approval of a purchase order for all purchases over a dollar threshold. Purchases under that threshold are made using approved purchasing cards. The District is implementing procedures to more closely monitor purchases made without an approved purchase order, and to take corrective action with District schools and departments as well as with vendors who accept orders without a purchase order number. The District is also revising the Purchasing Policy to more clearly define the process of granting exceptions to the policy. Certifications – We noted that formal certifications as required by OMB Circular A-87 to support allocation of payroll costs to restricted federal programs are not always adequately documented. We recommend that monthly certifications be obtained for individuals who work in more than one program and when at least one of the programs is federal. We also recommend that semi-annual certifications be obtained for employees that work in one federal program. Views of Responsible Officials – The District is establishing procedures to more closely monitor adherence to the formal certification requirements of OMB Circular A-87. The District Finance Department will take a more active role in helping departments and schools to complete certifications as required. -11- The status of these comments will be reviewed as part of your next audit. We recommend management establish monitoring policies and procedures to provide the District with reasonable assurance that the District complies with various state and federal program requirements. Monitoring includes ongoing evaluations, recommendations for improvement, timely response to necessary changes, and periodic reports to management and the Board. We appreciate being able to work with District personnel during our audit. Squire & Company, PC -12-
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